Test Bank For Strategic Management Theory & Cases An Integrated Approach, 14th Edition by Charles Hi

TEST BANK Strategic Management Theory & Cases An Integrated Test Bank For Approach, Edition

by Charles Hill,W. Melissa Strategic Management Theory14th & Cases An Integrated Approach, 14th Edition Charles L. Hill, Melissa A. Schilling Schilling Chapter 1-12 Chapter 01 - Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage True / False 1. Determining the technological and legal factors surrounding a company’s possible international expansion into India is an example of an internal analysis. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 2. A customer comment on an online forum about changing a company’s product placement in stores stimulates a change in an existing business plan, which results in increased profits and positive outcomes and is an example of serendipity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 3. Using customer surveys, focus groups, and field research to drive business decisions is an example of the ivory tower concept of planning. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 4. Making a general business decision about where to manufacture a product based on the result of a single survey of one small focus group is a cognitive bias known as illusion of control. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM Multiple Choice 5. Which of the following statements about sustained competitive advantage is true? a. It is unaffected by the strategies taken by the company. b. Sustainability is achieved when it lasts for three months. c. It exists only when the company's profitability is greater than the 10 highest grossing firms in the world. d. It exists only when the company's profitability is greater than the average profitability and profit growth of its rivals. e. It is seldom affected by the business model of the company.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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6. Daryl works for Delta Corp. He is involved in the important decision-making processes of the company and is also responsible for the overall performance of the company. In the context of strategic management, Daryl is most likely a: a. line manager. b. functional manager. c. general manager. d. production supervisor. e. project manager.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 7. Which of the following is a difference between a general manger and a functional manager? a. A general manager has no responsibility to the performance of the individuals of the company while the functional manager has an integral relationship with employee performance. b. A general manager is responsible for overall performance while the functional manager is responsible for a specific task or activity. c. A functional manager has the profit-and-loss responsibility for a product while the general manager is strictly dedicated to strategic planning. d. A functional manager oversees the operation of an entire division while a general manager develops strategies that help fulfill strategic objectives. e. General managers are closer to the customer than functional managers, and their ideas may develop into effective strategic plans for the business.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM Copyright Cengage Learning. Powered by Cognero.

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8. In the last five years, Blue Drinks, a multinational beverage corporation, increased its return on invested capital (ROIC) from $5 million to $25 million. The company was able to do this by expanding its product line to include a wider variety of flavors. The $20 million increase in its ROIC over this period can be referred to as which of the following? a. Shareholder value b. Dividend payment c. Profit growth d. Profitability turnover e. Risk capital ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 9. Which of the following statements about nonprofit organizations is true? a. They compete for scarce resources just as for-profit businesses do. b. Their priority is to maximize shareholder value in order to attract risk capital. c. Their managers do not need to develop careful strategies because making a profit is not the organization's goal. d. They do not have to worry about exceeding budgets. e. They seldom set performance goals like profit-seeking organizations.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 10. Which of the following statements about strategic leadership is true? a. It is the primary responsibility of the functional managers of an organization. b. It does not consider the task of maximizing shareholder value. c. It is involved with making decisions regarding how to create competitive advantage. d. It is a concept that does not apply to multidivisional companies with several business units. e. It is essentially about supervising workers at a manufacturing unit of an organization.

ANSWER: c POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Easy REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 11. Which of the following refers to the investment that shareholders make in a company that cannot be recovered if the company fails and goes bankrupt? a. Profitability b. Shareholder value c. Debt d. Risk capital e. Return on invested capital ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 12. Identify the correct process for strategy-making. a. Formulation; Designing, delivering, and supporting products; Improving the efficiency and effectiveness of operations; Designing a company’s organizational structure, control systems, and culture b. Designing, delivering, and supporting products; Improving the efficiency and effectiveness of operations; Designing a company’s organizational structure, control systems, and culture; Formulation c. Designing, delivering, and supporting products; Formulation; Improving the efficiency and effectiveness of operations; Designing a company’s organizational structure, control systems, and culture d. Designing, delivering, and supporting products; Improving the efficiency and effectiveness of operations; Formulation; Designing a company’s organizational structure, control systems, and culture e. Designing, delivering, and supporting products; Improving the efficiency and effectiveness of operations; Designing a company’s organizational structure, control systems, and culture ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 13. Philip oversees the processes of the research and development department of his company. He is responsible for all the activities and tasks undertaken by the department. In the context of strategic management, Philip is most likely to be a: a. corporate-level general manager. b. functional manager. c. managing director. d. chief executive officer (CEO). e. business development manager.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 14. Which of the following statements about functional-level managers is true? a. They oversee the operation of an entire company or division. b. Their sphere of responsibility is generally confined to one organizational activity. c. Their activities and roles have no importance in realizing the strategic goals of an organization. d. They provide a link between the people who oversee the strategic development of a firm and those who own the firm. e. They occupy the apex of decision making within an organization.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM Copyright Cengage Learning. Powered by Cognero.

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15. Roza Munoz oversees the overall operations of Maxwell House, which is one of the divisions of the Kraft Heinz Company. Roza is also responsible for the overall performance of the business division. Which of the following is NOT likely to be one of Roza's responsibilities? a. Turning corporate-level strategy into action b. Defining Kraft Heinz's mission statement c. Deciding how to compete in the coffee industry d. Supervising functional-level managers e. Developing a business-level strategy ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 16. Which of the following identifies the difference between a mission and a vision statement? a. A mission statement describes where the company wants to be in the community while a vision statement declares the purpose the company serves to its customer. b. A mission statement describes the ―what,‖ ―who,‖ and ―why‖ while the vision statement describes the ―where.‖ c. A mission statement expresses the aspirations upon achievement of goals while a vision statement expresses functions and objectives. d. A mission statement illustrates results while a vision statement illustrates actions. e. A mission statement and a vision statement are interchangeable.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 17. Beta Corp., a gaming software company, recently launched a new game. The target audience identified by the company was the age group of 12–18 years. The advertising and marketing strategies were designed exclusively to target this age group. However, sales data revealed individuals who belong to the age bracket 18–25 years were the ones who bought the game. The managers at Beta Corp. decided to redesign their marketing strategies to position the game as a product that people of all ages would enjoy. The company's decision to modify its product positioning demonstrates which Copyright Cengage Learning. Powered by Cognero.

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of the following strategies? a. Downsizing b. Emergent c. Deliberate d. Concurrency control e. Unrealized ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 18. Which of the following statements about emergent strategies is true? a. They are essentially the strategies that arise from feedback loops. b. An organization's capability to produce emergent strategies is a function of the kind of corporate culture that the organization’s structure and control systems foster. c. They are the strategies that require the least amount of evaluation and strategic thinking from the managers. d. They cannot be combined with the intended strategies of an organization. e. They are the product of formal top-down planning mechanisms.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 19. A company, at its inception, states that its goal is ―to provide the best customer service possible.‖ Which of the following best describes this objective? a. It is the company’s emergent strategy. b. It is the company’s corporate structure. c. It is the company’s HR strategy. d. It is the company’s mission statement. e. It is the company’s damage control plan.

ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 20. Which of the following statements about the feedback loop in the context of strategy implementation is true? a. It provides managers with input for the next round of strategy formulation and implementation. b. It emerges within an organization without prior planning and in response to unforeseen circumstances. c. It cannot reveal whether a business model is working. d. It carries information from corporate-level managers to functional-level managers. e. It indicates that the strategy implementation process has ended.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 21. Dave’s Construction Company conducted a SWOT analysis, which resulted in a need to implement business strategies that increase customer awareness and widen their customer base through better customer service to gain a competitive advantage in their industry. Which of the following business strategies would this describe? a. Functional-level strategies b. Business-level strategies c. Global strategies d. Corporate-level strategies e. None of the strategies are correct.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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22. The scenario approach to strategic planning involves: a. devising plans for coping with several different possible future states of the world. b. designing the best organizational structure and the best culture and control systems to put a chosen strategy into action. c. functional-level managers setting key corporate objectives. d. anticipating the reoccurrence of problems that were previously encountered and designing solutions accordingly. e. designing plans for problems that the company believes it will most certainly face in the immediate future.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 23. Scenario planning is a technique for coping with the problem of a. uncertainty. b. planning equilibrium. c. bottom-up planning. d. strategic fit. e. cognitive bias.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 24. More people seem to fear a snake bite than a dog bite, and yet statistically one is more likely to be bitten by a dog than by a snake. This is because people tend to estimate the probability of an outcome based on how easy the outcome is to imagine. This represents which of the following cognitive biases? a. Escalating commitment b. Hypothesis bias Copyright Cengage Learning. Powered by Cognero.

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c. Availability error d. Representativeness e. Illusion of control ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 25. Systematic errors in the decision-making process are most often caused by: a. inadequate information. b. information overload. c. cognitive biases of decision makers. d. poor data collection procedures. e. the devil's advocacy method.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 26. Which of the following cognitive biases refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions based on these beliefs, even when presented with evidence that their beliefs are incorrect? a. Confirmation bias b. Reasoning by analogy c. Illusion of control d. Escalating commitment e. Representativeness ANSWER: a POINTS: 1 DIFFICULTY: Easy Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 27. Holly owns a landscape company and is thinking about expanding her services to include outdoor water features (waterfalls, streams, ponds). If, before making this decision, she looks at the experience of similar firms that have added outdoor water features, she is employing: a. reasoning by analogy. b. illusion of control. c. devil's advocacy. d. the outside view. e. dialectic inquiry.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 28. Which of the following is a negative aspect of the ivory tower approach to the strategic planning process? a. It can lead to tensions between corporate-level and functional-level managers. b. The strategic role of autonomous decisions made by lower-level managers can be ignored. c. Decisions are made by top managers that are not connected to the day-to-day operations. d. It does not recognize the importance of the participation of managers at all corporate levels as a means for successful strategic planning. e. All of these are negative aspects of the ivory tower approach to the strategic planning process.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

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29. Mike, the chief executive officer (CEO) of a retail chain, wanted to keep costs low. To set an example for others, he drove his own car and furnished his office with plain, metal desks. In this case, Mike was displaying a. commitment. b. ego. c. astute use of power. d. devil's advocacy. e. autocratic leadership.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/26/2023 4:49 PM 30. Which of the following are characteristics of good strategic leaders? a. They possess a willingness to delegate and empower subordinates. b. They control all facets of decision making. c. Each make decisions without consulting others. d. Good leaders ensure uniformity of purpose through the authoritarian exercise of power. e. They are usually inconsistent in their approach to individual employees.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 31. Which of the following is NOT a characteristic of emotional intelligence? a. Self-awareness b. Self-regulation c. Escalating commitment d. Empathy Copyright Cengage Learning. Powered by Cognero.

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e. Social skills ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 32. Karen, a manager at Libra Inc., had noticed that her subordinates were experiencing a lot of stress. After conducting a meeting with her subordinates, Karen realized that they were extremely overworked and intimidated by close deadlines.

Determined to reduce their stress, she introduced a new process that eliminated time-consuming activities and gave them more flexibility for work timelines. This action taken by Karen demonstrates which of the following aspects of emotional intelligence? a. Availability error b. Self-awareness c. Self-regulation d. Motivation e. Empathy ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 33. Rebecca, a manager, was very annoyed after noticing several negligent errors in a critical report. However, while talking to the subordinate who created the report, Rebecca was calm and composed; she did not act impulsively and lose her temper. Which of the following aspects of emotional intelligence is illustrated in this scenario? a. Self-awareness b. Self-regulation c. Motivation d. Empathy e. Social skills ANSWER: b POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 34. Why is it important for leaders to gather information through informal and unconventional means? a. Formal channels can cause leaders to become overloaded with too much information and responsibilities. b. Formal conventional channels can be influenced by special interests and gatekeepers who choose what information to share. c. Formal channels can skew strategies which can result in poor performance and lack of focus. d. Formal channels often miscommunicate the vision of the company and disrupt the organization’s culture. e. Formal channels encourage leaders to use their authority to force ideas through in order to accomplish goals.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:45 PM DATE MODIFIED: 4/21/2023 11:36 AM 35. Evidence suggests that the best way to maximize the long-run return to shareholders is to focus on: a. increasing prices. b. research and development goals. c. satisfying customer needs and making sure that employees are fairly treated. d. compensating managers well. e. maximizing employee overtime.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM Copyright Cengage Learning. Powered by Cognero.

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36. A general manager announces a new policy that includes an end-of-the year bonus for all employees if the company achieves its overall productivity goal. This is an example of a manager: a. neglecting shareholders’ desire for maximum profitability. b. giving away money for no reason. c. losing the competition with other businesses for top talent. d. choosing to focus on employees to maximize shareholder value. e. setting a policy to increase his or her own income.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 37. Ralph is a well-liked manager at Aries Inc. He eloquently communicates the goals of the organization and has been successful in making the organization's vision part of its culture. Which of the following characteristics of good strategic leaders can be observed in Ralph? a. Authoritarian leadership b. Devil's advocacy c. Eloquence d. Inconsistency e. Empathy ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 38. Which of the following actions is NOT part of strategy implementation? a. Selecting strategies b. Designing a company's organizational structure c. Improving the efficiency and effectiveness of operations d. Delivering and supporting products e. Designing a company's control systems and culture ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 9:49 AM DATE MODIFIED: 4/21/2023 11:36 AM 39. What is the primary goal for most companies? a. Achieving superior financial performance relative to rivals b. Expanding the company's product line c. Maintaining a positive public image d. Increasing the number of employees e. Focusing on environmental sustainability ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 9:52 AM DATE MODIFIED: 4/21/2023 11:36 AM 40. Which of the following is a characteristic of a company with a competitive advantage? a. Inferior performance compared to rivals b. Superior financial performance relative to rivals c. Financial losses d. Lack of strategic leadership e. Unstable market position ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 9:56 AM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

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41. What is the main difference between strategy formulation and strategy implementation? a. Strategy formulation is about selecting strategies, while strategy implementation is about putting those strategies into action. b. Strategy formulation is about executing strategies, while strategy implementation is about choosing those strategies. c. Strategy formulation is about creating a company's organizational structure, while strategy implementation is about designing its control systems and culture. d. Strategy formulation is about improving the efficiency of operations, while strategy implementation is about designing and delivering products. e. Strategy formulation is about financial performance, while strategy implementation is about achieving a competitive advantage.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 9:58 AM DATE MODIFIED: 4/21/2023 11:36 AM 42. Based on the text, which factor contributed significantly to Peloton's initial success under founder John Foley's leadership? a. A strong focus on profitability b. A well-formulated and well-implemented strategy c. The absence of competitors in the market d. A rapid expansion of its product line e. A consistent increase in demand for its products ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:01 AM DATE MODIFIED: 4/21/2023 11:36 AM 43. What can managers do to make the strategy-making process more effective? a. Focus only on strategy formulation and ignore strategy implementation b. Rely on a single strategy without considering changes in market conditions Copyright Cengage Learning. Powered by Cognero.

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c. Engage in strategic leadership to manage the strategy-making process d. Ensure that the company has a competitive advantage before formulating a strategy e. Avoid adjusting strategies in response to new competitors ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-1 Strategy and Strategic Leadership QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.01 - Define strategic leadership.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/21/2023 10:03 AM DATE MODIFIED: 4/21/2023 11:36 AM 44. Which two factors directly contribute to shareholder value? a. Capital appreciation and dividend payments b. Market share and product diversity c. Market growth and ethical behavior d. Employee satisfaction and corporate social responsibility e. Organizational structure and operational efficiency ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:05 AM DATE MODIFIED: 4/26/2023 4:50 PM 45. What is the return on invested capital (ROIC) defined as? a. Net profit over the capital invested in the firm b. Dividend payments over the number of shares outstanding c. Total revenue over total expenses d. Net income after tax over the cost of capital e. Share price appreciation over the total assets of the company ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:08 AM DATE MODIFIED: 4/26/2023 4:52 PM 46. What are the best ways to increase shareholder value in the long run? a. Create value for customers, treat employees well, and respect the needs of communities. b. Focus solely on maximizing short-term profits and returns to shareholders. c. Increase market share at the expense of profitability. d. Prioritize rapid profit growth over profitability. e. Rely on a single, unchanging strategy regardless of market conditions.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:10 AM DATE MODIFIED: 4/21/2023 11:36 AM 47. What is a competitive advantage? a. When a company's profitability and profit growth are less than that of its rivals b. When a company's profitability and profit growth are equal to that of its rivals c. When a company's profitability and profit growth are greater than that of its rivals d. When a company has more resources than its rivals have e. When a company has more market share than its rivals have ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:12 AM DATE MODIFIED: 4/21/2023 11:36 AM 48. What does a business model encompass? a. Only the strategies for acquiring customers and producing goods b. The strategies and capital investments to generate above-average performance Copyright Cengage Learning. Powered by Cognero.

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c. The company's marketing plan and financial resources d. The company's competitive advantage and market position e. The organizational structure and management styles ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:15 AM DATE MODIFIED: 4/21/2023 11:36 AM 49. What are the two main factors that determine a company's profitability and profit growth? a. Its relative success in its industry and the overall performance of its industry b. Its market share and competitive advantage c. Its product differentiation and customer satisfaction d. Its operational efficiency and cost management e. Its marketing strategy and customer acquisition ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:16 AM DATE MODIFIED: 4/21/2023 11:36 AM 50. Which business model has been successfully applied to toys, office supplies, and home-improvement supplies? a. The self-service supermarket business model b. The full-service retail format business model c. The boutique specialty store business model d. The online marketplace business model e. The subscription-based business model ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:19 AM DATE MODIFIED: 4/21/2023 11:36 AM 51. What is the significance of a business model in achieving a competitive advantage? a. It helps managers understand how various strategies can create activities that fit together to make a company unique and able to consistently outperform the competition b. The significance is that it provides a blueprint for acquiring more resources than the competitors c. It focuses on creating a single, unchanging strategy for the company d. It prioritizes short-term profit growth over long-term sustainability e. It relies on the company's market position and industry dominance ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:21 AM DATE MODIFIED: 4/21/2023 11:36 AM 52. Why is strategic planning important for managers in the nonprofit sector? a. It helps nonprofits increase their profits and market share b. It ensures nonprofits can compete with for-profit organizations c. It allows nonprofits to map out strategies to attain performance goals and compete for scarce resources d. It focuses on short-term financial gains to attract more donors e. It guarantees the long-term success and growth of the nonprofit organization ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-3 Competitive Advantage and a Company’s Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.03 - Explain what is meant by ―competitive advantage.‖ NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:22 AM DATE MODIFIED: 4/21/2023 11:36 AM 53. Which of the following best describes the strategic role of functional-level managers within an organization? a. Developing strategies for individual businesses within the organization b. Overseeing the development of strategies for the whole organization Copyright Cengage Learning. Powered by Cognero.

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c. Allocating resources among the different businesses d. Developing functional strategies to fulfill strategic objectives set by business- and corporate-level managers e. Setting overall strategic goals and monitoring the performance of the businesses ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:24 AM DATE MODIFIED: 4/21/2023 11:36 AM 54. Which of the following is NOT one of the main criticisms of the formal planning model? a. The unpredictability of the real world b. The role that lower-level managers can play in the strategic management process c. The fact that many successful strategies are often the result of serendipity, not rational strategizing d. The importance of a strong corporate culture e. The highly structured nature of the strategic planning process ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/21/2023 10:26 AM DATE MODIFIED: 4/21/2023 11:36 AM 55. According to the text, how did Yahoo.com and Microsoft's MSN network adapt to the threat posed by Google's business model? a. They merged with Google. b. They adopted Google's pay-per-click business model and developed their own search engines. c. They increased their investment in traditional forms of online advertising. d. They focused on their core businesses and ignored Google's threat. e. They sought government intervention against Google's monopoly.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:31 AM DATE MODIFIED: 4/21/2023 11:36 AM 56. Based on the text, what kind of strategic approach helped Honda to succeed in the US motorcycle market? a. A detailed, long-term plan focused on larger motorcycles b. An emergent strategy that arose from unplanned action in response to unforeseen circumstances c. A strong emphasis on top-down strategic planning d. A focus on selling through specialty motorbike stores e. A partnership with established motorcycle brands in the US ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:33 AM DATE MODIFIED: 4/21/2023 11:36 AM 57. According to the text, what is the role of top management when it comes to emergent strategies? a. Top management should always stick to the intended strategy. b. Top management should evaluate emergent strategies and intervene when appropriate. c. Top management should let emergent strategies play out without any interference. d. Top management should focus on long-term planning and ignore emergent strategies. e. Top management should actively suppress emergent strategies to maintain control.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:34 AM DATE MODIFIED: 4/21/2023 11:36 AM 58. According to the text, what is one reason strategic planning may fail over longer time periods?

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a. Scenario planning is not utilized. b. Managers forget that the future is entirely unpredictable. c. Operating managers are always involved in the planning process. d. Companies only focus on the current competitive environment. e. Scenario planning is only used by a small percentage of companies.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:36 AM DATE MODIFIED: 4/21/2023 11:36 AM 59. What is the main purpose of using scenario planning in strategic planning? a. To ensure that managers only focus on the most likely future scenario b. To create a rigid plan that works for all possible future scenarios c. To help managers understand the dynamic and complex nature of their environment, think strategically, and generate a range of strategic options d. To guarantee that all future scenarios will be accurately predicted e. To solely focus on optimistic future scenarios ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:39 AM DATE MODIFIED: 4/21/2023 11:36 AM 60. What did GE's appliance group fail to realize when they assumed smaller appliances were the future due to shrinking houses and families? a. Kitchens and bathrooms were not shrinking b. Families wanted smaller appliances to save space. c. Homebuilders and retailers were not interested in smaller appliances. d. Two-income families preferred large refrigerators to reduce supermarket trips. e. Both A and D ANSWER: e POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:41 AM DATE MODIFIED: 4/21/2023 11:36 AM 61. Which of the following statements best describes the implications of the "ivory tower" approach to strategic planning? a. It fosters collaboration between all levels of management and encourages the inclusion of lower-level managers in the decision-making process. b. It can result in suboptimal strategies due to the disconnect between top managers and current operating realities. c. It emphasizes the importance of autonomous action by lower-level managers. d. It ensures that corporate-level planners provide the resources necessary to identify the strategies required to attain the organization's broad strategic goals. e. It guarantees that all managers, regardless of their level, have a thorough understanding of the company's strategic planning process.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-7 Strategic Planning in Practice QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.07 - Review the practice of strategic planning.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:43 AM DATE MODIFIED: 4/21/2023 11:36 AM 62. When making strategic decisions, which cognitive bias refers to decision makers committing more resources to a project even if it is failing? a. Confirmation bias b. Escalating commitment c. Reasoning by analogy d. Representativeness e. Overconfidence ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might Copyright Cengage Learning. Powered by Cognero.

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lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 10:45 AM DATE MODIFIED: 4/21/2023 11:36 AM 63. Which technique can be used to counter cognitive biases such as illusion of control, reasoning by analogy, and representativeness by evaluating a project against a reference class of analogous past strategic initiatives? a. Devil's advocacy b. Dialectic inquiry c. The outside view d. Scenario planning e. Strategic intent ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 10:47 AM DATE MODIFIED: 4/21/2023 11:36 AM Essay 64. Identify the levels of strategic managers and discuss their role in the strategic management process.

ANSWER: The three levels of strategic managers are corporate, business, and functional. Corporatelevel managers include the CEO, other senior executives, the board of directors, and corporate staff. The role of corporate-level managers is to oversee the development of strategies for the whole organization. This role includes defining the goals of the organization, determining what businesses it should be in, allocating resources among the different businesses, formulating and implementing strategies that span individual businesses, and providing leadership for the entire organization.

Business-level managers oversee business units—self-contained divisions of a company with their own functions that are performed within the units. The role of business-level managers is to translate the general statements of direction and intent that come from the corporate level into concrete strategies for individual businesses.

POINTS: DIFFICULTY: REFERENCES:

Functional-level managers are responsible for the specific business functions or operations found within a company or one of its divisions. These managers are generally responsible for one organizational activity. Their strategic role is to develop functional strategies in their area that help fulfill the strategic objectives set by business- and corporate-level managers.

1 Moderate 1-4 Strategic Managers

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QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 65. Explain the difference between functional and general managers. Provide an example of each from your college or university.

ANSWER: Functional-level managers are responsible for the specific business functions or operations found within a company or one of its divisions. Thus, a functional manager's sphere of responsibility is generally confined to one organizational activity, whereas general managers oversee the operation of an entire company or division. Although they are not responsible for the overall performance of the organization, functional managers nevertheless have a major strategic role: to develop functional strategies in their areas that help fulfill the strategic objectives set by business- and corporate-level general managers. In a college or a university setting, a President would be a general manager, whereas the Director of Admissions or Vice President for Student Affairs would be an example of a functional manager.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-4 Strategic Managers QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.04 - Discuss the strategic role of managers at different levels within an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 66. List the steps involved in the formal strategic planning process.

ANSWER: The formal strategic planning process has five main steps: 1. Select the corporate mission and major corporate goals.

2. Analyze the organization’s external competitive environment to identify opportunities and threats.

3. Analyze the organization’s internal operating environment to identify the organization’s strengths and weaknesses.

4. Select strategies that build on the organization’s strengths and correct its weaknesses in order to take advantage of external opportunities and counter external threats. These strategies should be consistent with the mission and major goals of the organization. They should be congruent and constitute a viable business model.

5. Implement the strategies.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 1-5 The Strategic Planning Process Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 67. Explain the formal strategic planning process. Name each step in the process, and describe the specific activities included in each step and the relationship between the steps.

ANSWER: The first component of the strategic management process is crafting the organization's mission statement, which provides the framework—or context—within which strategies are formulated. A mission statement has four main components: a statement of the organization's reason for existence—normally referred to as the mission; a statement of some desired future state, usually referred to as the vision; a statement of the key values to which the organization is committed; and a statement of major goals.

The second component of the strategic management process is an analysis of the organization's external operating environment. The essential purpose of the external analysis is to identify strategic opportunities and threats within the organization's operating environment that will affect how it pursues its mission. Three interrelated environments should be examined when undertaking an external analysis: the industry environment in which the company operates, the country or national environment, and the wider socioeconomic or macroenvironment.

Internal analysis, the third component of the strategic planning process, focuses on reviewing the capabilities and competencies of a company to identify its strengths and weaknesses.

The next component of strategic thinking requires the generation of a series of strategic alternatives, or choices of future strategies to pursue, given the company's internal strengths and weaknesses and its external opportunities and threats. The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. The central purpose is to identify the strategies to exploit external opportunities, counter threats, build on and protect company strengths, and eradicate weaknesses. The strategies identified through a SWOT analysis should be congruent with each other. Thus, functional-level strategies should be consistent with, or support, the company's business-level and global strategies. Moreover, corporate-level strategies should support business-level strategies.

Once managers have chosen a set of congruent strategies to achieve a competitive advantage and increase performance, those strategies must be implemented. Strategy implementation involves taking actions at the functional, business, and corporate levels to execute a strategic plan.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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68. Identify and discuss the criticisms of the traditional strategic planning process and why it is useful to view strategy as an emergent process.

ANSWER: The traditional planning process is viewed as a rational, highly structured process that is orchestrated by top management. This view of the strategy process has been criticized for a number of reasons.

First, the world is uncertain, complex, and full of ambiguity, and it is an environment in which small chance events can have a large and unpredictable impact on outcomes; thus, plans can become obsolete in a short amount of time. In such circumstances, even the most carefully thought-out strategic plans are prone to being rendered useless by rapid and unforeseen change. In an unpredictable world, being able to respond quickly to changing circumstances, and to alter the strategies of the organization, accordingly, is paramount.

A second criticism of the traditional approach is that too much importance is attached to the role of top management. An alternative view is that managers deep within an organization can—and often do—exert a profound influence over the strategic direction of the firm. The traditional model does not allow for the important strategic role that lower-level managers can play.

The third criticism of the traditional model is that it does not address serendipity—the stumbling across good outcomes unexpectedly. Because serendipitous discoveries or events can yield profitable opportunities, companies must be able to pursue them, even if they are inconsistent with the current strategic plan.

Given these three criticisms, the role of emergent strategies becomes clear. Unplanned responses to unforeseen circumstances that often arise from autonomous action by individual managers deep within the organization can allow a company to prosper.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-6 Strategy as an Emergent Process QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.06 - Examine the criticisms of strategic planning.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 69. Select three of the cognitive biases that individual decision makers experience and describe each bias. Choose a real or hypothetical situation for each of them, explaining how the bias is evident in the situation.

ANSWER: The prior hypothesis bias refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of these beliefs, even when presented with evidence that their beliefs are incorrect. Moreover, they tend to seek and use information that is consistent with their prior beliefs while ignoring information that contradicts these beliefs. For example, managers for U.S. automakers in the 1960s and 1970s believed that Americans bought cars for the luxury features and styling, and therefore, they completely missed the trend toward cars that were more reliable, safer, and fuel efficient. Japanese automakers saw the trends and were able to fill that demand first.

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Escalating commitment occurs when decision makers, having already committed significant resources to a project, commit even more resources even if they receive feedback that the project is failing. Students exhibit this bias when they work harder to raise their class grade from a D to a C than they will work to raise their grade from a B to an A, even though both improvements have the same impact on their overall grade average.

Reasoning by analogy involves the use of simple analogies to make sense out of complex problems. The problem with this heuristic is that the analogy may not be valid. For example, some managers use war as a metaphor for business competition. However, this analogy limits their ability to consider options such as cooperation in joint ventures.

The representative bias is rooted in the tendency to generalize from a small sample or even a single, valid anecdote. Managers who have had one extremely positive or negative occurrence tend to remember and rely on that occurrence when they make future decisions. If a gambler gets very lucky the first time he wagers, he tends to wager greater amounts and more often than do gamblers who are initially very unlucky.

Illusion of control occurs when managers are overconfident about their abilities to control events. Managers who take on projects that are beyond their capabilities or who refuse to admit that they need help are guilty of this bias.

Availability error arises from our predisposition to estimate the probability of an outcome based on how easy the outcome is to imagine. For example, more people seem to fear a plane crash than a car accident, yet statistically one is far more likely to be killed in a car on the way to the airport than in a plane crash. People outweigh the probability of a plane crash because the outcome is easier to imagine, and because plane crashes are more vivid events than car crashes, which affect only small numbers of people at one time.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-8 Strategic Decision Making QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.08 - Explain strategic decision making and the cognitive biases that might lead to poor strategic decisions.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Create DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 70. Describe three characteristics of strong strategic leaders. Explain how each of the three characteristics would help motivate and lead an organization's personnel.

ANSWER: Strong leaders have a clear, compelling vision of where the organization should go, eloquently communicate this vision to others within the organization in terms that energize people, and consistently articulate their vision until it becomes part of the organization's culture. This ensures that employees understand the fundamental goals they are working toward, guiding them as they make decisions about their daily work.

Strong leaders are committed to accomplishment of the organization's goals, and they demonstrate their commitment through their actions as well as their words. By observing their leader's commitment directly in their actions, employees believe that the goals are truly important, and they also benefit from seeing the appropriate behavior modeled for them.

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Strong leaders develop a network of formal and informal sources who keep them well informed about what is going on within the company. Employees see that leaders value their input; they also respect leaders who are able to communicate well with individuals at different hierarchical levels.

Strong leaders delegate when possible but maintain control over critical decisions. Workers are motivated by decision-making power and can reduce the workload of their leaders when they are empowered. However, strong leaders understand that they need to maintain control over certain key decisions. This is best for the organization, and it also protects lower-level workers from the consequences of disastrous choices.

Strong leaders use power effectively. They build consensus rather than use their authority to force ideas through; they act as members of a coalition or its democratic leaders rather than as dictators. They also rely on allies who can help them attain their strategic objectives.

Workers are loyal when they are consulted and relied on. Politically astute leaders do not fall into the trap of advocating an action that might later be abandoned, nor do they try to make too many changes at once.

Strong leaders have emotional intelligence—that is, they are self-aware, self-regulated, passionate about their work, empathetic toward others, and friendly. Workers have respect and trust for leaders who exhibit self-control. Workers are inspired by observing another's passion for the work, and they appreciate being treated with empathy and friendliness.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-9 Strategic Leadership QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.09 - Discuss the characteristics of strategic leaders.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM 71. What are the reasons that profit-making companies make maximizing shareholder value one of their ultimate goals?

Compare long-run and short-run profit strategies for maximizing shareholder value. Which one is best for maximizing shareholder value? Explain your answer.

ANSWER: Maximizing shareholder value is the ultimate goal of profit-making companies, for two reasons. First, shareholders provide a company with the risk capital that enables managers to buy the resources needed to produce and sell goods and services. Risk capital is capital that cannot be recovered if a company fails and goes bankrupt. Shareholders will not provide risk capital unless they believe that managers are committed to pursuing strategies that provide a good return on their capital investment. Second, shareholders are the legal owners of a corporation, and their shares therefore represent a claim on the profits generated by a company. Thus, managers have an obligation to invest those profits in ways that maximize shareholder value.

There is good evidence that the best way to maximize the long-run return to shareholders is to focus on customers and employees. Satisfying customer needs and making sure that employees are treated fairly and work productively, typically translates into better financial performance and superior long-run returns for shareholders. Alternatively, ignoring customer needs, and treating employees unfairly, may boost short-run profits and returns to shareholders, but it will also damage the long-run viability of the enterprise and ultimately Copyright Cengage Learning. Powered by Cognero.

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depress shareholder value. This is why many successful managers argue that if a company focuses on its customers and creates incentives for its employees to work productively, shareholder returns will take care of themselves.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-2 Strategic Leadership and Superior Performance QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.02 - Discuss leadership and its relationship to superior performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/26/2023 4:52 PM 72. Describe the differences between a mission statement, a vision statement and a values statement. You have been charged with crafting an example of each of these statements for a new company that is breaking into the denim market with made-to-order jeans. The company was created to meet the need of customers who desired comfortable jeans for their body type rather than trying to fit their body in jeans made for everyone. Customers can enter their measurements on the business’s website, choose their wash and type of fit. Each pair of jeans is cut and hand-sewn onsite with locally sourced materials and comes with a tag with each customer’s name on it. Using this information, craft a possible mission statement, vision statement and values statement for this company.

ANSWER: A company’s mission describes what the organization does. An important first step in the process of formulating a mission is to come up with a definition of the organization’s business. Essentially, the definition answers these questions: ―What is our business? What will it be? What should it be?‖ The responses to these questions guide the formulation of the mission. To answer the question ―What is our business?‖ a company should define its business in terms of three dimensions: who is being satisfied (what customer groups), what is being satisfied (what customer needs), and how customers’ needs are being satisfied (by what skills, knowledge, or distinctive competencies).

The vision of a company defines a desired future state; it articulates, often in bold terms, what the company would like to achieve.

The values of a company state how managers and employees should conduct themselves, how they should do business, and what kind of organization they should build. Insofar as they help drive and shape behavior within a company, values are commonly seen as the bedrock of a company’s organizational culture: the set of values, norms, and standards that control how employees work to achieve an organization’s mission and goals.

Answers will vary for the crafting of the possible mission statement, vision statement and values statement for this company, but should address the fictional company’s goals and framework for a mission statement, a vision statement and a values statement.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Create 4/19/2023 4:46 PM 4/26/2023 4:53 PM

73. Contrast the purpose and environments included in an external and an internal analysis. How are these used together in the business model?

ANSWER: The essential purpose of the external analysis is to identify strategic opportunities and threats within the organization’s operating environment that will affect how it pursues its mission.

Three interrelated environments should be examined when undertaking an external analysis: the industry environment in which the company operates, the country or national environment, and the wider socioeconomic or macroenvironment. Analyzing the industry environment requires an assessment of the competitive structure of the company’s industry, including the competitive position of the company and its major rivals. It also requires analysis of the nature, stage, dynamics, and history of the industry. Because many markets are now global, analyzing the industry environment also means assessing the impact of globalization on competition within an industry. Such an analysis may reveal that a company should move some production facilities to another nation, that it should aggressively expand in emerging markets such as China, or that it should beware of new competition from emerging nations. Analyzing the macroenvironment consists of examining macroeconomic, social, governmental, legal, international, and technological factors that may affect the company and its industry.

Internal analysis focuses on reviewing the resources, capabilities, and competencies of a company to identify its strengths and weaknesses.

The generation of a series of strategic alternatives, or choices of future strategies to pursue, given the company’s internal strengths and weaknesses and its external opportunities and threats. The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. The central purpose is to identify the strategies to exploit external opportunities, counter threats, build on and protect company strengths, and eradicate weaknesses. The goal of a SWOT analysis is to create, affirm, or fine-tune a companyspecific business model that will best align, fit, or match a company’s resources and capabilities to the demands of the environment in which it operates. Managers compare and contrast various alternative possible strategies, and then identify the set of strategies that will create and sustain a competitive advantage. These strategies can be divided into four main categories: Functional-level strategies, Business-level strategies, Global strategies and Corporate-level strategies.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 1-5 The Strategic Planning Process QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.01.05 - Identify the primary steps in a strategic planning process.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:46 PM DATE MODIFIED: 4/21/2023 11:36 AM

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Chapter 02 - External Analysis: The Identification of Opportunities and Threats True / False 1. The bottled water industry created new competitors for Coca-Cola, but it did not change the basic industry boundaries. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 2. Dave grew up in a household that primarily drank Minute Maid orange juice and lemonade. Now married with his own children, he continues to purchase Minute Maid products for his own family. This is an example of switching costs. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 3. Dale Smith opened his forklift dealership twenty years ago. Over the last five years he has been approached by several larger operations looking to buy him out. He had hoped to pass the business on to his sons, but they aren’t interested in continuing the business, and he is having a hard time letting go. This is an example of the exit barrier known as emotional attachment. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 4. Sunshine Biscuits, a Kellogg company who make Cheez-Its, and Frito Lay, who make Rold Gold Pretzels, are considered substitute products, which increase competition and limit price. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 5. Starbucks and an independent local café are different in terms of their business techniques. But they both sell coffee and, therefore, belong to the same strategic group. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 6. Companies facing higher exit barriers find it harder to reduce capacity and face a greater threat of severe price competition. a. True Copyright Cengage Learning. Powered by Cognero.

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b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 7. Movement between strategic groups is restricted by mobility barriers such as whether it is cost-effective to try to imitate or outperform competitors within the strategic group. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 8. When the value of the dollar is low compared to the value of other currencies, products made in the United States are relatively inexpensive, and products made overseas are relatively expensive. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

4/21/2023 3:50 PM

9. Technological change can represent both an opportunity and a threat. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 10. Interest rates have an impact on the sale of automobiles, appliances, and capital equipment. This represents a macroeconomic force. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM Multiple Choice 11. Which of the following identifies the main difference between an opportunity and a threat for a company’s environment? a. Opportunities open a company up for risks to their profitability while threats allow for implementation of strategies, which can increase profitability. b. Opportunities provide a company the freedom to take advantage of conditions in the environment while threats can mean peril for a company’s integrity and profitability. c. Opportunities arise in the external environment while threats primarily play out in the internal environment of a company. d. Opportunities generally relate to the increased competition provided by new arrivals to the industry and threats are focused on the exiting of competitors in the industry.

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e. The only difference between an opportunity and a threat is whether a company decides to pursue new strategies or to stick with proven strategies as a result of the new element or condition.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 12. A group of firms manufactures writing implements such as pens, pencils, and markers. This group should be referred to as a(n): a. substitute. b. market segment. c. service provider. d. regulator. e. industry.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 13. An impact that the changing industry boundaries have had is that: a. owners of companies can now define boundaries. b. there is an increase in the number of competitors within an industry. c. technological changes do not affect companies anymore. d. the pattern of customer needs does not affect companies anymore. e. the number of product substitutes available for customers has reduced.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 14. Which of the following would not diminish the risk of entry of potential competitors for an established company within an industry? a. Government prohibition of market entry in the company’s industry. b. Consumers prefer the established company’s product. c. Potential competitors cannot match the established company’s lower cost structure. d. The established company does not benefit from cost reductions due to mass production of standardized products. e. Customers are locked into the established company’s product due to the high amount of energy, time, and money it would take to switch to a new product.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 15. Which of the following is not a result of intense rivalry within an industry? a. Raised costs b. Lowered prices c. Reduced spending on non-price-competitive strategies d. Threat to profitability e. None of these are results of intense rivalry within an industry.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM Copyright Cengage Learning. Powered by Cognero.

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16. Which of the following is a difference between the bargaining power of buyers and the bargaining power of suppliers? a. A powerful buyer lower costs, while suppliers raise costs to squeeze profits out of an industry. b. Buyers have the most bargaining power in a monopoly, while suppliers need multiple product substitutes to have bargaining power. c. Only suppliers have the ability to make demands based on their power relative to that of the company. d. Buyers bargaining power can raise costs by demanding better quality, while suppliers can raise costs by providing lower quality products. e. The potential of a supplier with strong bargaining power is considered a threat, while a buyer with strong bargaining power does not pose a threat to the industry.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 17. An industry's buyers have high bargaining power when: a. they purchase in small quantities. b. switching costs are low. c. it is economically impossible for them to purchase an input from several companies at once. d. the supply industry depends upon buyers for a very small percentage of its total orders. e. the industry is a monopoly.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 18. The level of industry demand: a. has little effect on competition in the industry. b. is one of the determinants of the intensity of rivalry in the industry. c. increases when customers exit a marketplace.

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d. does not impact the market share that established companies hold. e. decreases the rivalry among established companies, when in decline.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 19. When shopping for clothing such as shirts and jeans, Tyrone only buys products from Eastern Clothing Company even if there are several other companies that offer similar products at lower prices. Tyrone's preference for Eastern Clothing Company demonstrates: a. lack of demand. b. bargaining power. c. risk of entry. d. brand loyalty. e. lack of economies of scale.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 20. The Smith boys want to get the new Xbox console for Christmas, but their parents are hesitant to buy it because the family already owns the two latest versions of the PlayStation consoles with multiple games and extra controllers. Their decision to remain with the PlayStation is due to which of the following? a. Switching costs b. Bargaining power c. Risk of entry d. Brand loyalty e. Lack of economies of scale ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 21. Suppliers in an industry are most powerful when a. there are few substitutes for the products that they sell. b. switching costs are low. c. companies in the industry threaten to enter the suppliers' industry. d. their profitability is significantly affected by the purchases of companies in a particular industry. e. they refrain from entering their customers' industry because of lack of resources.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/26/2023 4:55 PM 22. Which of the following is NOT considered a benefit of industry analysis? a. It can be a powerful tool to aid in a manager’s strategic thinking. b. It recognizes how competitive forces are isolated and do not impact each other. c. It stimulates systematic thinking about strategic choices. d. It makes it easier to identify opportunities and threats within an industry. e. It can result in profitable changes to existing strategies.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

4/19/2023 4:47 PM 4/21/2023 3:50 PM

23. Which of the following is NOT an implication that strategic groups must address when considering threats and opportunities? a. Threats to profitability come from rivals within the strategic group. b. Customers see the products of those in a strategic group as substitutes for on another. c. Competition comes on two fronts, from those within the strategic group as well as those in other strategic groups within the industry. d. Different strategic groups have distinctive and varied relationships with each of the identified competitive forces. e. The strength of competitive forces facing strategic groups is a result of the competitive positioning approach chosen by the group.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 24. What is the main function of mobility barriers in an industry? a. They allow industries to change their strategy and compete in an alternate strategic group. b. They inhibit the movement of companies between strategic groups in an industry. c. They inhibit companies from shifting between suppliers for raw materials. d. They are factors that operate outside of an industry. e. They exclude the barriers to entry into a group and the barriers to exit from a company’s existing strategic group.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 25. Which of the following statements about growth industries is true?

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a. They typically have high barriers to entry. b. They tend to be characterized by weak rivalry. c. They are characterized by low demands. d. They increase prices because customers are more aware of the industry's product. e. They inhibit the development of distribution channels.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 26. As an industry enters the shakeout stage a. rivalry among companies declines. b. demand grows at a high rate. c. prices of products increase. d. excess productive capacity emerges. e. new entrants come into the market.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/26/2023 4:56 PM 27. As an industry enters the decline stage: a. growth becomes negative. b. rivalry among established companies usually decreases. c. competitive pressures abate. d. capacity reduces. e. demand remains the same.

ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 28. In the late 1800s, when the automobile was first manufactured, the automobile industry would have been considered which of the following industries? a. Mature b. Shakeout c. Embryonic d. Growth e. Declining ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 29. Which of the following occurs immediately after the growth stage of the industry life cycle? a. Growth slows because buyers are unfamiliar with the product. b. Demand is limited to replacements only and growth is zero. c. Saturation of demand is approached because fewer first-time buyers remain. d. Growth is dependent on new entrants to the market, such as population increases. e. Social changes, demographics, and international competition cause negative growth.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Analyze 4/19/2023 4:47 PM 4/21/2023 3:50 PM

30. Which of the following is currently an embryonic industry? a. Personal computers b. Biotechnology c. Internet retailing d. Nanotechnology e. Wireless communications ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 31. Which of the following is a benefit of innovation in an industry? a. It allows smaller companies the ability to compete with large, established companies by reducing entry barriers and lowering fixed costs of production. b. It breaks the life cycle pattern and causes growth so rapid it causes stages to be skipped altogether. c. It emphasizes the importance of industry structure. d. It secures the profitability of strategic groups within an industry. e. It increases the barriers to entry to reduce rivalry and competition.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 32. Julian was asked to examine the demographic forces facing his employer, a clothing manufacturer. Which of the following factors is Julian most likely to examine? a. Government regulations b. Inflation rates Copyright Cengage Learning. Powered by Cognero.

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c. Manufacturing technology d. Age of the population e. Society's growing interest in exercise ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 33. Many beverage manufacturers are noticing that sales for bottled water and fruit-based beverages are increasing compared to carbonated drinks because customers are increasingly becoming more health conscious. This change in customer preferences can be attributed to which of the following factors of the macroenvironment? a. Economic forces b. Demographic forces c. Technological forces d. Political forces e. Social forces ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 34. Due to a recent relaxation in the pollution control laws by the government, Alpha Motors has reduced the production of its electric-powered cars. The company is responding to a change in which of the following macroenvironmental forces? a. Macroeconomic b. Demographic c. Political and legal d. Social e. Global ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 35. People are currently living longer now than in the past because of advances in medicine. As a result, the sale of products that meet the needs of older individuals, such as devices that assist in walking and movement, have increased. In the context of an industry's macroenvironment, age is considered which type of force? a. Technological b. Demographic c. Social d. Political e. Legal ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 36. Philip Morris capitalized on the growing health consciousness trend when it acquired Miller Brewing Company, and then redefined competition in the beer industry with its introduction of low-calorie beer (Miller Lite). This health trend represents which type of force? a. Social b. Political c. Legal d. Technological e. Demographic ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 37. Why is it important for managers to correctly define the industry boundaries their company operates within? a. To ensure they are using the most advanced technology in their products b. To keep their products differentiated from their competitors c. To avoid being caught off-guard by competitors who serve the same basic customer needs but with different product offerings d. To identify new customers to sell their products to e. To increase the number of products they offer to their customers ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 1:17 PM DATE MODIFIED: 4/21/2023 3:50 PM 38. How do managers determine the boundaries of an industry? a. By identifying the customer needs served by a market b. By analyzing the different product offerings of competitors c. By defining their company's product-oriented view d. By evaluating the technological advancements in the industry e. By conducting a SWOT analysis of their company ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:19 PM DATE MODIFIED: 4/21/2023 3:50 PM 39. Which of the following is NOT an example of the soft-drink industry?

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a. Carbonated drinks b. Bottled water c. Fruit punches d. Noncarbonated soft drinks e. Hot chocolate drinks ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:20 PM DATE MODIFIED: 4/21/2023 3:50 PM 40. How can emerging new technologies change industry boundaries? a. By enabling companies in unrelated industries to satisfy established customer needs in new ways b. By reducing the competition in a particular industry c. By increasing the prices of products and services offered by companies d. By making it difficult for new entrants to enter an industry e. By decreasing the bargaining power of suppliers in a particular industry ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:21 PM DATE MODIFIED: 4/21/2023 3:50 PM 41. How did Coca-Cola respond to the rise of noncarbonated soft drinks within the soft-drinks market? a. Coca-Cola acquired several other beverage companies. b. Coca-Cola introduced its own brand of water. c. Coca-Cola defined its industry boundaries too narrowly. d. Coca-Cola reduced the prices of its carbonated soft drinks. e. Coca-Cola discontinued the production of its carbonated soft drinks.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-1 Defining an Industry Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:22 PM DATE MODIFIED: 4/21/2023 3:50 PM 42. Why is it important for managers to take a customer-oriented view of their business when defining industry boundaries? a. To increase the bargaining power of suppliers in their industry b. To reduce the competition in their industry c. To identify the basic customer needs their company is serving d. To increase the prices of their products and services e. To expand their company's product offerings ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:24 PM DATE MODIFIED: 4/21/2023 3:50 PM 43. An industry can be described as a group of companies that offer a. products or services that are close substitutes for each other. b. unrelated products or services. c. products or services that are not substitutes for each other. d. products or services in different geographic regions. e. services that serve as substitutes for products.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/21/2023 1:25 PM DATE MODIFIED: 4/21/2023 3:50 PM 44. Why is it important for managers to take a customer-oriented view of their business when defining industry Copyright Cengage Learning. Powered by Cognero.

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boundaries? a. It helps them identify potential competitors. b. It helps them anticipate changes in customer needs. c. It helps them differentiate their products from those of their competitors. d. It helps them increase customer loyalty. e. It is important to create brand awareness.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/21/2023 1:27 PM DATE MODIFIED: 4/21/2023 3:50 PM 45. What is an example of how industry boundaries can change over time? a. The rise of customer demand for bottled water and fruit drinks in the soft drink industry b. The convergence of the computer and telecommunications industries c. The emergence of new technologies that enable companies to satisfy established customer needs in new ways d. All of the above e. None of the above ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-1 Defining an Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.01 - Define industry and industry environment.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/21/2023 1:28 PM DATE MODIFIED: 4/21/2023 3:50 PM 46. Which of the following is NOT one of the factors that can affect product position in an industry? a. Quality of the products b. Distribution channels used c. Range of the products d. Technological leadership e. Advertising budget ANSWER: c POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:30 PM DATE MODIFIED: 4/21/2023 3:50 PM 47. What are the two primary strategic groups in the pharmaceutical industry? a. Proprietary and general merchandise b. Proprietary and generic-drug c. Proprietary and high-risk d. High-return and low-return e. High-risk and low-risk ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:32 PM DATE MODIFIED: 4/21/2023 3:50 PM 48. Which companies are standouts in the regional jet industry? a. Boeing and Airbus b. Teva Pharmaceutical Industries, Sun Pharmaceutical, and Mylan Inc. c. Walmart, Target, and Fred Meyer d. Bombardier and Embraer e. Merck, Eli Lilly, and Pfizer ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:34 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

4/21/2023 3:50 PM

49. In which industry can two main strategic groups be traditionally observed? a. Pharmaceutical b. Commercial aerospace c. Retail d. Technology e. Automobile ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:35 PM DATE MODIFIED: 4/21/2023 3:50 PM 50. What is the primary competitive implication of the concept of strategic groups for identifying opportunities and threats within an industry? a. Companies tend to view the products of their own strategic group as direct substitutes for each other. b. Different strategic groups can have different relationships to each of the competitive forces. c. A company’s closest competitors are those in other strategic groups in the industry. d. Each strategic group may face a different set of opportunities and threats. e. The most immediate threat to a company’s profitability comes from rivals in other strategic groups.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 1:36 PM DATE MODIFIED: 4/21/2023 3:50 PM 51. What is a strategic group, and how can understanding strategic groups be useful for industry analysis? a. A group of companies that follow similar strategies, which can help identify competitors and potential threats within an industry. b. A group of companies that follow identical strategies, which can help identify suppliers and potential opportunities within an industry.

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c. A group of companies that follow different strategies, which can help identify suppliers and potential threats within an industry. d. A group of companies that follow similar strategies, which can help identify customers and potential opportunities within an industry. e. A group of companies that follow different strategies, which can help identify customers and potential opportunities within an industry.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/21/2023 2:58 PM DATE MODIFIED: 4/21/2023 3:50 PM 52. Which stage of the industry life-cycle model is characterized by barriers to entry based on access to key technological know-how? a. Embryonic b. Growth c. Shakeout d. Mature e. Decline ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 2:59 PM DATE MODIFIED: 4/21/2023 3:50 PM 53. Which of the following is true about an embryonic industry? a. Growth at this stage is usually rapid due to scale economies b. Barriers to entry are typically based on brand loyalty c. Rivalry is often based on price competition d. Buyers are already familiar with the product e. None of the above ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:01 PM DATE MODIFIED: 4/21/2023 3:50 PM 54. Which of the following is a characteristic of a growth industry? a. Entry barriers based on access to key technological know-how b. Intense price competition among existing firms c. Rivalry tends to be relatively low d. Excess productive capacity due to slow demand growth e. None of the above ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:04 PM DATE MODIFIED: 4/21/2023 3:50 PM 55. In which stage of the industry life-cycle model does demand approach saturation levels? a. Embryonic b. Growth c. Shakeout d. Mature e. Decline ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 4/21/2023 3:05 PM 4/21/2023 3:50 PM

56. Which of the following is a limitation of the industry life-cycle model? a. It does not account for rapid growth in embryonic stages. b. It is not a generalization. c. It does not account for decline in mature stages. d. It accounts for shakeouts in industries. e. It accounts for industry competition driven by innovation.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/21/2023 3:08 PM DATE MODIFIED: 4/21/2023 3:50 PM 57. According to the punctuated equilibrium model, which of the following is true? a. Long periods of turbulence are punctuated by periods of equilibrium. b. Competitive forces and strategic group concepts can be applied during the period of rapid change. c. Innovation leads to consolidation of the industry. d. Fragmentation of the industry is less common than consolidation. e. Business models based on new positioning strategies do not add value during periods of rapid change.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/21/2023 3:11 PM DATE MODIFIED: 4/21/2023 3:50 PM 58. What can lower barriers to entry and allow new, smaller enterprises to compete with large, established organizations? a. Large, integrated companies dominating the industry b. Tacit price collusion among industry players c. Reduction of fixed costs of production due to innovation d. Fragmentation of the industry Copyright Cengage Learning. Powered by Cognero.

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e. Consolidation of the industry ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/21/2023 3:12 PM DATE MODIFIED: 4/21/2023 3:50 PM 59. Which of the following statements is true about the industry life-cycle model? a. It is always accurate in predicting the stages of an industry. b. It is not a useful way of thinking about and analyzing competition. c. It is a generalization that does not always follow a pattern in practice. d. It is applicable only to industries that have gone through several shakeouts. e. It is a model that applies only to industries that have reached full maturity.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:14 PM DATE MODIFIED: 4/21/2023 3:50 PM 60. Which of the following is an example of the impact of innovation on industry structure? a. The vacuum-tube industry went straight into decline. b. The auto industry has remained mature almost indefinitely. c. The telecommunications industry went through several shakeouts before entering full maturity. d. The steel industry was once an oligopoly, but now is fragmented and price competitive. e. The bicycle industry was revitalized after a long period of decline due to social change.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 4/21/2023 3:16 PM 4/21/2023 3:50 PM

61. What is the view of Michael Porter on the evolution of industry structure? a. Long periods of equilibrium are punctuated by rapid change and then the industry structure becomes more consolidated. b. Long periods of turbulence triggered by innovation lead to a new state of equilibrium and a fragmented industry structure. c. Innovation does not have any impact on the competitive structure of an industry. d. The industry life-cycle model is the most accurate way of thinking about and analyzing competition. e. Competitive forces and strategic group concepts can be applied during a period of rapid change.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:19 PM DATE MODIFIED: 4/21/2023 3:50 PM 62. Which of the following is a consequence of innovation in recent decades? a. Increasing the fixed costs of production and reducing barriers to entry. b. Fragmenting an industry and making it more price competitive. c. Making the structure of an industry stable and oligopolistic. d. Dominating an industry through tacit price collusion. e. Allowing only large, established organizations to compete.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:21 PM DATE MODIFIED: 4/21/2023 3:50 PM 63. During a period of rapid change when industry structure is being revolutionized by innovation, where does the value typically migrate? a. Business models based on new positioning strategies. b. The full-service broker model in the stockbrokerage industry.

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c. The online trading model in the stockbrokerage industry. d. Industries that have remained mature almost indefinitely. e. Industries that have gone through several shakeouts.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/21/2023 3:22 PM DATE MODIFIED: 4/21/2023 3:50 PM 64. Which of the following statements about the limitations of the industry life-cycle model is true? a. The model is a generalization and may not apply to all industries. b. Industries always go through the same stages in the same order. c. The model can accurately predict the time span of each stage for every industry. d. The model can be used to identify every opportunity and threat in an industry. e. The model only works for industries that are viewed as necessities.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 3:23 PM DATE MODIFIED: 4/21/2023 3:50 PM 65. How has innovation transformed the steel industry? a. It has led to the consolidation of the industry. b. It has increased the fixed costs of production, making it harder for smaller enterprises to enter the market. c. It has resulted in tacit price collusion between large, established producers. d. It has allowed smaller, efficient mini-mills to enter the market and revolutionize the structure of the industry. e. It has resulted in the steel industry becoming an oligopoly, with a small number of large producers.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 3:25 PM DATE MODIFIED: 4/21/2023 3:50 PM 66. Which of the following is not one of the primary macroeconomic forces that can shape the nature of competition in an industry? a. Growth rate of the economy b. Interest rates c. Currency exchange rates d. Inflation rates e. Corporate tax rates ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/21/2023 3:27 PM DATE MODIFIED: 4/21/2023 3:50 PM 67. Which of the following macroeconomic forces can directly impact a company's cost of capital? a. Economic growth rate b. Interest rates c. Currency exchange rates d. Inflation rates e. Deflation rates ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/21/2023 3:28 PM DATE MODIFIED: 4/21/2023 3:50 PM 68. Imagine you are the CEO of a multinational company that operates in several countries. You are considering Copyright Cengage Learning. Powered by Cognero.

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expanding your operations into a new country where the economy is currently experiencing high inflation. How might this decision impact your company's ability to earn an adequate rate of return? a. High inflation is likely to lead to price wars in mature industries, so it will be more difficult to earn a profit. b. Inflation reduces the value of debt, making it easier for companies with high levels of debt to make regular payments. c. Inflation makes the future less predictable, which may make companies less willing to invest and ultimately depress economic activity. d. High inflation creates opportunities for increased sales overseas, which will help your company earn a higher rate of return. e. Inflation has no direct impact on a company's ability to earn an adequate rate of return.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/21/2023 3:29 PM DATE MODIFIED: 4/21/2023 3:50 PM Essay 69. Briefly describe the five stages of the industry life cycle.

ANSWER: An embryonic industry is one that is just beginning to develop. Growth at this stage is slow because of factors such as buyers’ unfamiliarity with the industry’s product, high prices due to the inability of companies to leverage significant scale economies, and poorly developed distribution channels. Barriers to entry tend to be based on access to key technological knowhow rather than cost economies or brand loyalty. If the core knowhow required to compete in the industry is complex and difficult to grasp, barriers to entry can be quite high, and established companies will be protected from potential competitors. Rivalry in embryonic industries is based not so much on price as on educating customers, opening up distribution channels, and perfecting the design of the product. Such rivalry can be intense, and the company that is the first to solve design problems often has the opportunity to develop a significant market position.

Once demand for an industry’s product begins to increase, it develops the characteristics of a growth industry. In a growth industry, first-time demand is expanding rapidly as many new customers enter the market. Typically, an industry grows when customers become familiar with the product, prices fall because scale economies have been attained, and distribution channels develop. Normally, the importance of control over technological knowledge as a barrier to entry has diminished by the time an industry enters its growth stage. Because few companies have yet to achieve significant scale economies or build brand loyalty, other entry barriers tend to be relatively low early in the growth stage. Thus, the threat from potential competitors is typically highest at this point. Paradoxically, high growth means that new entrants can be absorbed into an industry without a marked increase in the intensity of rivalry. Thus, rivalry tends to be relatively low.

Sooner or later, the rate of growth slows, and the industry enters the shakeout stage. In the Copyright Cengage Learning. Powered by Cognero.

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shakeout stage, demand approaches saturation levels: more and more of the demand is limited to replacement because fewer potential first-time buyers remain. As an industry enters the shakeout stage, rivalry between companies can build. Typically, companies that have become accustomed to rapid growth continue to add capacity at rates consistent with past growth. However, demand is no longer growing at historic rates, and the consequence is excess productive capacity.

The shakeout stage ends when the industry enters its mature stage. The market is fully saturated, demand is limited to replacement demand, and growth is low or zero. Typically, the growth that remains comes from population expansion, bringing new customers into the market, or increasing replacement demand. As an industry enters maturity, barriers to entry increase, and the threat of entry from potential competitors decreases. As growth slows during the shakeout, companies can no longer maintain historic growth rates merely by holding on to their market share. Competition for market share develops, driving down prices and often producing a price war. To survive the shakeout, companies begin to focus on minimizing costs and building brand loyalty. By the time an industry matures, the surviving companies are those that have secured brand loyalty and efficient, low-cost operations.

Because both of those factors constitute a significant barrier to entry, the threat of entry by potential competitors is often greatly diminished.

Eventually, most industries enter a stage of decline: growth becomes negative for a variety of reasons, including technological substitution, social changes, demographics, and international competition. Within a declining industry, the degree of rivalry among established companies usually increases. Depending on the speed of the decline and the height of exit barriers, competitive pressures can become as fierce as in the shakeout stage. The largest problem in a declining industry is that falling demand leads to the emergence of excess capacity.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 2-4 Industry Life-Cycle Analysis QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.02.04 - Discuss how industries evolve over time, with reference to the industry life-cycle model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 70. Describe the major limitations of the models for industry analysis. Does the existence of these limitations mean that the models are not useful? Why or why not?

ANSWER: The competitive forces, strategic groups, and industry life-cycle models all have limitations.

The competitive forces and strategic group models present a static picture of competition that deemphasizes the role of innovation. Yet innovation can revolutionize industry structure and completely shift the strength of different competitive forces. The competitive forces and strategic group models have been criticized for de-emphasizing the importance of individual company differences. A company will not be profitable just because it is part of an attractive industry or strategic group; much more is required. The industry life-cycle model is a generalization that is not always followed; particularly when innovation revolutionizes an industry.

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REFERENCES: 2-5 Limitations of Models for Industry Analysis QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.02.05 - Discuss limitations of models for industry analysis.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 71. Consider the macroenvironment facing a large, international airline headquartered in the United States (such as American Airlines or United Airlines). Give at least three examples of important trends or events from each of the segments of the airline's macroenvironment (macroeconomic, global, technological, demographic, social, political, and legal), and explain whether each represents a threat or an opportunity for the firm.

ANSWER: The airline industry benefits from low interest rates, part of the macroeconomic environment, because it enables airlines to borrow the funds for purchasing new planes at a lower cost.

Americans are taking shorter but more frequent vacations. This social trend presents an opportunity for airlines to sell more tickets.

Technological advances have allowed railroads to use fast, fuel-efficient bullet trains, which can economically substitute for planes on short, heavily-traveled commuter routes, such as along the Boston–New York–Washington, D.C. corridor. This development threatens airlines because it reduces the number of tickets they can sell and the prices they can charge in those markets.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 2-6 The Macroenvironment QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.02.06 - Summarize the ways in which the macroenvironment can shape the nature of competition in an industry.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 72. Identify the six forces that shape competition in an industry. Describe how changes in the strength of these forces affect prices, profitability, and under which circumstances each can be considered a threat or opportunity. Why is a competitive analysis using the competitive forces framework a benefit to industry?

ANSWER: The six forces that shape competition within an industry are identified as: (1) the risk of entry by potential competitors, (2) the intensity of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, (5) the closeness of substitutes to an industry’s products, and (6) the power of complement providers.

As each of these forces grows stronger, it limits the ability of established companies to raise prices and earn greater profits. Within this framework, a strong competitive force can be regarded as a threat because it depresses profits. A weak competitive force can be viewed as Copyright Cengage Learning. Powered by Cognero.

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an opportunity because it allows a company to earn greater profits. The strength of the six forces may change over time as industry conditions change. Managers face the task of recognizing how changes in the six forces give rise to new opportunities and threats, which helps in formulating appropriate strategic responses. In addition, it is possible for a company, through its choice of strategy, to alter the strength of one or more of the forces to its advantage.

The analysis of competition in the industry environment using the competitive forces framework is a powerful tool that helps managers think strategically. It is important to recognize that one competitive force often affects others, and all forces need to be considered when performing industry analysis. For example, new entries due to low entry barriers increase competition in the industry and drive down prices and profit rates, other things being equal. If buyers are powerful, they may take advantage of the increased choice resulting from new entry to further bargain down prices, increasing the intensity of competition and making it more difficult to make a decent profit in the industry. It is important to understand how one force might impact upon another. An analysis of industry opportunities and threats can lead directly to a change in strategy by companies within the industry. This, of course, is the crucial point—analyzing the industry environment in order to identify opportunities and threats leads logically to a discussion of what strategies should be adopted to exploit opportunities and counter threats.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 2-2 Porter’s Competitive Forces Model QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.02.02 - Review the primary technique used to analyze competition in an industry environment: the Five Forces model.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM 73. Define a strategic group. What are some examples of how strategic groups differ in the way they bring their products to market? What are the implications for identifying threats and opportunities?

ANSWER: Within most industries it is possible to observe groups of companies in which each company follows a strategy similar to that pursued by other companies in the group but different from the strategy pursued by companies in other groups. These different groups of companies are known as strategic groups.

Companies in an industry often differ significantly from one another with regard to the way they strategically position their products in the market. Factors such as the distribution channels they use, the market segments they serve, the quality of products, technological leadership, customer service, pricing policy, advertising policy, and promotions, all affect product position.

The concept of strategic groups has a number of implications for the identification of opportunities and threats within an industry. First, because all companies in a strategic group are pursuing a similar strategy, customers tend to view the products of such enterprises as direct substitutes for each other. Thus, a company’s closest competitors are those in its strategic group, not those in other strategic groups in the industry. The most immediate threat to a company’s profitability comes from rivals within its own strategic group. A second Copyright Cengage Learning. Powered by Cognero.

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competitive implication is that different strategic groups can have different relationships to each of the competitive forces; thus, each strategic group may face a different set of opportunities and threats. Each of the following can be a relatively strong or weak competitive force depending on the competitive positioning approach adopted by each strategic group in the industry: the risk of new entry by potential competitors; the degree of rivalry among companies within a group; the bargaining power of buyers; the bargaining power of suppliers; and the competitive force of substitute and complementary products.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 2-3 Strategic Groups within Industries QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.02.03 - Explore the concept of strategic groups, including the implications for industry analysis.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/21/2023 3:50 PM

Chapter 03 - Internal Analysis: Resources and Competitive Advantage True / False 1. The Big Mac, the McFlurry, and the McDonald’s logo are all examples of the organizational architecture of the McDonald’s company. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:39 AM 2. Nene works in a factory where she picks crab meat from crabs. She is paid per day based upon the number of pounds of crab meat that she picks. Nene’s daily number of pounds of crab meat can be referred to as her productivity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 3. At Adam's bicycle repair shop, the primary value-chain activity of production occurs each time a customer's bicycle is repaired. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 4. Creating a signature scent, choosing an original name, and configuring the shape and look of the bottle are all decisions made in the production phase of the value chain for a perfume company. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM Multiple Choice 5. Based on the VRIO framework, a resource can be considered a source of competitive advantage if it a. is shared by most companies in an industry.

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b. is rare, valuable, difficult to imitate, and organized or managed by the company. c. is the foundation of a company’s strategic plan. d. is kept as a trade secret rather than as a patent. e. increases the cost of producing the product and, therefore, the price charged to customers.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:41 AM 6. Which of the following is true about rareness and advanced factors of production? a. Process knowledge, organizational architecture, and intellectual property are more difficult to imitate, which results in a better chance in achieving long-term, sustainable competitive advantage. b. Intellectual property is the only advanced factor of production that is unique enough to capture long-term, sustainable competitive advantage. c. Since most process knowledge and organizational architecture is purchased from outside providers, it can be copied by other firms and does not lead to the rarity necessary to result in long-term, sustainable competitive advantage. d. Advanced factors of production are not able to capture the uniqueness that basic factors of production can achieve and, therefore, do not factor into the pursuit of long-term, sustainable competitive advantage. e. Advanced factors of production are less likely to be rare and are in general easier for rivals to imitate, resulting in the inability for firms to achieve long-term, sustainable competitive advantage.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 7. When conducting an internal analysis, a manager must do all of the following EXCEPT: a. look at the way in which forces in the macroenvironment affect industry structure and influence opportunities and threats. b. understand the role of rare, valuable, and hard-to-imitate resources in the establishment of competitive advantage. c. appreciate how rare, valuable, and hard-to-imitate resources lead to superior efficiency, innovation, quality, and customer responsiveness.

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d. analyze the sources of their company’s competitive advantage to identify what drives the profitability of their enterprise. e. analyze the sources of their company’s competitive advantage to identify where opportunities for improvement might be.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 8. Which of the following is true regarding resources? a. Resources are considered organized if they are easy to imitate by rivals. b. They include labor, land, management, physical, plant, and equipment. c. Resources are often homogeneous among companies. d. They do not include patents, copyrights, and trademarks. e. A resource is considered valuable only if it increases a company's costs.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 9. Donna can make a chair for $100; she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is: a. $50. b. $75. c. $125. d. $150. e. $225.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 10. Anna bakes cookies for $10 per batch, she charges customers $15 for a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is: a. $5. b. $7.50. c. $10. d. $15. e. $25.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:43 AM 11. In the past, Kodak possessed the leading imaging technology. This technology allowed them to differentiate their products from those offered by rivals. Imaging technology was Kodak’s a. distinctive competence. b. resource. c. support activity. d. tacit. e. organizational architecture.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:44 AM 12. Which of the following is a reason for the higher barrier to imitation for a company that possesses rare and valuable Copyright Cengage Learning. Powered by Cognero.

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process knowledge? a. Process knowledge is often hidden from view within the firm and socially complex. b. In most companies, employees have a complete understanding and direct access to the process knowledge of the firm. c. Individuals hired by rival firms are able to provide a complete picture of a company’s process knowledge due to their overall knowledge base. d. By making small changes to the way a firm operates, implementation of a rival firm’s process knowledge is relatively easy to achieve. e. Rival organization’s employees who possess the power and influence to implement change are often driven to appropriate another firm’s process knowledge.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 13. Customer response time is the time it takes for a. value to be placed on a company's products by customers. b. development of a new process for producing products and delivering them to customers. c. given inputs to be converted into an output. d. development of products that have superior attributes to existing products. e. a good to be delivered or a service to be performed.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 14. The concept of efficiency as a building block of competitive advantage applies to: a. all products produced by a firm. b. only those products that consumers believe to be high quality. c. only those products of a firm popular among a large customer base. d. custom-made products only.

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e. only those products that have been redesigned.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 15. Which of the following is an important attribute for a product from a quality-as-reliability perspective? a. Styling b. Aesthetic appeal c. Wait time at the point of sale d. Features e. Performance ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 16. Comparing the history of a firm’s performance as well as its performance against competitors can benefit a firm in which of the following ways? a. It can help determine whether the company’s performance has improved or deteriorated over time. b. It can measure whether strategies are maximizing the value that is being created. c. It can ascertain if the firm’s cost structure is in line with competitors. d. It can establish if company resources are being used effectively. e. All of these are benefits of comparing the history of a firm’s performance as well as its performance against competitors.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 17. Intel’s invention of the microprocessor in the early 1970s, Cisco’s development of the router for routing data over the Internet in the mid-1980s, and Apple’s development of the iPod, iPhone, and iPad in the 2000s can be referred to as which type of innovation? a. Process b. Product c. Customer d. Resource e. Value-chain ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 18. Innovation refers to the act of a. seeking patent protection for new products. b. developing new products and processes. c. measuring time taken for a service to be provided. d. measuring the output produced by an employee. e. identifying and satisfying the needs of a customer.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

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19. Which of the following best describes product innovation? a. Transforming a quantity of inputs into a given output b. Identifying and satisfying a customer's needs c. Creating products that have superior attributes than existing products d. Developing a new process that focuses on quantity rather than quality e. Measuring the quantity of outputs produced per employee ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 20. Which of the following correctly describes the difference between product and process innovation? a. An example of product innovation is just-in-time inventory systems while an example of process innovation is Cisco’s development of the router. b. Product innovation generates value by creating new products while process innovation often allows a company to create more value by lowering production costs. c. Product innovation lowers production costs while process innovation provides enhanced versions of existing products that customers perceive as having more value. d. Product innovation is more important than process innovation in achieving competitive advantage. e. Product innovation decreases a company’s pricing options while process innovation increases production costs.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 21. Using the value-chain model, which of the following primary activities is performed last, as inputs are transformed into outputs? a. Research and development Copyright Cengage Learning. Powered by Cognero.

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b. Marketing and sales c. Logistics d. Production e. Customer service ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 22. Using the value chain model, which of the following primary activities is performed after the production phase as inputs are transformed into outputs? a. Research and development b. Marketing and sales c. Customer service d. Production e. Human resources ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 23. Ford Motor Company developed the Explorer sports utility vehicle (SUV) in 1990, and it is still one of the best-selling SUVs in the United States, based on an extensive study of customer preferences. Which value-chain activity of Ford conducted those studies? a. Research and development b. Human resources c. Materials management d. Marketing and sales e. Company infrastructure ANSWER: d POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 24. Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. In which value-chain activity does Mike work? a. Research and development b. Human resources c. Materials management d. Production e. Company infrastructure ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 25. Mikayla, a cost accountant, is responsible for gathering and monitoring data used for controlling the organization's costs. In which value-chain activity does Mikayla work? a. Research and development b. Human resources c. Materials management d. Marketing and sales e. Company infrastructure ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM Copyright Cengage Learning. Powered by Cognero.

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26. Which of the following support activities in the value chain controls the transmission of physical materials through the value chain, from procurement through production and into distribution? a. Human resources b. Information systems c. Research and development d. Logistics e. Operations ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 27. Which of the following are primarily the digital systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries? a. Information systems b. Logistics c. Corporate infrastructure d. Marketing and sales e. Materials management ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 28. Research and development activities are concerned with a. enhancing the design of products to create the impression of superior value. b. establishing greater efficiency in the production processes to lower costs. c. increasing the functionality of products. d. making products more attractive to increase value. e. All of these are research and development activities.

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ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:47 AM 29. The term value chain refers to the idea that a company is: a. one of a series of units that comprise an industry segment. b. the producer of a series of customer-valued products that are linked together. c. a chain of functional activities that transform inputs into outputs. d. one of a series of economic functions. e. a collection of various products and their attributes.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 30. Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario? a. Marketing and sales b. Distribution c. Research and development d. Production e. Customer service ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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31. Which of the following measures how effectively the company uses its capital to generate revenues and is calculated by taking revenues and dividing it by invested capital? a. Return on invested capital b. Return on sales c. Capital turnover d. Cost of goods sold e. Sales, general, and administrative expenses ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 32. Although several different measures of profitability exist, many authorities in the measurement of profitability argue that which of the following is the best measurement because ―it focuses on the true operating performance of the company‖? a. Return on invested capital b. Net profit margin c. Return on equity d. Capital turnover e. Return on sales ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 33. Ted is an accountant at ABC Company. He calculates the difference between total revenues and total costs before tax.

This is defined as the a. net profit.

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b. capital turnover. c. cost of goods sold. d. return on sales. e. invested capital.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 34. Dale's methods of fitting horseshoes save time and money for his employer at the local ranch. However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No. That's not the way we've always done it around here."

Cedric's resistance to change illustrates: a. organizational inertia. b. barriers to imitation. c. barriers to mobility. d. lack of distinctive competencies. e. causal ambiguity.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 35. Benchmarking can be defined as the practice of: a. monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service. b. developing products that are new to the world or have superior attributes to existing products in the market. c. measuring the time that it takes for a good to be delivered or a service to be performed. d. measuring how well a company is doing by comparing it to another company, or to itself, over time. e. analyzing the financial position of a company and creating the income statements and the balance sheets.

ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Easy REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 36. When Rollie's Car Wash began to lose business to rivals, Rollie read publications for car-wash owners to learn the best practices in the industry. Then he implemented the best practices. Rollie is using which of the following to improve his car wash? a. Specialized assets b. Benchmarking c. The VRIO framework d. Organizational inertia e. Intellectual property ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-4 The Value Chain QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.04 - Explain the concept of the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 37. Which company has a distinctive competence in design, making its devices highly desirable to customers? a. Samsung b. Toyota c. Apple d. Coca-Cola e. IKEA ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

4/23/2023 7:23 AM 4/23/2023 11:06 AM

38. What are distinctive competencies? a. General market trends b. Firm-specific weaknesses c. Industry-wide strengths d. Firm-specific strengths that allow differentiation and/or cost reduction e. External threats to a company ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/23/2023 7:24 AM DATE MODIFIED: 4/23/2023 11:06 AM 39. Which of the following is NOT considered an advanced factor of production? a. Process knowledge b. Organizational architecture c. Labor d. Intellectual property e. Company culture ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 7:27 AM DATE MODIFIED: 4/23/2023 11:06 AM 40. What does the term "resources" refer to in the context of a company's competitive advantage? a. Funds available for investment b. Factors of production used to transform inputs into outputs c. The number of employees in a company d. The physical location of a company e. The company's public image Copyright Cengage Learning. Powered by Cognero.

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ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/23/2023 7:28 AM DATE MODIFIED: 4/23/2023 11:06 AM 41. Based on the text, which of the following resources would be considered part of Coca-Cola's competitive advantage? a. The brand's unique color scheme b. The company's proprietary beverage recipes c. The use of high-quality water in their beverages d. The company's headquarters location e. The number of vending machines selling their products ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 7:30 AM DATE MODIFIED: 4/23/2023 11:06 AM 42. What aspect of Toyota's distinctive competencies has led to its competitive advantage in the global automobile industry? a. Superior advertising and marketing strategies b. Strong brand reputation and logo design c. Development and operation of manufacturing processes d. Access to exclusive raw materials e. Monopolization of key automobile markets ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 4/23/2023 7:31 AM 4/23/2023 11:06 AM

43. What is the primary objective of a company's strategy? a. To achieve short-term profits b. To maintain average profitability c. To achieve a sustained competitive advantage d. To focus solely on cost reduction e. To diversify the company's product offerings ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-1 Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.01 - Discuss the source of competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/23/2023 7:36 AM DATE MODIFIED: 4/23/2023 11:06 AM 44. Which of the following acronyms best represents the framework managers use to determine the quality of a company’s resources? a. VROI b. IVOR c. VORI d. RIVO e. VRIO ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/23/2023 7:37 AM DATE MODIFIED: 4/23/2023 11:06 AM 45. What does the "V" in the VRIO framework stand for? a. Variety b. Volume c. Value d. Vision Copyright Cengage Learning. Powered by Cognero.

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e. Velocity ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/23/2023 7:38 AM DATE MODIFIED: 4/23/2023 11:06 AM 46. In the context of the VRIO framework, what type of resources is considered valuable? a. Those that are easy to imitate b. Those that are universally accessible c. Those that enable a company to exploit opportunities and counter threats d. Those that are not protected by intellectual property laws e. Those that are not rare ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 7:39 AM DATE MODIFIED: 4/23/2023 11:06 AM 47. Which of the following is NOT a characteristic of resources that are inimitable? a. Hard to copy b. Easy to copy c. Partly tacit d. Hidden from view within the firm e. Socially complex ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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Bloom's: Apply 4/23/2023 7:40 AM 4/23/2023 11:06 AM

48. Which of the following is a potential consequence of a company outsourcing its valuable process knowledge in core functional activities? a. The company will accumulate new knowledge faster. b. The company will be able to focus on more critical tasks. c. The company's short-term costs will be reduced. d. The company will lose its long-term competitive advantage. e. The company's intellectual property will be protected.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:05 AM DATE MODIFIED: 4/23/2023 11:06 AM 49. What makes resources rare and valuable according to the VRIO framework? a. Their availability on the open market b. Their homogeneous nature c. Their path-dependent consequences from the company's history d. Their ease of imitation e. Their common availability among rivals ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:06 AM DATE MODIFIED: 4/23/2023 11:06 AM 50. Which factor can make imitation of a company's rare and valuable process knowledge difficult? a. Organizational inertia b. Publicly available information c. Direct competition d. Absence of legal sanctions Copyright Cengage Learning. Powered by Cognero.

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e. Commodity-like resources ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:08 AM DATE MODIFIED: 4/23/2023 11:06 AM 51. What is the primary reason why companies may choose to treat valuable technology as a trade secret instead of patenting it? a. Patents are too expensive. b. Trade secrets are easier to protect. c. Patenting would reveal valuable information about the technology. d. Trade secrets have a longer legal protection period. e. Patents are easily bypassed by rivals.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-2 Resource Quality: The VRIO Framework QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:10 AM DATE MODIFIED: 4/23/2023 11:06 AM 52. Which of the following factors is NOT one of the three factors affecting a company's profitability? a. The value customers place on the company's products b. The company's market share c. The price that a company charges for its products d. The costs of creating those products e. The consumer surplus ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Remember 4/23/2023 10:11 AM 4/23/2023 11:06 AM

53. What is the difference between value and price in the context of a product? a. Value is the price a customer pays for a product. b. Value is the perceived worth of a product's attributes, while price is the amount a customer pays for the product. c. Price is the perceived worth of a product's attributes, while value is the amount a customer pays for the product. d. Value and price are interchangeable terms. e. Value is the price a company pays to produce a product.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/23/2023 10:12 AM DATE MODIFIED: 4/23/2023 11:06 AM 54. If a company increases the value of its products, which of the following pricing options could it consider? a. Raise prices to reflect the higher value. b. Lower prices to induce more customers to purchase its products. c. Both raise and lower prices depending on the company's strategy. d. Maintain the same price, since the value has increased. e. Increase production costs to justify the higher value.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:14 AM DATE MODIFIED: 4/23/2023 11:06 AM 55. Which of the following is an example of a company utilizing its valuable, rare, inimitable resources and capabilities to deliver a product offering that consumers value more highly than that of rivals? a. A company that sells a generic product at a low price Copyright Cengage Learning. Powered by Cognero.

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b. A company that produces a high-quality product with high production costs c. Apple's iPhone, with its elegant design, easy-to-use interface, and unique features d. A company that competes solely on price, without differentiating its product e. A company that focuses on increasing market share without considering product value ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:15 AM DATE MODIFIED: 4/23/2023 11:06 AM 56. Which of the following measures the value that a consumer captures? a. V - P b. P - C c. V - C d. P + C e. V + P ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/23/2023 10:17 AM DATE MODIFIED: 4/23/2023 11:06 AM 57. What is the effect of lowering production costs (C) on the value created by a company? a. The value created decreases. b. The value created increases. c. The value created remains the same. d. The value created becomes negative. e. The effect on the value created is unknown.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/23/2023 10:18 AM DATE MODIFIED: 4/23/2023 11:06 AM 58. Suppose a company can significantly reduce the costs of creating its products without affecting the value customers place on them. Which of the following outcomes is most likely? a. The company's profitability will decrease. b. The company's profitability will increase. c. The company's market share will decrease. d. The company's pricing options will be reduced. e. The company's consumer surplus will decrease.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:20 AM DATE MODIFIED: 4/23/2023 11:06 AM 59. Which of the following is an example of product innovation? a. Toyota's lean production system b. Just-in-time inventory systems c. Intel's invention of the microprocessor in the early 1970s d. Reduced setup times for complex equipment e. Self-managing teams ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:28 AM DATE MODIFIED: 4/23/2023 11:06 AM 60. How can superior quality contribute to a competitive advantage?

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a. By increasing employee productivity b. By allowing the company to charge higher prices c. By reducing costs d. Both a) and b) e. Both b) and c) ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:29 AM DATE MODIFIED: 4/23/2023 11:06 AM 61. A company that improves its customer response time is likely to achieve a. superior efficiency. b. increased capital productivity. c. superior customer responsiveness. d. enhanced product innovation. e. lower production costs.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:31 AM DATE MODIFIED: 5/2/2023 8:48 AM 62. What is a key factor in achieving superior responsiveness to customers? a. Focusing on capital productivity b. Customizing goods and services to unique customer demands c. Emphasizing product attributes related to quality as excellence d. Reducing the number of product attributes e. Prioritizing process innovation over product innovation ANSWER: b POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:32 AM DATE MODIFIED: 4/23/2023 11:06 AM 63. Which of the following is considered the key measure of a company's financial performance? a. Gross margin b. Capital turnover c. Return on invested capital (ROIC) d. Net profit e. Return on assets ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/23/2023 10:33 AM DATE MODIFIED: 4/23/2023 11:06 AM 64. Which two major components can ROIC be divided into? a. Gross margin and capital turnover b. Return on sales and capital turnover c. Net profit and return on assets d. Invested capital and net profit e. Capital turnover and net profit ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

4/23/2023 10:35 AM 4/23/2023 11:06 AM

65. How can a company's managers increase the return on sales "ROS"? a. By decreasing invested capital b. By reducing the cost of goods sold (COGS) for a given level of sales revenues c. By increasing capital turnover d. By increasing the level of spending on sales force, marketing, general, and administrative expenses (SG&A) for a given level of sales revenues e. By increasing the amount of working capital ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:37 AM DATE MODIFIED: 4/23/2023 11:06 AM 66. How can a company's managers boost profitability by increasing capital turnover? a. By increasing the amount of working capital invested in inventories b. By increasing the amount of fixed capital invested in property, plant, and equipment (PPE) c. By reducing the amount of working capital invested in inventories d. By increasing the cost of goods sold (COGS) for a given level of sales revenues e. By increasing the level of spending on sales force, marketing, general, and administrative expenses (SG&A) for a given level of sales revenues ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:38 AM DATE MODIFIED: 4/23/2023 11:06 AM 67. According to the text, which company had a higher return on sales "ROS" in the financial year ending January 2020? a. Gap Inc. b. lululemon Copyright Cengage Learning. Powered by Cognero.

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c. Both had the same return on sales d. Neither company had a return on sales. e. Not enough information provided.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:40 AM DATE MODIFIED: 4/23/2023 11:06 AM 68. According to the text, what is one reason that lululemon has a higher gross margin than Gap Inc.? a. Lululemon has a lower capital turnover. b. Lululemon has a lower return on invested capital (ROIC). c. Lululemon has a more powerful brand, allowing for higher price markups. d. Lululemon spends more on general marketing to consumers than Gap Inc. e. Lululemon has a higher PPE/sales ratio.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:41 AM DATE MODIFIED: 4/23/2023 11:06 AM 69. Referring to the text, why does lululemon have a lower PPE/sales ratio compared to Gap Inc.? a. Lululemon has a higher gross margin. b. Lululemon's stores are more productive at generating sales. c. Lululemon has a higher return on sales (ROS). d. Lululemon has a higher capital turnover. e. Lululemon has a lower COGS/sales ratio.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/23/2023 10:43 AM DATE MODIFIED: 4/23/2023 11:06 AM Essay 70. Give one example of a firm that has achieved a distinctive competency in efficiency, quality, innovation, and responsiveness to customers and describe that competency.

ANSWER:  Efficiency. Walmart can buy its products in high volume and negotiate low prices from its suppliers, which it can then pass on to customers through low pricing.  Quality. Ben and Jerry's Ice Cream can develop trendy flavors that customers desire, giving that firm an advantage in quality.  Innovation. 3M works with customers to develop new products for specific customer needs, which is a distinctive competency in innovation.  Customer responsiveness. Dell Technologies uses its website to offer convenient and cheap after-sales support to customers, satisfying demands for customer responsiveness.

POINTS: 1 DIFFICULTY: Easy REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 5/2/2023 8:49 AM 71. Evaluate and comment on this statement: "No competitive advantage lasts forever."

ANSWER: Students will acknowledge that this statement is true. In the United States, there are companies with decades of successful operation, including General Motors, IBM, and others.

In parts of Europe, in Japan, and in several other countries, there are successful firms that have been competitive over centuries. For example, the English ceramics firm Spode, which manufactures fine china, has been in business since before the American Revolution, and it is still highly competitive in its industry. However, even the most successful firms are vulnerable to mistakes and inappropriate strategies over time. IBM, for example, was struggling in the early 1980s, and some observers were predicting its demise (incorrectly, as it turned out). The reason for the transience of all competitive advantages is that all the advantages are built on the actions of a group of individuals, and individuals are fallible.

POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 72. Identify and describe the four building blocks of competitive advantage. Provide an example of each using a real company situation.

ANSWER: The four building blocks of competitive advantage are superior efficiency, quality, innovation, and customer responsiveness. These building blocks allow a company to differentiate its product offering to provide more utility to customers and/or lower its cost structure.

The simplest measure of efficiency is the quantity of inputs required to produce a given output; that is, efficiency = outputs/inputs. The more efficient a company is, the fewer inputs it requires to produce a particular output, and the lower its’ costs are. One common measure of efficiency is employee productivity. Employee productivity refers to the output produced per employee. Employee productivity helps a company attain a competitive advantage through a lower cost structure. Another important measure of efficiency is capital productivity. Capital productivity refers to the output produced by a dollar of capital invested in the business. Firms that use their capital very efficiently and don’t waste it on unproductive assets or activities will have higher capital productivity.

A product is said to have superior quality when customers perceive that its attributes provide them with higher utility than the attributes of products sold by rivals. When customers evaluate the quality of a product, they commonly measure it against two kinds of attributes: quality as excellence and those related to quality as reliability. From a quality-as-excellence perspective, the important attributes are a product’s design and styling, its aesthetic appeal, its features and functions, the level of service associated with delivery of the product, and so on. When considering quality as reliability, a product can be said to be reliable when it consistently performs the function it was designed for, performs it well, and rarely, if ever, breaks down. The impact of high product quality on competitive advantage is twofold. First, providing high-quality products increases the value those products provide to customers, which gives the company the option of charging a higher price for the products. Second, greater efficiency and lower unit costs associated with reliable products of high quality impact competitive advantage. When products are reliable, less employee time is wasted in making defective products, or providing substandard services, and less time has to be spent fixing mistakes—which means higher employee productivity and lower unit costs. Thus, high product quality not only enables a company to differentiate its product from that of rivals, but, if the product is reliable, it also lowers costs.

There are two main types of innovation: product innovation and process innovation. Product innovation is the development of products that are new to the world or have superior attributes to existing products. Process innovation is the development of a new process for producing and delivering products to customers. Product innovation generates value by creating new products, or enhanced versions of existing products, that customers perceive as having more value, thus increasing the company’s pricing options. Process innovation often allows a company to create more value by lowering production costs. In the long run, Copyright Cengage Learning. Powered by Cognero.

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innovation of products and processes is perhaps the most important building block of competitive advantage.

To achieve superior responsiveness to customers, a company must be able to do a better job than competitors of identifying and satisfying its customers’ needs. Customers will then attribute more value to its products, creating a competitive advantage based on differentiation. Improving the quality of a company’s product offering is consistent with achieving responsiveness, as is developing new products with features that existing products lack. In other words, achieving superior quality and innovation is integral to achieving superior responsiveness to customers. Another factor that stands out in any discussion of responsiveness to customers is the need to customize goods and services to the unique demands of individuals or groups. An aspect of responsiveness to customers that has drawn increasing attention is customer response time; the time that it takes for a good to be delivered or a service to be performed. Other sources of enhanced responsiveness to customers are superior design, superior service, and superior after-sales service and support.

All of these factors enhance responsiveness to customers and allow a company to differentiate itself from its less responsive competitors. In turn, differentiation enables a company to build brand loyalty and charge a premium price for its products.

Student examples will vary.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-5 The Building Blocks of Competitive Advantage QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.05 - Identify and explore the role of efficiency, quality, innovation, and customer responsiveness in building and maintaining a competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 73. Describe the two main ways managers can increase return on invested capital (ROIC). Give examples of strategies that can be used to achieve each of these goals.

ANSWER: A company’s managers can increase ROIC by pursuing strategies that increase the company’s return on sales and by boosting the profitability of their company by obtaining greater sales revenues from their invested capital, thereby increasing capital turnover.

To increase the company’s return on sales, they can pursue strategies that reduce the cost of goods sold (COGS) for a given level of sales revenues (COGS/sales); reduce the level of spending on sales force, marketing, general, and administrative expenses (SG&A) for a given level of sales revenues (SG&A/sales); and reduce R&D spending for a given level of sales revenues (R&D/sales). Alternatively, they can increase return on sales by pursuing strategies that increase sales revenues more than they increase the costs of the business as measured by COGS, SG&A, and R&D expenses. That is, they can increase the return on sales by pursuing strategies that lower costs or increase value through differentiation, and thus allow the company to increase its prices more than its costs.

To boost the profitability of their company by obtaining greater sales revenues from their invested capital, managers pursue strategies that reduce the amount of working capital, such as the amount of capital invested in inventories, needed to generate a given level of sales Copyright Cengage Learning. Powered by Cognero.

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(working capital/sales) and then pursuing strategies that reduce the amount of fixed capital that they have to invest in property, plant, and equipment (PPE) to generate a given level of sales (PPE/sales). That is, they pursue strategies that reduce the amount of capital that they need to generate every dollar of sales, and therefore reduce their cost of capital. Recall that cost of capital is part of the cost structure of a company, so strategies designed to increase capital turnover also lower the cost structure.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 3-6 Analyzing Competitive Advantage and Profitability QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.06 - Explain the relationship between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 74. What implications can be drawn about the idea that advanced factors of production usually make up the unique strengths of an organization?

ANSWER: It can be demonstrated how advanced factors of production such as intellectual property, process knowledge, and organizational architecture are more likely to be rare, and will be harder to imitate due to high barriers to imitation, than more basic factors of production. There are several implications that can be drawn from this insight.

First, it is clearly important for managers to vigorously protect their intellectual property from imitation both by establishing their intellectual property rights (e.g., by filing for patent, copyright or trademark protection), and by asserting those rights, legally challenging rivals who try to violate them. This said, it is sometimes best not to patent valuable technology but instead keep it as a trade secret because that can make imitation more difficult.

Second, given that process knowledge is often an important source of sustainable competitive advantage, managers would be well advised to devote considerable attention to optimizing their processes. They might, for example, invest time and effort in process improvement methodologies such as Six Sigma. Similarly, given the importance of organizational architecture, it is crucial for managers to assure that their company’s organization is optimal.

Thinking critically and proactively about organizational design becomes a very important task.

Third, it is important to protect knowledge about superior processes and practices from leaking out.

POINTS: DIFFICULTY: REFERENCES: QUESTION TYPE: HAS VARIABLES:

Lastly, if a company has developed rare and valuable process knowledge in core functional activities of the firm, it would be unwise for the firm to outsource those activities to a thirdparty producer in pursuit of a perceived short-term cost saving or other transitory benefit.

1 Moderate 3-2 Resource Quality: The VRIO Framework Essay False

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STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.02 - Utilize the VRIO model to assess the quality of resources.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM 75. How does the understanding of the dynamic relationships between value, pricing, demand, and costs affect a manager’s decisions regarding profitability and maximizing competitive advantage?

ANSWER: Managers must understand the dynamic relationships among value, pricing, demand, and costs in order to make decisions that will maximize competitive advantage and profitability. Managers must understand how value creation and pricing decisions affect demand, as well as how unit costs change with increases in volume. In other words, they must clearly comprehend the demand for their company’s product and its cost structure at different levels of output if they are to make decisions that maximize profitability.

The most beneficial position for a company occurs when it can utilize its valuable, rare, inimitable resources and capabilities to deliver a product offering that consumers value more highly than that of rivals (that is, they derive more utility from it), and which can be produced at a lower cost than that of rivals. This is an outcome that many companies strive to achieve.

There are several ways to manipulate price and change costs to increase value and achieve profitability and maximize competitive advantage. At the most basic level, a company’s profitability depends on three factors: (1) the value customers place on the company’s products, (2) the price that a company charges for its products, and (3) the costs of creating those products. The value customers place on a product reflects the utility they derive from it, or the happiness or satisfaction gained from consuming or owning it. Value must be distinguished from price. Value is something that customers receive from a product. It is a function of the attributes of the product such as its performance, design, quality, and point-ofsale and after-sale service. Regardless of the pricing option a company chooses, that price is typically less than the value placed upon the good or service by the customer. This is because the customer captures some of that value in the form of what economists call a consumer surplus. This occurs because it is normally impossible to segment the market to such a degree that the company can charge each customer a price that reflects that individual’s unique assessment of the value of a product—what economists refer to as a customer’s reservation price. In addition, because the company is competing against rivals for customers, it has to charge a lower price than it could were it a monopoly. For these reasons, the point-of-sale price tends to be less than the value placed on the product by many customers. Nevertheless, remember this basic principle: The more value that consumers derive from a company’s goods or services, the more pricing options that company has.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 3-3 Value Creation and Profitability QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.03.03 - Understand the link between competitive advantage and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:47 PM DATE MODIFIED: 4/23/2023 11:06 AM Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - Business-Level Strategy True / False 1. The only way to exploit successful differentiation is to keep prices the same or only increase them moderately, leading to increased demand, economies of scale, and lower costs, which results in higher profitability and profit growth. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 2. A company develops a new innovative technique that improves efficiency within the industry. This improvement of performance through innovation causes the efficiency frontier to remain static and not deviate from its original curve. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 3. Mike's Eatery, a fast-food chain, neither customizes its product offerings nor sells new products based on market segments. Mike's Eatery is pursuing a standardization strategy. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: True / False Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 4. Since there is only one way to compete in a particular industry, a manager must be dedicated to pursuing this strategy and align functional activities and organizational arrangements with that strategy in order to execute it well. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 5. Successful value innovation achieves sustainable competitive advantage due to the inability of rivals to change their strategies in a timely manner without breaking prior commitments. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM Multiple Choice 6. Which of the following generic competitive strategies would a producer of a commodity such as steel most likely pursue? a. Exclusive dealing b. Broad differentiation c. Focus differentiation Copyright Cengage Learning. Powered by Cognero.

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d. Broad low cost e. Horizontal integration ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 7. In what situation can a company have both differentiation and a low-cost position? a. With innovation, a company can push out the efficiency frontier in its industry and can deliver more differentiation at a lower cost than its rivals. b. The company chooses to focus on the commodity market. c. The company focuses on improving the reliability of its product. d. The company improves its customer service on point-of sale and after-sale customer interactions. e. It is impossible to achieve both differentiation and a low-cost position.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 8. A differentiation strategy is based on creating a product that customers perceive as being: a. the same as other available products. b. superior to other available products. c. the least costly product in the industry. d. the most expensive product in the industry. e. cheaper but inferior to the available products.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 9. A segmentation strategy requires that a company a. standardize its products. b. offer its products at low costs. c. customize its products. d. produce one basic offering. e. attain high economies of scale by achieving a high volume of sales.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 10. Differentiation allows a company to a. respond to demands of deep price demands from powerful buyers and still make money. b. lower its cost structure. c. charge a premium price for its good or service, should it choose to do so. d. charge low prices and still make profits. e. initiate a price war to grow volume and drive its weaker rivals out of the industry.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 11. The main difference between companies following a broad low-cost strategy and those following a focus low-cost strategy is in the: a. standardized market price. b. industry life-cycle stage.

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c. degree of market segmentation. d. age of the market. e. market trajectory.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:48 PM DATE MODIFIED: 5/2/2023 11:27 AM 12. The production of more product variety without a large cost penalty is known as: a. market concentration. b. market segmentation. c. focus differentiation. d. mass production. e. mass customization.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 13. When a company offers a wide variety of products at lower prices than its rivals, it is most likely pursuing which of the following strategies? a. Low-cost b. Differentiation c. Focus d. Exit e. Divestment ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 14. A differentiator has the advantage of: a. selling on non-price factors, such as design or customer service. b. producing a large product variety without a large cost penalty. c. producing a basic offering that is relatively inexpensive to produce and deliver. d. being able to respond to demands for deep price discounts from powerful buyers and still make money. e. being able to initiate a price war in order to grow volume and drive its weaker rivals out of the industry.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 15. Lucy’s Swimwear Boutique offers swimwear that is targeted at affluent people who can afford to buy expensive, handmade swimsuits. Which of the following approaches to market segmentation is Lucy’s Swimwear Boutique using? a. Broad differentiation strategy b. Low market segmentation strategy c. Medium market segmentation strategy d. Broad high-cost strategy e. Focus differentiation strategy ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 16. Acknowledging the demand for healthier drinking options, a large beverage company has developed a new line of Copyright Cengage Learning. Powered by Cognero.

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beverages with no calories and no artificial sweeteners to add to its existing product line. Which of the following approaches to market segmentation is the beverage company using? a. Broad low-cost strategy b. Focus differentiation strategy c. Medium market segmentation strategy d. Focus low-cost strategy e. Broad differentiation strategy ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 17. The advantage that focused companies have over their broad market rivals is that they can a. sell on non-price factors, such as design or customer service. b. respond to demands for deep price discounts. c. can establish a cost advantage and customize offerings for a niche market. d. initiate a price war to grow volume and drive its weaker rivals out of the industry. e. absorb cost increases that may be passed on downstream by powerful suppliers.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 18. Delta Air Lines used to advertise its high-quality air travel service by saying it flew "anywhere, anytime." What generic business-level strategy is represented by this advertisement? a. Broad low-cost strategy b. Broad differentiation strategy c. Vertical integration strategy d. Right-time marketing strategy e. Rapid growth strategy ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 19. A company pursuing a focus strategy a. attempts to serve all market segments. b. concentrates on building market share in one market segment. c. typically has more resources at its disposal than a differentiator does. d. has a greater impact on cost and revenue. e. produces different offerings for different segments.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/9/2023 10:11 AM 20. Nick, a professional magician, is often invited to perform magic tricks at birthday parties and other social gatherings from across the country. However, he offers his services only to clients who stay in the same city as him. He is also known to charge less than other magicians in the city. Nick is pursuing which generic business-level strategy? a. Broad differentiation strategy b. Focus differentiation strategy c. Focus low-cost strategy d. Broad low-cost strategy e. Medium market segmentation strategy ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 4/19/2023 4:49 PM 5/2/2023 11:27 AM

21. Yankee Candle Company offers customers candles that burn for 50–60 hours, much longer than most department store candle brands. Therefore, customers are willing to pay a higher price for these candles. Which of the following strategies is Yankee Candle Company following? a. Cost leadership strategy b. Rapid growth strategy c. Market segmentation strategy d. Differentiation strategy e. Stuck-in-the-middle strategy ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 22. Lilly’s Beauty Company sells general haircare products such as shampoo, conditioner, and hairspray. The company does not sell new or customized products to meet the specific needs of certain groups of people. Which of the following approaches is illustrated in this scenario? a. Standardization strategy b. Focus strategy c. Medium market segmentation strategy d. High market segmentation strategy e. Focus market segmentation strategy ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 23. Which of the following is NOT true about the implications for cost and revenue and market segmentation? a. A segmentation strategy is typically associated with lower costs than a standardization strategy.

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b. A standardization strategy involves a company producing one basic offering and trying to attain economies of scale by achieving high-volume sales. c. A segmentation strategy requires that a company customize its product offering to different segments which causes it to sell less of each offering, making it harder to achieve economies of scale. d. A segmentation strategy requires that a company customize its product offering to different segments, and products targeted at segments at the higher-income end of the market may require more functions and features, which can raise the costs of production and delivery. e. A segmentation strategy can allow a company to capture incremental revenues by customizing its offerings to the needs of different groups of consumers and, thus, selling more in total.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 24. Which of the following is an example of a differentiated company’s attention to efficiency? a. To not cut costs so deeply that it harms its capability to differentiate its offering from that of rivals. b. To be careful and aware of all costs and not let them get out of control. c. To not waver in its choice of how to compete and maintain this focus in all strategic decisions. d. Managers are confident in their business-level strategy, have clear logic for pursuing that strategy, have an offering that matches their strategy, and have aligned functional activities and organizational arrangements with that strategy in order to execute it well. e. All of these are ways a differentiated company shows attention to efficiency.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 25. Which generic business-level strategy is based on the intent to lower costs so that a company can lower prices and still make a profit? a. Broad low-cost strategy b. Price differentiation strategy c. Broad differentiation strategy d. Focus differentiation strategy Copyright Cengage Learning. Powered by Cognero.

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e. Focus low-cost strategy ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 26. Which of the following matches the correct company with the generic business-level strategy that it practices? a. Wal-Mart practices a broad differentiation strategy. b. Toyota practices a broad, low-cost strategy. c. Southwest Airlines practices a focus low-cost strategy. d. Costco practices a focus differentiation strategy. e. Nordstrom practices a focus low-cost strategy.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 27. Jordan's Ice Creams is strategically located near a university. After realizing that most of its customers, who are mostly students, prefer a wide range of flavors, it started offering different combinations of premium flavors, cones, and toppings to create hundreds of extravagant, customized products. Which generic business-level strategy is Jordan pursuing? a. Broad low-cost strategy b. Broad differentiation strategy c. Focus low-cost strategy d. Focus differentiation strategy e. Product substitution strategy ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 28. In which of the following situations is a differentiation strategy used? a. The industry is fragmented into customer groups based on needs. b. Customer needs are primarily satisfied by the price of the product. c. A company's cost structure needs to be reduced. d. There is a demand for deep price discounts from powerful buyers. e. The industry is not allowed to charge a premium price for its products.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 29. Which of the following is a difference between a standardization and segmentation strategy? a. A standardization strategy has several advantages over a segmentation strategy. b. Standardization allows the company to capture incremental revenues by customizing its offerings while segmentation has products aimed at the average consumer. c. A standardization strategy may lose sales from customers who desire more functions and features and are prepared to pay more for them while a segmentation strategy meets the needs of different groups of consumers and thus sells more in total. d. A standardization strategy prices product to allow for a wider customer base while segmentation may lose sales from customers who cannot afford to purchase the average product. e. Standardization strategy may have higher costs than a segmentation strategy.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM Copyright Cengage Learning. Powered by Cognero.

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30. A disadvantage of pursuing a low-cost strategy is that a. it makes it difficult for the firm to customize its product offerings. b. price wars make it hard to compete with differentiators. c. it makes it easier for rivals to enter the firm’s market. d. it makes it difficult to respond to demands from deep price discounts from powerful buyers and still make money. e. it makes it difficult to absorb cost increases that may be passed on downstream by powerful suppliers.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/9/2023 10:11 AM 31. Which of the following is a functional-level strategy designed to improve differentiation? a. Designing products that can be produced and delivered at as low a cost as possible b. Standardization of the product offering and marketing mix to different market segments c. Hiring and employee development strategies designed to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world d. Initiation of a price war to grow volume and drive its weaker rivals out of the industry e. Products that have lower prices to allow a company to erect an economic moat around its business that thwarts higher-cost rivals.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 32. Which of the following is NOT a principal danger of a low-cost position approach? a. Substitute goods or services b. Technological change c. Imitation of production techniques d. Changes in consumer tastes e. Rivals lowering their costs Copyright Cengage Learning. Powered by Cognero.

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ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 33. A company that focuses on a lower-income market segment: a. sells on non-price factors such as design and customer service. b. produces a basic offering to reduce cost structures. c. focuses its marketing efforts on brand building. d. relies on patent protections to keep costs low. e. customizes its marketing mix to different market segments.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 34. Which of the following organizational arrangements does NOT support a company taking a low-cost position? a. Incentive systems that empower employees to suggest and pursue initiatives that are consistent with productivity improvements b. A frugal company culture that emphasizes the need to control costs c. Measurement and control systems that focus on productivity and cost containment d. A multi-level structure with several tiers in the management hierarchy e. Clear lines of accountability and control ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

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35. Info Tech, Inc. makes complex telecommunications products, such as cellular telephones. Since this company has a distinctive competency in research and development, it should try to differentiate its product through a. reliability. b. innovation. c. advertising. d. service. e. low pricing.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/9/2023 10:12 AM 36. The term value innovation is used to describe a. the way a company decides to group customers based on important differences in their needs to gain a competitive advantage. b. a business’s overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings. c. what happens when innovation pushes out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost than was previously thought possible. d. what happens when a company decides to ignore different segments and produce a standardized product for the average consumer. e. what happens when a company decides to serve many segments or even the entire market, producing different offerings for different segments.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/9/2023 10:13 AM Copyright Cengage Learning. Powered by Cognero.

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37. The basic proposition of the blue ocean strategy is that many successful companies have built their competitive advantage by a. redefining their product offering through value innovation and creating a new market space. b. initiating a price war to grow volume and drive their weaker rivals out of the industry. c. developing brand loyalty to protect them from intense price rivalry within their industry. d. charging premium prices for their goods or services. e. adopting lean production and flexible manufacturing technologies.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 38. How does value innovation achieve sustained competitive advantage for the innovating company? a. It shifts the basis of competition. b. It can catch rivals off guard and make it difficult for them to catch up. c. It forces the innovative company to think differently than rivals in order to create an offering and strategic position that is unique. d. Rivals are unable to change focus from prior strategic commitments. e. All of these are reasons why value innovation can achieve sustained competitive advantage for an innovating company.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 39. What is the primary focus of a business-level strategy? a. Targeting a specific demographic b. Deciding which customer needs to satisfy c. Determining how to satisfy customer needs d. Defining the overall competitive theme of a company in a market e. Establishing the mission statement of a company ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/2/2023 9:35 AM DATE MODIFIED: 5/2/2023 11:27 AM 40. According to the text, Rivian's target demographic consists of which group of individuals? a. Lower-income city dwellers b. Middle-income families with children c. Upper-income outdoor enthusiasts d. Budget-conscious environmentalists e. Luxury car collectors ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/2/2023 9:40 AM DATE MODIFIED: 5/2/2023 11:27 AM 41. Drawing from the text, what is one way that Rivian is trying to differentiate its electric pickup truck from competitors such as Ford's F-150 Lightning? a. By offering lower prices b. Through design and engineering c. By targeting a different customer segment d. By increasing production costs e. By focusing on city driving capabilities ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

5/2/2023 9:41 AM 5/2/2023 11:27 AM

42. Which business-level strategy is Rivian utilizing by charging a premium price for its higher quality electric pickup truck? a. Cost leadership b. Differentiation c. Focused cost leadership d. Focused differentiation e. Integrated low-cost/differentiation ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:43 AM DATE MODIFIED: 5/2/2023 11:27 AM 43. In order to lower costs and make a profit, Rivian is seeking to achieve what? a. Economies of scale b. Market segmentation c. Supply chain disruption d. Competitive advantage e. Mass customization ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:45 AM DATE MODIFIED: 5/2/2023 11:27 AM 44. Which of the following is NOT a decision that managers must make when it comes to their company's segmentation strategy? a. Whom to serve b. What customer needs to satisfy c. How to satisfy customer needs d. How to create a mission statement Copyright Cengage Learning. Powered by Cognero.

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e. How to differentiate their goods or services ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:47 AM DATE MODIFIED: 5/2/2023 11:27 AM 45. What are the two basic ways that companies compete in a marketplace? a. By targeting different customer segments and creating a mission statement b. By lowering costs and creating more value through differentiation c. By mass production and focusing on a niche market d. By adopting a unique business-level strategy and solving unanticipated problems e. By targeting a specific demographic and offering a premium price ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:48 AM DATE MODIFIED: 5/2/2023 11:27 AM 46. Which of the following factors could negatively impact Rivian's competitive advantage? a. Gaining economies of scale through mass production b. Offering a premium price for its higher quality offering c. Supply chain disruptions resulting from the COVID-19 pandemic d. Differentiating its electric pickup truck through design and engineering e. Targeting upper-income outdoor enthusiasts ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-1 Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.01 - Define business-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking Copyright Cengage Learning. Powered by Cognero.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

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47. Which company's strategy is an example of a low-cost strategy in the airline industry? a. American Airlines b. Delta Airlines c. Southwest Airlines d. United Airlines e. Alaska Airlines ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:51 AM DATE MODIFIED: 5/2/2023 11:27 AM 48. Which of the following is NOT a way that a company can differentiate itself from its rivals? a. Superior reliability b. Better design c. Lower cost d. Better after-sales service and support e. Superior functions and features ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:54 AM DATE MODIFIED: 5/2/2023 11:27 AM 49. What advantage does a successful differentiation strategy provide to a company, besides charging a premium price? a. Lowering production costs b. Gaining a larger market share c. Reducing competition d. Increasing the number of product offerings Copyright Cengage Learning. Powered by Cognero.

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e. Reducing the need for marketing efforts ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 9:55 AM DATE MODIFIED: 5/2/2023 11:27 AM 50. Which of the following statements is true regarding the efficiency frontier? a. All positions on the efficiency frontier are equally attractive. b. The efficiency frontier is static and does not change. c. Companies that cannot get to the efficiency frontier have a competitive advantage. d. The efficiency frontier can be pushed outward through innovation. e. The efficiency frontier represents positions of high cost and low differentiation.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-2 Low-Cost and Differentiation Strategies QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.02 - Explain the difference between low-cost and differentiation strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/2/2023 9:57 AM DATE MODIFIED: 5/2/2023 11:27 AM 51. Which of the following is an example of a company using a standardization strategy in their market segmentation approach? a. Nike segmenting the athletic shoe market according to sport and gender b. Walmart targeting the average customer with everyday low prices c. Coca-Cola offering different products for different customer needs d. Gap Inc. having brands for different market segments e. Porsche focusing exclusively on the high-end sports car market ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

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52. A company decides to serve multiple customer groups, differentiated by their needs, in order to gain a competitive advantage. They do this by offering different products to each group. Which of the following strategies is the company pursuing? a. Standardization strategy b. Segmentation strategy c. Focus strategy d. Mass customization strategy e. Component sharing strategy ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:02 AM DATE MODIFIED: 5/2/2023 11:27 AM 53. Which of the following is an advantage of a segmentation strategy over a standardization strategy? a. Lower costs due to economies of scale b. Ability to capture incremental revenues by customizing offerings to consumer needs c. Reduced costs by producing a single, standardized product d. Focusing on a single market segment e. Sharing common components across multiple products ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-3 Who Are Our Customers? Market Segmentation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.03 - Summarize the process of market segmentation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:28 AM DATE MODIFIED: 5/2/2023 11:27 AM 54. Which of the following competitive forces is NOT discussed in the text as being affected by a well-crafted businesslevel strategy? a. Threat of entrants Copyright Cengage Learning. Powered by Cognero.

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b. Power of buyers c. Intensity of rivalry d. Threat of substitute goods or services e. Power of technological innovation ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:30 AM DATE MODIFIED: 5/2/2023 11:27 AM 55. How does a low-cost company like Amazon create an entry barrier for its rivals? a. By focusing on a niche market b. By differentiating its products c. By building brand loyalty d. By maintaining a very-low-cost structure e. By relying on non-price factors ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:33 AM DATE MODIFIED: 5/2/2023 11:27 AM 56. Which of the following tactics did Dell use during its glory days in the early 2000s to grow its business and drive its weaker rivals out of the industry? a. Focusing on a niche market b. Creating brand loyalty c. Cutting prices for PCs to drive up sales volume d. Differentiating its products based on design e. Implementing price increases without resistance from buyers ANSWER: c POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:34 AM DATE MODIFIED: 5/2/2023 11:27 AM 57. How does a successful differentiator protect itself from pricing pressure from powerful buyers? a. By having a low-cost structure b. By focusing on a niche market c. By selling on non-price factors such as design or customer service d. By initiating price wars e. By absorbing cost increases passed on by powerful suppliers ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:36 AM DATE MODIFIED: 5/2/2023 11:27 AM 58. What strategy does Porsche use to outsell broad market companies like Toyota or GM in the high-end sports car niche of the market? a. Focusing on a niche and customizing its offerings b. Having a low-cost structure c. Building brand loyalty by offering a wide product selection d. Selling on non-price factors such as design e. Competing on price with its rivals ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

5/2/2023 10:37 AM 5/2/2023 11:27 AM

59. Which of the following types of companies is most likely to be successful in a price war? a. A differentiated company with a strong brand loyalty b. A low-cost company with economies of scale c. A focused company targeting a niche market d. A company that relies on non-price factors such as design e. A company that has a wide product selection ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/2/2023 10:40 AM DATE MODIFIED: 5/2/2023 11:27 AM 60. Which building blocks of competitive advantage are emphasized in the pursuit of a low-cost business-level strategy? a. Superior quality and innovation b. Efficiency and superior product reliability c. Customer responsiveness and excellence d. Customization and marketing mix e. Brand building and perceived differentiation ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/2/2023 10:42 AM DATE MODIFIED: 5/2/2023 11:27 AM 61. What is the primary goal of functional-level strategies for a differentiated company? a. Achieving economies of scale b. Streamlining processes c. Enhancing productivity d. Achieving superior quality, innovation, and customer responsiveness Copyright Cengage Learning. Powered by Cognero.

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e. Implementing just-in-time inventory control systems ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/2/2023 10:44 AM DATE MODIFIED: 5/2/2023 11:27 AM 62. Which of the following is NOT a functional-level strategy for a low-cost company? a. Adopting lean production and flexible manufacturing technologies b. Designing products that can be produced and delivered at as low a cost as possible c. Customizing the product offering and marketing mix to different market segments d. Implementing just-in-time inventory control systems e. Streamlining processes to take out unnecessary steps ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:46 AM DATE MODIFIED: 5/2/2023 11:27 AM 63. Which organizational arrangements are likely to be found in a low-cost company like Amazon or Walmart? a. A flat structure with few levels in the management hierarchy b. A hierarchical structure with multiple levels of management c. A focus on marketing, product design, customer service, and customer care functions d. A culture that encourages innovation and risk-taking e. An emphasis on brand building and perceived differentiation from rivals ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:47 AM DATE MODIFIED: 5/2/2023 11:27 AM 64. What change did Steve Jobs make to Apple's organizational structure when he returned to the company in 1997? a. He gave the industrial design group the lead on new product development. b. He focused on streamlining processes and improving efficiency. c. He implemented just-in-time inventory control systems. d. He prioritized hiring and employee development strategies. e. He emphasized marketing efforts and brand building.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:49 AM DATE MODIFIED: 5/2/2023 11:27 AM 65. In a differentiated company, which functions play a key role in ensuring success? a. Marketing, product design, customer service, and customer care b. Engineering, supply chain management, and procurement c. Process improvement, cost containment, and inventory control d. Quality improvement, automation, and economies of scale e. Lean production, flexible manufacturing technologies, and streamlining processes ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:50 AM DATE MODIFIED: 5/2/2023 11:27 AM 66. According to the text, what functional-level strategy can help a company differentiate itself in terms of product Copyright Cengage Learning. Powered by Cognero.

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offerings? a. Achieving economies of scale and learning effects b. Adopting lean production and flexible manufacturing technologies c. Designing product offerings with high perceived quality in terms of functions, features, and performance d. Streamlining processes to take out unnecessary steps e. Implementing just-in-time inventory control systems ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:52 AM DATE MODIFIED: 5/2/2023 11:27 AM 67. Which term refers to the process of fundamentally shifting the game in an industry by offering more value through differentiation at a lower cost than rivals? a. Red ocean strategy b. Value innovation c. Competitive advantage d. Market segmentation e. Market penetration ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/2/2023 10:56 AM DATE MODIFIED: 5/2/2023 11:27 AM 68. Which airline is given as an example of a company that found its blue ocean through value innovation? a. American Airlines b. Delta Airlines c. United Airlines d. Southwest Airlines e. JetBlue Airlines ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 10:59 AM DATE MODIFIED: 5/2/2023 11:27 AM 69. What is one key advantage of successful value innovation? a. Lower costs for the company b. Catching rivals off guard and making it difficult for them to catch up c. Attracting more investors d. Reducing competition in the market e. Expanding market share instantly ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 11:01 AM DATE MODIFIED: 5/2/2023 11:27 AM 70. Which of the following questions is NOT suggested by Kim and Mauborgne for managers to ask themselves when crafting a new business-level strategy? a. What factors can we create that rivals do not offer? b. Which factors should be reduced well below the standard in our industry? c. Which factors that rivals take for granted in our industry can be eliminated? d. How can we increase our market share without changing our current strategy? e. Which factors should be raised above the standard in our industry?

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/2/2023 11:02 AM Copyright Cengage Learning. Powered by Cognero.

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71. Considering the example of Southwest Airlines, which of the following is an accurate representation of how they applied the value innovation framework? a. Eliminated airport lounges, raised in-flight refreshments, and created business-class seating b. Eliminated business-class seating, reduced in-flight refreshments, and created point-to-point flights c. Reduced airport lounges, eliminated in-flight meals, and raised point-to-point flights d. Raised airport lounges, created business-class seating, and eliminated in-flight meals e. Reduced in-flight refreshments, raised business-class seating, and created airport lounges ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/2/2023 11:05 AM DATE MODIFIED: 5/2/2023 11:27 AM Essay 72. Define the generic business-level strategies companies pursue. Provide an example of a company that represents each type of strategy.

ANSWER: There are four generic business-level strategies.

When a company lowers costs so that it can lower prices and still make a profit, it is pursuing a broad, low-cost strategy. One example of a company that pursues this type of strategy is Wal-Mart.

When a company differentiates its product in some way, such as by recognizing different segments or offering different products to each segment, it is pursuing a broad differentiation strategy. Examples of companies that pursue this type of strategy are Toyota and Cola-Cola.

When a company targets a certain segment or niche and tries to be the low-cost player in that niche, it is pursuing a focus low-cost strategy. Examples of companies that pursue this type of strategy are Costco and Southwest Airlines.

When a company targets a certain segment or niche and customizes its offering to the needs of that segment through the addition of features and functions, it is pursuing a focus differentiation strategy. One example of a company that pursues this type of strategy is Nordstrom.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-4 Business-Level Strategy Choices QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.04.04 - Identify the generic business-level strategic choices.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic Bloom's: Analyze 4/19/2023 4:49 PM 5/2/2023 11:27 AM

73. Describe how business-level strategies give a company a competitive advantage over actual and potential rivals.

ANSWER: Properly executed, a well-chosen and well-crafted business-level strategy can give a company a competitive advantage over actual and potential rivals.

Consider first the low-cost company; by definition, the low-cost enterprise can make profits at price points that its rivals cannot profitably match. This makes it very hard for rivals to enter its market. In other words, the low-cost company can build an entry barrier into its market. It can, in effect, erect an economic moat around its business that thwarts higher-cost rivals out.

A low-cost position and the ability to charge low prices and still make profits also protect a company against substitute goods or services. Low costs can help a company to absorb cost increases that may be passed on downstream by powerful suppliers. Low costs can also enable the company to respond to demands for deep price discounts from powerful buyers and still make money. The low-cost company is often best positioned to survive price rivalry in its industry. Indeed, a low-cost company may deliberately initiate a price war in order to grow volume and drive its weaker rivals out of the industry.

Now consider the differentiated company. The brand loyalty associated with differentiation can constitute an important entry barrier, protecting the company’s market from potential competitors. Because the successful differentiator sells on non-price factors, such as design or customer service, it is also less exposed to pricing pressure from powerful buyers. Indeed, the converse may be the case—the successful differentiator may be able to implement price increases without encountering much, if any, resistance from buyers. The differentiated company can also easily absorb price increases from powerful suppliers and pass those on downstream in the form of higher prices for its offerings, without suffering much, if any, loss in market share. The brand loyalty enjoyed by the differentiated company also protects it protection from substitute goods and service.

The differentiated company is protected from intense price rivalry within its industry by its brand loyalty, and by the fact that non-price factors are important to its customer set. At the same time, the differentiated company often does have to invest significant effort and resources in non-price rivalry, such as brand building through marketing campaigns or expensive product development efforts, but to the extent that it is successful, it can reap the benefits of these investments in the form of stable or higher prices.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-5 Business-Level Strategy and Competitive Advantage QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.04.05 - Explain the relationship between business-level strategies and competitive advantage.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM Copyright Cengage Learning. Powered by Cognero.

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74. List the features that need to be included in functional strategies to improve differentiation.

ANSWER: To successfully differentiate itself, a company must pursue the right actions at the functional level and organize itself appropriately. Pursuing functional-level strategies that enable the company to achieve superior quality in terms of both reliability and excellence are important, as in an emphasis upon innovation in the product offering, and high levels of customer responsiveness. A firm that implements the differentiation strategy cannot ignore efficiency.

Because of its strategic choice, the differentiated company is likely to have a higher cost structure than the low-cost player in its industry. Specific functional-level strategies designed to improve differentiation include:     

Customization of the product offering and marketing mix to different market segments.

Designing product offerings that have high perceived quality in terms of their functions, features, and performance, in addition to being reliable.

A well-developed customer-care function for quickly handling and responding to customer inquiries and problems.

Marketing efforts focused on brand building and perceived differentiation from rivals.

Hiring and employee development strategies designed to ensure that employees act in a manner that is consistent with the image that the company is trying to project to the world.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-6 Implementing Business-Level Strategy QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.04.06 - Explain how a company executes its business-level strategy through functional-level strategies and organizational arrangements.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM 75. When a company seeks to carve out a unique market space for themselves through value innovation, they must think about how a company might redefine its market and craft a new business-level strategy. What are four areas that a company should focus on finding new strategies? What questions should be asked for each area? Choose a company that has created market space through value innovation and trace how they addressed these four areas to redefine itself.

ANSWER: Successful enterprises compete differently than their less successful rivals: They carve out a unique market space for themselves through value innovation. When thinking about how a company might redefine its market and craft a new business-level strategy, Kim and Mauborgne suggest that managers ask themselves the following questions: 1. Eliminate: Which factors that rivals take for granted in our industry can be eliminated, thereby reducing costs?

2. Reduce: Which factors should be reduced well below the standard in our industry, thereby lowering costs?

3. Raise: Which factors should be raised above the standard in our industry, thereby increasing value?

4. Create: What factors can we create that rivals do not offer, thereby increasing value?

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Answers will vary when students choose a company that has created market space through value innovation. One possible example is the strategy for Southwest. Southwest charges a low price and does not provide meals or lounges in airports, business-class seating, or connections through hubs (it flies point to point) but does provide friendly, quick, convenient, reliable low-cost service, which is exactly what its customer set values.

Southwest eliminated lounges, business seating, and meals in flight; it reduced in- flight refreshment to be well below industry standards; and by flying point-to-point it raised speed (reducing travel time), convenience, and reliability. Southwest also creates value by flying between smaller, downtown airports whenever possible—something that other airlines did not typically do.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 4-7 The Blue Ocean Strategy and Value Innovation QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.04.07 - Discuss the concept of blue ocean strategy and value innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:49 PM DATE MODIFIED: 5/2/2023 11:27 AM

Chapter 05 - Building Competitive Advantage and Executing Business-Level Strategy Through Functional Strategy True / False 1. When cost parity is achieved between rival companies, the only way to achieve sustained competitive advantage is to continue to use the technology available to minimize production costs. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 5/12/2023 10:40 AM DATE MODIFIED: 5/12/2023 10:59 AM 2. Flexible production technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.

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a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Technology KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 10:44 AM DATE MODIFIED: 5/12/2023 10:59 AM 3. A disruption in the supply chain that causes input shortages can cause inventory problems for firms that rely on a justin-time (JIT) inventory system. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 5/12/2023 10:45 AM DATE MODIFIED: 5/12/2023 10:59 AM Multiple Choice 4. Company A has a product that hasn’t hit the market yet but has already constructed efficient manufacturing facilities and has lowered costs through learning effects. It has a marketing team in place that has initiated an aggressive advertising campaign with sales promotions that have stimulated demand for the product and accumulated sales volume. Which of the following is true of Company A? a. This strategy would help Company A move down the experience curve quickly. b. This strategy would hinder Company A’s move down the experience curve and allow rival companies to have a cost advantage. c. This strategy would allow Company A to decrease product volume and market share. d. This strategy would not allow Company A to reach superior efficiency. e. This strategy would enable Company A to ride up the experience curve and gain a competitive advantage over its rivals.

ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Challenging REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:20 PM 5. What effect does the notion of self-managing have on time? a. There is an increase per-unit costs of manufactured items. b. They perform all workplace tasks except the making of hiring decisions. c. This increases the cycle time of manufacturing items. d. It requires team members to learn only one task and specialize in that alone. e. It tends to increase productivity and product quality.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:20 PM 6. The effect of the experience-curve concept: a. helps a company realize both learning effects and diseconomies of scale. b. suggests that unit manufacturing costs increase by a certain amount each time output is increased. c. is very important in industries that mass-produce a standardized output. d. suggests that achieving low costs allows a firm to charge a premium price. e. is least likely to bottom out as long as the company does not stop production.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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7. Which of the following is a tactical step for getting down the experience curve ahead of competitors? a. Using premium pricing to create an image of uniqueness in consumers' minds b. Pursuing a distinctive competence in focused marketing c. Constructing a manufacturing plant of less-than-minimum efficient scale d. Adopting an aggressive marketing strategy to build up demand and accumulated volume as quickly as possible e. Making the assembly of the product as complex as possible because this results in greater learning effects ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 8. Unlike traditional manufacturing, flexible manufacturing: a. decreases efficiency. b. lowers unit costs. c. limits an organization's ability to customize products. d. allows the production of only standardized products. e. limits an organization's ability to offer greater product variety.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 9. Which of the following statements regarding customer defection is NOT true? a. Defection rates are determined by customer loyalty. b. The longer a company retains a customer, the greater is the volume of customer-generated unit sales. c. Lowering customer defection rates creates a higher cost structure. d. The longer a company retains a customer, the lower the average unit cost of each sale.

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e. There is a positive relationship between the length of time that a customer stays with a company and profit per customer.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 10. Just-in-time inventory (JIT) systems a. are used only by manufacturing firms. b. provide a buffer stock of inventory for a company. c. are used to reduce inventory holding costs. d. save costs by outsourcing inventory management to other companies. e. always keep extra inventory on hand for emergencies.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:21 PM 11. Employee productivity is a. a function of management delegation. b. a key determinant of a company's efficiency, cost structure, and profitability. c. not subject to measurement. d. not sustainable in the long run. e. a function that does not affect a company's profitability.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:22 PM 12. A company's hiring strategy a. directly affects employee productivity. b. has little effect on employee productivity. c. does not relate to profitability. d. is not part of the company's overall human resource strategy. e. upgrades an employee's skill level.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:22 PM 13. The Mountain Ski Lodge spent $100,000 marketing and advertising its new ski trails and on-site spa. The money used for marketing and advertising can be referred to as a. variable costs. b. fixed costs. c. ratio costs. d. diseconomies of scale. e. economies of scale.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:22 PM Copyright Cengage Learning. Powered by Cognero.

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14. Cream Cups bakes cakes in several varieties dedicated to special occasions. It also allows its customers to personalize the cakes according to their personal preferences. This is an example of a. learning effects. b. a just-in-time (JIT) inventory system. c. customer defection. d. mass customization. e. diseconomies of scale.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:23 PM 15. Amazon has developed strategies for their distribution warehouses that minimizes the amount of inventory held at each location and maximizes the amount of inventory turnover. Through these strategies, they are utilizing a. mass customization. b. a flexible manufacturing system. c. quality as reliability mantra. d. supply chain management. e. a just-in-time (JIT) inventory system.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:23 PM 16. Which of the following is NOT one of the principles commonly found in companies that have successfully embraced the total quality management (TQM) philosophy? a. Building an organizational commitment to quality b. Enhancing the philosophy that mistakes, defects, and poor-quality materials are not acceptable c. Allowing more time for supervisors to work with employees d. Training employees in appropriate skills for the job Copyright Cengage Learning. Powered by Cognero.

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e. Defining work standards solely in terms of numbers or quotas ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 17. Quality can best be thought of as a. a competency in investigating and identifying needs of customers. b. the attributes that customers perceive as superior in a product. c. product development projects driven by customer needs. d. the quantity of inputs that it takes to produce a given output. e. unit cost reductions associated with a large scale of output.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:23 PM 18. Which of the following does the philosophy underlying total quality management (TQM) include? a. Greater quantity results in cost decreases. b. Better quality leads to higher market share. c. Greater quantity increases a company's profitability. d. Opinions of employees are irrelevant in manufacturing products. e. Work standards should only be defined as numbers or quotas.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 19. Which of the following is the final step in the five-step chain reaction on which the philosophy of total quality management (TQM) is based? a. Better use of time and materials b. Increase in a company's profitability c. Creation of more jobs d. Higher market shares due to superior quality of products e. Improvement in productivity ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 20. Which of the following steps in the five-step chain reaction, as articulated by Deming with regard to the philosophy underlying total quality management (TQM), enables a company to achieve a higher market share and raise prices? a. Improvement in productivity b. Increase in a company's profitability c. Higher market shares due to superior quality of products d. Reduction of costs due to improved quality e. Creation of more jobs ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM Copyright Cengage Learning. Powered by Cognero.

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21. Research and development (R&D) can help a company improve quality by a. designing products that are easy to manufacture. b. pursuing economies of scale. c. developing strategies on how to market products. d. upgrading employee skill levels. e. creating teams whose members coordinate their own activities.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:24 PM 22. Which of the following is NOT a result of reducing lot sizes for manufactured products? a. Defects are difficult to identify. b. The source of defects can be recognized quickly. c. The problems causing any defects can be addressed and rectified. d. It decreases waste. e. There will not be as many defective products produced in the lot size.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 23. A television commercial for Champion Windows highlights how easy it is to custom order, the reliability and efficiency of delivery as well as the service provided by their maintenance and repair department. Which of the following attributes of Champion is this advertisement highlighting? a. Product attributes b. Service attributes c. Associated personnel attributes d. Management attributes Copyright Cengage Learning. Powered by Cognero.

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e. Customer attributes ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 24. Which of the following correctly pairs the function with its role in defining product excellence? a. Human Resources: Manufactures to continually upgrade the quality of the attributes that are designed into the company’s product offerings. b. Marketing: Collects marketing information in order to determine which attributes are important to customers and helps create the perception of high quality. c. Research and Development: Creates and innovates to meet the continuous product improvements made by competitors. d. Production: Trains personnel so that the appropriate attributes are emphasized during design creation. e. Infrastructure (leadership): Tailors the message so that it creates a consistent image in the minds of customers.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 25. Despite definite customer demand, new products often fail due to a. faster cycle time. b. low customer defection rate. c. poor commercialization. d. increased response time. e. the scramble to gain first-mover advantage.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-4 Achieving Superior Innovation Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:24 PM 26. If a product is to be properly commercialized, there must be integration between which of the following functions? a. Research and development (R&D); marketing b. Research and development (R&D); materials management c. Marketing; materials management d. Finance; marketing e. Marketing; after-sales support ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 27. Which of the following is NOT a benefit of tight cross-functional integration among research and development (R&D), production, and marketing? a. New products are designed for ease of manufacture. b. Development costs are not allowed to spiral out of control. c. Product development projects are driven by company innovations. d. The time it takes to develop a product and bring it to market is minimized. e. Close integration between R&D and marketing is achieved to ensure that product development projects are driven by the needs of customers.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember Copyright Cengage Learning. Powered by Cognero.

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28. Which of the following is NOT a reason why innovation is the primary source of competitive advantage? a. Innovation brings new products better suited to meet customer needs. b. Innovation improves the quality of existing products. c. Innovation raises the cost of production. d. Innovation can allow companies to differentiate its products. e. Innovation can allow companies to lower their cost structure below its rivals.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 29. What is a consequence of the lack of integration between Research & Development (R&D) and production when innovating new products? a. Lack of integration lowers manufacturing costs and leaves less room for error. b. Lack of integration helps lower development costs and speed products to market. c. Lack of integration ensures that products are designed with manufacturing requirements in mind. d. Lack of integration lowers costs and increases product quality. e. Lack of integration can lead to increases in time to market and development costs due to redesigns.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 30. Which of the following trends has led to the fragmentation of many consumer markets? a. Self-managing teams b. Project management c. Total quality management (TQM) Copyright Cengage Learning. Powered by Cognero.

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d. Customization e. Increased response time ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 31. Customer defection rates are a. not directly related to unit cost. b. an indication of a company's ability to satisfy its customers. c. irrelevant as they are unlikely to impact advertising and marketing costs. d. unlikely to affect sales volumes. e. not affected by cost of products.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:24 PM 32. Cool Looks, Inc. is a local fashion design company that actively solicits comments from its customers about the quality of its clothing and the kind of merchandise they want it to supply. Which of the following mechanisms for focusing on the customer is Cool Looks utilizing? a. Managing materials b. Improving response time c. Demonstrating leadership d. Shaping employee attitudes e. Knowing customer needs ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 33. How does a company achieve superior responsiveness to customers? a. By developing new product features based on customer wants b. By improving the production process to become increasingly efficient c. By providing customers value for their money d. By establishing a relationship with customers where needs are identified and investigated e. All of these are ways for a company to achieve superior responsiveness to customers.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 34. Which of the following is NOT a benefit of rapid response time? a. It can help gain competitive advantage over rival companies. b. It strengthens brand loyalty. c. It decreases the amount the company can charge for products. d. It allows for differentiation of product offerings. e. It gives the opportunity for a company to charge a premium price.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM Copyright Cengage Learning. Powered by Cognero.

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35. Which of the following is the foundation of competitive advantage? a. Efficiency b. Quality c. Rare resources d. Innovation e. Customer responsiveness ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 9:03 AM DATE MODIFIED: 5/12/2023 10:59 AM 36. What are functional-level strategies? a. Actions that managers take to improve the efficiency and effectiveness of one or more value creation activities b. Strategies used to build valuable resources at the business level c. Strategies used to improve a company's reputation among industry professionals and consumers d. Strategies used to respond to evolving customer preferences e. Strategies used to increase a company's market share ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/12/2023 9:14 AM DATE MODIFIED: 5/12/2023 10:59 AM 37. Which of the following is an example of a functional-level strategy for a technology company? a. Developing a new cell phone b. Establishing a new business unit to produce the cell phone c. Outsourcing the production process of the cell phone d. Investing in employee training and development on the new technology e. Implementing a new pricing strategy for the new product ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:16 AM DATE MODIFIED: 5/12/2023 10:59 AM 38. What are the building blocks of competitive advantage? a. Innovation, quality, efficiency, and customer responsiveness b. Valuable, rare, inimitable resources that are well organized within an enterprise c. Business-level strategies d. Sustainable competitive advantages e. Functional-level strategies ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 9:19 AM DATE MODIFIED: 5/12/2023 10:59 AM 39. How do functional-level strategies support a company's business-level strategy? a. By improving the efficiency and effectiveness of one or more value creation activities b. By building valuable resources at the business level c. By responding to evolving customer preferences d. By establishing a competitive advantage e. By increasing market share ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:21 AM DATE MODIFIED: 5/12/2023 10:59 AM Copyright Cengage Learning. Powered by Cognero.

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40. Which of the following is an example of a functional-level strategy that can improve a company's efficiency? a. Developing a new product b. Investing in employee training and development c. Implementing a new pricing strategy d. Building a new manufacturing plant e. Outsourcing a production process ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/12/2023 9:24 AM DATE MODIFIED: 6/14/2023 7:37 PM 41. How can a company use functional-level strategies to attain superior quality? a. By investing in employee training and development b. By building new manufacturing plants c. By implementing a new pricing strategy d. By outsourcing a production process e. By improving the efficiency and effectiveness of one or more value creation activities ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/12/2023 9:27 AM DATE MODIFIED: 5/12/2023 10:59 AM 42. Which of the following is an example of a company that has a sustainable competitive advantage based on product differentiation? a. Apple b. Walmart c. Amazon d. Google e. Coca-Cola ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:28 AM DATE MODIFIED: 5/12/2023 10:59 AM 43. Which of the following is an example of a functional-level strategy that can improve a company's customer responsiveness? a. Developing a new product b. Investing in employee training and development c. Implementing a new pricing strategy d. Outsourcing a production process e. Building a strong brand reputation ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:31 AM DATE MODIFIED: 5/12/2023 10:59 AM 44. How can functional-level strategies help a company to build valuable resources? a. By improving the efficiency and effectiveness of one or more value creation activities b. By outsourcing a production process c. By establishing a sustainable competitive advantage d. By building a new manufacturing plant e. By implementing a new pricing strategy ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.01 - Differentiate between different functional-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:33 AM Copyright Cengage Learning. Powered by Cognero.

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45. What is one way for a company to benefit from economies of scale? a. Increase fixed costs b. Decrease production volume c. Increase selling prices d. Decrease volume of output e. Spread fixed costs over a large production volume ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:34 AM DATE MODIFIED: 5/12/2023 10:59 AM 46. What is the relationship between accumulated output and unit manufacturing costs? a. As accumulated output increases, unit costs remain constant. b. As accumulated output increases, unit costs increase. c. As accumulated output increases, unit costs decrease due to economies of scale and learning effects. d. As accumulated output increases, unit costs decrease due to economies of scale only. e. As accumulated output increases, unit costs decrease due to learning effects only.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:36 AM DATE MODIFIED: 5/12/2023 10:59 AM 47. Why might a company choose to build two plants, each employing 300 people, rather than one plant employing 600 people? a. Because it is more efficient to build smaller plants. b. Because it is cheaper to build two plants than one. c. Because larger plants suffer from the diseconomies of scale associated with large organizational units. d. Because smaller plants result in higher productivity.

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e. Because it is easier to manage smaller plants.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:38 AM DATE MODIFIED: 5/12/2023 10:59 AM 48. What is the principal tool that managers use to enhance the reliability of their product offering? a. Total Quality Management (TQM) b. Just-in-Time (JIT) Inventory Systems c. Statistical Process Control (SPC) d. Six Sigma Quality Improvement Methodology e. Flexible Manufacturing Techniques ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:40 AM DATE MODIFIED: 5/12/2023 10:59 AM 49. What is the main benefit of eliminating defects or errors from the production process? a. Reducing waste and increasing efficiency b. Creating a strong reputation for quality c. Differentiating products from those offered by rivals d. Increasing the company’s market share e. Creating more jobs for employees ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:45 AM DATE MODIFIED: 5/12/2023 10:59 AM 50. What is one technique that helps greatly in tracing defects to the source? a. Reducing lot sizes for manufactured products b. Increasing lot sizes for manufactured products c. Storing defective products for several months before use d. Delivering large quantities of parts with defects before they are detected e. Relying on statistical procedures to pinpoint variations in quality ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:46 AM DATE MODIFIED: 5/12/2023 10:59 AM 51. Under Six Sigma programs, what is the goal in a manufacturing company for defects per million units? a. 1.0 defect b. 2.0 defects c. 3.0 defects d. 3.4 defects e. 4.0 defects ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:48 AM DATE MODIFIED: 5/12/2023 10:59 AM 52. What is the key to creating a metric that can be used to measure quality?

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a. Identifying the defects that arise from processes b. Tracing defects to their source c. Finding out what caused the defects d. Creating incentives for reaching the quality goal e. Incorporating shop floor employees into the quality improvement program ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:50 AM DATE MODIFIED: 5/12/2023 10:59 AM 53. What is the role played by human resource management in implementing reliability improvement methodologies? a. Devising suitable quality-training programs b. Designing products with fewer parts c. Identifying defects that arise from processes d. Creating a metric that can be used to measure quality e. Working with suppliers to improve the quality of component parts ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 9:55 AM DATE MODIFIED: 5/12/2023 10:59 AM 54. What is the most important source of competitive advantage? a. Strong financial resources b. Innovation c. Market share d. Low production costs e. Brand recognition ANSWER: b POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 9:57 AM DATE MODIFIED: 5/12/2023 10:59 AM 55. Which of the following is not a reason for the failure of new products? a. Poor design b. Poor positioning strategy c. Insufficient customer demand d. Slow marketing e. Integration between R&D and marketing ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 10:03 AM DATE MODIFIED: 5/12/2023 10:59 AM 56. Which function can provide valuable information about customer needs? a. R&D b. Marketing c. Production d. Human resources e. Finance ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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57. What is one of the best ways to achieve cross-functional integration? a. Establishing cross-functional product development teams b. Outsourcing R&D to a third-party company c. Hiring consultants to provide guidance d. Limiting communication between departments e. Keeping functions separate to avoid conflicts ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 10:07 AM DATE MODIFIED: 5/12/2023 10:59 AM 58. What is one way to lower manufacturing costs? a. Increasing product quality b. Designing products for ease of manufacture c. Focusing on product features d. Spending more money on marketing e. Reducing production speed ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 10:09 AM DATE MODIFIED: 5/12/2023 10:59 AM 59. What is the main objective of a cross-functional product development team? a. To oversee a product development project from initial concept development to market introduction b. To lower manufacturing costs c. To increase R&D spending d. To outsource production to a third-party company Copyright Cengage Learning. Powered by Cognero.

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e. To limit communication between departments ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 10:11 AM DATE MODIFIED: 5/12/2023 10:59 AM 60. How can companies reduce the high failure rate associated with innovation? a. By investing more money in R&D b. By limiting communication between departments c. By making sure there is tight integration between R&D, production, and marketing d. By developing products for which there is not enough demand e. By marketing products slowly ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/12/2023 10:15 AM DATE MODIFIED: 5/12/2023 10:59 AM 61. Why is it important for managers to learn from their experience with product development? a. To allocate more resources to R&D b. To reduce development costs c. To identify key success factors and the root causes of failures d. To increase manufacturing speed e. To limit communication between departments ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/12/2023 10:18 AM DATE MODIFIED: 5/12/2023 10:59 AM 62. What is the key to achieving superior customer responsiveness? a. Offering low prices b. Providing high-quality products c. Giving customers what they want, when they want it, and at a price they are willing to pay d. Developing new products with new features e. Focusing on efficiency and innovation ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/12/2023 10:21 AM DATE MODIFIED: 5/12/2023 10:59 AM 63. What is the prerequisite for attaining superior customer responsiveness? a. Efficient production process b. High-quality products c. Listening to customers' needs and seeking better ways to satisfy those needs d. Offering customized products e. Reducing response time ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 10:27 AM DATE MODIFIED: 5/12/2023 10:59 AM 64. What is the role of leadership in achieving superior customer responsiveness?

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a. Building a customer orientation within the company b. Developing new products with new features c. Offering low prices d. Providing high-quality products e. Focusing on efficiency and innovation ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/12/2023 10:29 AM DATE MODIFIED: 5/12/2023 10:59 AM 65. What is an appropriate definition for customization? a. Varying the features of a good or service to tailor it to the unique needs or tastes of a group of customers or individual customers b. Reducing response time to customer demands c. Offering low prices to customers d. Developing new products with new features e. Providing high-quality products ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/12/2023 10:31 AM DATE MODIFIED: 5/12/2023 10:59 AM 66. What is the benefit of reducing response time to customer demands? a. The ability to charge higher prices for products b. Providing high-quality products to customers c. Offering customized products to customers d. Developing new products with new features e. Focusing on efficiency and innovation ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/12/2023 10:32 AM DATE MODIFIED: 5/12/2023 10:59 AM 67. How can a company quickly adjust production schedules in response to unanticipated customer demands? a. By having a marketing function that can quickly communicate customer requests to production b. By having a highly flexible production and materials-management function c. By having information systems that can help production and marketing d. By offering customized products to customers e. By reducing response time to customer demands ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/12/2023 10:34 AM DATE MODIFIED: 5/12/2023 10:59 AM 68. What is the example of a company from the text that pays close attention to customer requests and fine-tunes its merchandise in response? a. Domino's Pizza b. Four Seasons hotel chain c. Amazon.com d. Honda e. Lands' End ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Remember 5/12/2023 10:36 AM 5/12/2023 10:59 AM

69. What is the benefit of a company being responsive to customers' needs? a. Building brand loyalty and gaining the competitive advantage b. Developing new products with new features c. Offering low prices to customers d. Focusing on efficiency and innovation e. Reducing response time to customer demands ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/12/2023 10:39 AM DATE MODIFIED: 5/12/2023 10:59 AM Essay 70. Discuss why superior efficiency is important and the many ways that different parts of the organization can help achieve it.

ANSWER: Superior efficiency can be an important source of competitive advantage. The more efficient a company, the fewer the inputs required to produce a given output, and therefore the lower its cost structure.

POINTS: DIFFICULTY: REFERENCES:

A company can increase efficiency through a number of steps: exploiting economies of scale (reductions in unit costs attributed to larger output) and learning effects (cost savings that come from learning by doing); adopting flexible manufacturing technologies (a range of technologies designed to reduce setup times for complex equipment, increase the use of machinery through better scheduling, and improve quality control at all stages of the manufacturing process); reducing customer defection rates (the percentage of a company’s customers who defect every year to competitors); implementing a just-in-time (JIT) inventory system (a system of economizing on inventory holding costs by scheduling components to arrive just in time to enter the production process or only as stock is depleted); getting the research and development (R&D) function to design products that are easy to manufacture; upgrading the skills of employees through training; introducing self-managing teams (teams where members coordinate their own activities and make their own hiring, training, work, and reward decisions); linking pay to performance; building a companywide commitment to efficiency through strong leadership; and designing structures that facilitate cooperation among different functions in pursuit of efficiency goals.

1 Challenging 5-2 Achieving Superior Efficiency

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QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 71. Discuss why superior quality is important. Describe how companies can achieve superior quality.

ANSWER: Superior quality can help a company lower its costs, differentiate its product, and charge a premium price.

Achieving superior quality demands an organization-wide commitment to quality and a clear focus on the customer. It also requires metrics to measure: quality goals and incentives that emphasize quality; input from employees regarding ways in which quality can be improved; a methodology for tracing defects to their source and correcting the problems that produce them; a rationalization of the company’s supply base; cooperation with approved suppliers to implement total quality management programs; producing products that are designed for ease of manufacturing; and substantial cooperation among functions.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 5-3 Achieving Superior Quality QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:25 PM 72. You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in innovation. What suggestions would you offer? Be specific and detailed in your answer.

ANSWER: In many ways, innovation is the most important source of competitive advantage. This is because innovation can result in new products that better satisfy customer needs, can improve the quality (attributes) of existing products, or can reduce the costs of making products that customers want. The ability to innovate new products or processes gives a company a major competitive advantage that allows it to: (1) differentiate its products and charge a premium price, and/or (2) lower its cost structure below that of its rivals. However, the failure rate of new-product introductions is high because of factors such as uncertainty, poor commercialization, poor positioning strategy, slow cycle time, and technological shortsightedness.

POINTS:

To achieve superior innovation, a company must build skills in basic and applied research; design good processes for managing development projects; and achieve close integration between the different functions of the company, primarily through the adoption of crossfunctional product development teams and partly parallel development processes.

1

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DIFFICULTY: Challenging REFERENCES: 5-4 Achieving Superior Innovation QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to increase its innovation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 73. Explain the process by which increased production volume leads to lower costs. Give an example from a real or hypothetical firm. Can this process apply to a service organization as well as a manufacturing one? If so, give an example.

If not, explain why not.

ANSWER: Students should describe economies of scale, the cost savings that result from spreading fixed costs over a large production volume and achieving a greater division of labor and specialization. For example, when a sawmill is operating at half capacity, the fixed costs of rent, utilities, administrative tasks, and so on, are spread over fewer products, leading to high expenses per unit produced. But when that same sawmill operates at full capacity, the costs are spread over more units, lowering per-unit costs.

Another process that leads to lower costs is learning effects, in which a firm that is beginning to use a new, technologically complex process can learn to be more efficient by performing the task repeatedly. For example, biotechnology firms might spend 15 years developing their first commercially successful product. But as they learn from that experience, they can reduce development time for subsequent new products.

These processes can apply to service firms just as readily as they do to manufacturing firms.

For example, a hairstyling salon can spread the fixed costs of rent, utilities, and administration over its customers in exactly the same way that the sawmill can. Also, the salon can learn from experience how to style hair more efficiently, just as the biotechnology firm can learn from experience.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 5-2 Achieving Superior Efficiency QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Evaluate DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:25 PM 74. You are a consultant offering advice to a large manufacturing firm about ways to increase its distinctive competency in customer responsiveness. What suggestions would you offer? Be specific and detailed in your answer.

ANSWER: Addressing superior customer responsiveness often requires that the company achieve superior efficiency, quality, and innovation. Furthermore, to achieve superior customer responsiveness, a company must also give customers what they want, when they want it. It Copyright Cengage Learning. Powered by Cognero.

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must ensure a strong customer focus, which can be attained by emphasizing customer focus through leadership; training employees to think like customers; bringing customers into the company through superior market research; customizing products to the unique needs of individual customers or customer groups; and responding quickly to customer demands.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/12/2023 10:59 AM 75. Choose three of the value creation functions. (Infrastructure (leadership), Production, Marketing, Materials management, R&D, Information systems, Human resources). Compare the role each function plays in achieving superior efficiency, superior quality, superior innovation, and superior customer responsiveness.

ANSWER: Value Creation Function Infrastructure (leadership)

Production

Marketing

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Efficiency

Quality

Innovation

Provide company-wide commitment to efficiency.

Facilitate cooperation among functions.

Provide leadership and commitment to quality.

Find ways to measure quality.

Set goals and create incentives.

Solicit input from employees.

Encourage cooperation among functions.

Shorten production runs.

Trace defects back to the source.

Manage overall project (i.e., manage the development function).

Facilitate crossfunctional cooperation.

Cooperate with R&D on designing products that are easy to manufacture.

Work with R&D to develop process innovations.

Achieve customization through implementation of flexible manufacturing.

Achieve rapid response through flexible manufacturing.

Focus on the customer.

Provide customer feedback on quality.

Provide market information to R&D. Work with R&D to develop new products.

Know the customer.

Communicate customer feedback to appropriate functions.

Where appropriate, pursue economies of scale and learning economics.

Implement flexible manufacturing systems.

Where appropriate, adopt aggressive marketing to ride down the experience curve.

Limit customer

Customer Responsiveness Through leadership by example, build a company-wide commitment to responsiveness to customers.

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Materials management

defection rates by building brand loyalty.

Implement JIT systems.

Implement supply chain coordination.

R&D

Design products for ease of manufacture.

Seek process innovations.

Information systems

Use information systems to automate processes.

Use information systems to reduce costs of coordination.

Institute training programs to build skills.

Implement selfmanaging teams.

Implement pay for performance.

Human resources

Rationalize suppliers.

Help suppliers implement quality improvement methodologies.

Trace defects back to suppliers.

Design products that are easy to manufacture.

Use information systems to monitor defect rates.

Institute quality improvement training programs.

Identify and train black belts.

Organize employees into quality teams

No primary responsibility.

Develop logistics systems capable of responding quickly to unanticipated customer demands (JIT).

Develop new products and processes.

Cooperate with other functions, particularly marketing and manufacturing, in the development process.

Use information systems to coordinate crossfunctional, crosscompany product development.

Bring customers into the product development process.

Hire talented scientists and engineers.

Develop training programs that get employees to think like customers.

Use web-based information systems to increase responsiveness to customers.

POINTS: DIFFICULTY: REFERENCES:

1 Challenging 5-2 Achieving Superior Efficiency 5-3 Achieving Superior Quality 5-4 Achieving Superior Innovation 5-5 Achieving Superior Customer Responsiveness QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.05.02 - Describe the various strategic investments an enterprise can make to increase its efficiency.

SM.HILL.24.05.03 - Describe different ways an enterprise can make strategic investments to increase its quality.

SM.HILL.24.05.04 - Define multiple ways an enterprise can make strategic investments to Copyright Cengage Learning. Powered by Cognero.

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increase its innovation.

SM.HILL.24.05.05 - Compare different strategic investments that increase an enterprise’s customer responsiveness.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/15/2023 4:26 PM

Chapter 06 - Business-Level Strategy and the Industry Environment True / False 1. Later entrants to embryonic industries have the advantage over earlier entrants because they do not have the development or educational costs of figuring out how to produce the technology or teaching consumers about its’ benefits. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 2. As markets develop, demand is initially slow, accelerates as the technology becomes better understood and utilized, and then declines as demand is increasingly limited to replacement demand. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM Copyright Cengage Learning. Powered by Cognero.

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3. The last group of customers to enter the market are characterized as practical, generally understand the value of new technology, weigh the benefits of adopting new products against the costs, and wait to enter the market until they are confident they will benefit. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM Multiple Choice 4. Which of the following is NOT a reason for fragmentation? a. Lack of scale economies may mean that there are few, if any, cost advantages to large size. b. There is no established brand loyalty in the market segment. c. The lack of scale economies and national brand loyalty often implies low entry barriers. d. The company is specialty company that operates in local or regional markets or is focused on specialized or custom-made products. e. Brand loyalty in the industry may primarily be local.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 5. The real estate industry is comprised of different firms in several locations. Some are independent and popular locally, whereas others are affiliated with national chains. The real estate industry is most likely to be a(n) a. fragmented industry. b. oligopoly. c. pure competition industry. d. consolidated industry. e. monopoly.

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ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 6. Which of the following is NOT an example of a fragmented industry? a. Custom-made jewelry b. Aircraft manufacturing c. Massage services industry d. Catering e. Landscaping ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 7. Which of the following statements about fragmented industries is true? a. They are usually characterized by large, mass-production operations. b. They essentially enjoy a national brand loyalty. c. They require companies to use focus strategies to meet specialized customer needs. d. They do not attract new entrants as they have extremely high entry barriers due to economies of scale. e. They are usually dominated by one or two large companies that enjoy the power to influence industry prices.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic Bloom's: Understand 4/19/2023 4:50 PM 5/23/2023 3:28 PM

8. A firm may pursue a chaining strategy to a. obtain the advantages of economies of scale. b. create product diversity. c. generate revenue by licensing the patents it owns. d. spread overhead costs. e. establish several unrelated business units.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 9. Which of the following is an advantage of franchising? a. It gives the franchisor the same level of tight control over franchisees as does chaining. b. It allows the franchisor to earn all the profits made by franchisees. c. It is beneficial for franchisees because they do not have to face higher capital costs. d. It helps the franchisees by relieving them of the responsibility of running operations. e. It can help the franchisor expand his or her business rapidly.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 10. Which of the following is a disadvantage of franchising? a. It restricts the franchisor from expanding. b. It results in the franchisor taking all the financial burden of the franchisees.

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c. It results in the delegation of authority to franchisees, and the franchisor may not enjoy complete control. d. It does not provide enough incentive to the franchisees to run operations effectively because franchisees are not entrepreneurs. e. It requires the franchisees to create a new business model and plan strategies.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 11. Which of the following statements about horizontal mergers is true? a. Horizontal mergers enable companies to achieve economies of scale. b. Horizontal mergers result in the fragmentation of the industry. c. The horizontal merger strategy has been very successful in businesses with zero cases of failure. d. Companies that establish a network of distributor outlets to obtain the advantages of a low-cost position are known as horizontal mergers. e. Companies that adopt the strategy of centralization to gain control over all business units are known as horizontal mergers.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 12. To compete in the fragmented restaurant industry, Starbucks built, and now operates, hundreds of restaurants across the United States and Canada. Which of the following strategies is Starbucks using? a. Acquisitions b. Horizontal mergers c. Franchising d. Licensing e. Chaining ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 13. Which of the following is a way that a fragmented industry can be consolidated? a. Using strategies to create meaningful scale economies b. Creating a national brand where none previously existed c. Lowering costs through the creation of scale economies by value innovations d. Offering new ways to address customer’s demands such as wider product selection, longer operating hours, and lower prices e. All of these are ways that a fragmented industry can be consolidated ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 14. In a bid to expand its business and build a national brand, Omega Inc. has acquired several competing outlets in different locations. All the outlets are responsible for the production of smaller components. Omega believes that by having a larger enterprise that can offer a full portfolio of products, it can gain an edge over smaller rivals when selling to other companies. Which of the following strategies has Omega Inc. most likely used? a. Chaining b. Franchising c. Horizontal merger d. Niche strategy e. Divestment strategy ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:28 PM 15. Hydralicious, a juice bar, has been looking to expand its business. The company has given a few entrepreneurs in different locations the license to operate under its name. The entrepreneurs have permission to use the company's reputation and the business model to run operations. The entrepreneurs will be charged a fee, but they will also get a percentage of the profits. Which of the following strategies is Hydralicious most likely to be using? a. Chaining b. Horizontal merger c. Vertical merger d. Franchising e. Centralization ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:50 PM DATE MODIFIED: 5/23/2023 3:29 PM 16. Which of the following represents the correct chronology for market development? a. Embryonic, mass market, growth, mature, market saturation b. Embryonic, growth, mass market, mature, market saturation c. Embryonic, growth, mass market, market saturation, mature d. Growth, embryonic, mass market, mature, market saturation e. Mass market, embryonic, growth, market saturation, mature ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze Copyright Cengage Learning. Powered by Cognero.

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17. Most embryonic industries emerge from a. a technological innovation. b. product proliferation. c. a lack of high entry barriers. d. chaining. e. franchising.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Technology KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 18. The strategy that a company should pursue for the first group of customers to enter the market for a new product a. is to wait until the customer can see the benefits and appreciate the use of the new technology. b. is to highlight the utility and longevity of the technology. c. should focus on product values such as ease of use and reliability. d. is to use their social influence to promote new technologies and their future vision support the diffusion of new innovations. e. is to compare the benefits against the costs of adopting a new product.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 19. Which of the following individuals is most likely to fall under the category of laggards in the context of customer groups? a. Lauren, who is tech-savvy and tends to actively seek out new and innovative products in the market b. Suresh, who appreciates technology but tends to refrain from trying products that are extremely new Copyright Cengage Learning. Powered by Cognero.

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c. Phillip, who is ignorant about the newest uses of technology and buys new products only when they become an absolute necessity d. Charlotte, who is aware of the value that technology offers; she tends to weigh costs and benefits of a product before making a buying decision e. Maria, who tends to be a little apprehensive about buying new technology but buys nevertheless when she observes that a lot of people are using the new technology ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 20. Which of the following is a market growth factor that refers to the degree to which the results of using and enjoying a new product can be seen and appreciated by other people? a. Complexity b. Relative advantage c. Compatibility d. Trialability e. Observability ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 21. Which of the following statements about customer categories in growing industries is true? a. Laggards frequently adopt new products even when the benefits are not obvious. b. Innovators are the customers who are the last ones to adopt a new product. c. A typical late majority customer group is a behaviorally conservative set of customers. d. Customers in the early majority generally do not understand the value of new technology. e. Laggards form the leading wave or edge of the mass market.

ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 22. Which of the following statements about growing industries is true? a. Innovators and early adopters have the same customer needs as the early majority. b. Innovators and early adopters are typically reached through specialized distribution channels. c. Reaching the early majority rarely requires advertising and is usually achieved through word of mouth. d. Companies serving innovators need to have large-scale mass production and very low prices. e. Companies competing in an embryonic market typically pay more attention to increasing the reliability of a product than to its performance.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 23. Armando, a technology enthusiast, is often willing to pay premium prices to always have the newest tech gadgets.

Armando most likely belongs to which of the following group of customers? a. Laggard b. Early majority c. Early adopter d. Late majority e. Innovator ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth Copyright Cengage Learning. Powered by Cognero.

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industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 24. Tom tends to be ignorant about technological advancements. He was reluctant to own a smartphone even when they were well established and familiar in the market. However, Thomas slowly got used to the idea of a smartphone when his job demanded him to be connected to the office network all the time. Thomas is most likely to fall under which of the following categories of customers? a. Early majority b. Late majority c. Laggards d. Early adopters e. Innovators ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 25. Gadgetbug, an electronic gadgets company, has established itself as one of the industry leaders. The company has been facing competition from new entrants. The new entrants offer gadgets in different colors, with compelling artwork embossed on the cases. Seeing the interest in this market, Gadgetbug introduced its own range of uniquely designed gadgets. In this scenario, Gadgetbug's attempt to cater to the different segments of customers to deter competition demonstrates a. price signaling. b. product proliferation. c. a harvest strategy. d. a limit price strategy. e. diseconomies of scale.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

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26. Which of the following strategies requires a company to limit or decrease its investment in a business and to extract, or ―milk,‖ the proceeds of its investment as much as it can? a. Market concentration strategy b. Share-increasing strategy c. Cost-leadership strategy d. Hold-and-maintain strategy e. Harvest strategy ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 27. The highest market demand and industry profits arise when a. early adopters leave the market. b. innovators and early adopters enter the market. c. when laggards and late majority users leave the market. d. early and late majority users enter the market. e. when the production costs become high.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 28. Nutrimax Corp., a breakfast cereal company, has designed extensive and elaborate advertising campaigns for its existing products. The campaigns mainly focus on the features and benefits of the products that differentiate the cereals from the competition. Nutrimax Corp. is most likely to be using which of the following strategies? a. Market penetration Copyright Cengage Learning. Powered by Cognero.

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b. Product development c. Product proliferation d. Market development e. Capacity control ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 29. Which of the following factors in an industry is most likely to cause excess capacity? a. Technologically outdated production units b. High customer demand c. A company's investments in newer production technology d. Lack of competition from new entrants e. Limited number of outlets in certain locations ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 30. Drawbacks to which of the following industry rivalry management strategies include allowing companies with highcost structures to survive without implementing efficiency strategies despite the fact that this leaves them vulnerable in the long term? a. Price signaling b. Price leadership c. Non-price competition d. Market penetration e. Product development ANSWER: b POINTS: 1 DIFFICULTY: Easy Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 31. The strategy in a mature industry to invest in infrastructure that would be cost-prohibitive for new entrants to deter new competition from entering the market is known as a. product proliferation. b. technology upgrading. c. market penetration. d. capacity control. e. product development.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 32. Mature industries generally adopt all of the following strategies and tactics EXCEPT a. protecting their competitive advantage. b. moderating the intensity of industry competition. c. preserving both company and industry profitability. d. deterring entry into an industry. e. increasing the level of rivalry within an industry.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM Copyright Cengage Learning. Powered by Cognero.

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33. Which of the following is NOT a strategy used by mature industries to manage industry rivalry? a. Market development b. Non-price competition c. Strategic commitments d. Price signaling e. Market penetration ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 34. Which of the following correctly describes a non-price competitive strategy based on product differentiation? a. Market penetration uses new marketing segments and existing products. b. Market development uses new marketing segments and new products. c. Product development uses existing marketing segments and existing products. d. Product proliferation uses new marketing segments and new products. e. Price leadership uses existing marketing segments and existing products.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 35. An app development firm is working on a new product to identify and consolidate a smartphone user's favorite and most-used apps into one place on the phone. If the new product will be sold to existing customers, the firm is pursuing a strategy of a. product development. b. market penetration. c. product proliferation. d. market signaling. e. market development.

ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 36. Which of the following statements about declining industries is true? a. Not all segments of an industry typically decline at the same rate. b. A declining industry should ideally use the leadership strategy when it does not have any strengths and the competition is low. c. A divestment strategy is when a company in a declining industry tries to improve sales by improving product quality. d. The greater the exit barriers of a declining industry, the lower the intensity of competition. e. The intensity of competition is lower in declining industries that sell commodity-like products.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 37. When dealing with a declining industry, which of the following strategies should be used if a company has distinctive strengths that allow it to capture market share or if the speed of decline and the intensity of competition is moderate? a. Divestment b. Harvest c. Price signaling d. Leadership e. Capacity control ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

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38. When a company decides to exit an industry by selling its business assets to another company, it is said to be using which of the following strategies? a. Market penetration b. Divestment c. Niche d. Downsizing e. Outsourcing ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 39. The intensity of competition is greater in declining industries in which a. the industry is declining slowly instead of rapidly. b. the product is easy to differentiate. c. exit barriers are high. d. entry barriers are high. e. technology is stable.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 40. Music CDs and newspaper sales have been falling as users turn to the Internet for their music and news. Which of the following is NOT a strategy for companies in these declining industries?

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a. Leadership b. Chaining c. Niche d. Divestment e. Harvest ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 41. What are the three reasons for fragmentation in industries? a. High entry barriers, brand loyalty, and limited customer needs b. Scale economies, brand loyalty, and low entry barriers c. High entry barriers, low brand loyalty, and limited customer needs d. Limited scale economies, low brand loyalty, and high entry barriers e. High scale economies, high brand loyalty, and low entry barriers ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:06 PM DATE MODIFIED: 5/23/2023 3:29 PM 42. In what industries do focus strategies tend to work best? a. Large-scale industries b. Industries with high entry barriers c. Fragmented industries d. Industries with strong national brands e. Industries with limited customer needs ANSWER: c POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:08 PM DATE MODIFIED: 5/23/2023 3:29 PM 43. What is the key to understanding the process of transforming a fragmented industry through value innovation? a. Building national brands b. Establishing strong barriers to entry c. Finding ways to offer value that lowers costs through the creation of scale economies d. Adhering to strict franchising rules e. Focusing on customer needs ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:09 PM DATE MODIFIED: 5/23/2023 3:29 PM 44. The office supply industry was once highly fragmented and is now dominated by Staples and Office Depot OfficeMax. When it was highly fragmented, all of the following were characteristics EXCEPT: a. limited focus on personal service to local businesses. b. many small enterprises serving local markets. c. limited number of products. d. low inventory turnover. e. limited operating hours.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

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45. Suppose you are a manager in a fragmented industry. What are two strategies you could pursue to consolidate your industry? a. Focus on building a national brand and acquiring competitors. b. Focus on building national brands and franchising. c. Pursue a chaining strategy and acquire competitors. d. Pursue a franchising strategy and focus on building strong barriers to entry. e. Pursue a chaining strategy and focus on building strong barriers to entry.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:13 PM DATE MODIFIED: 5/23/2023 3:29 PM 46. What are the advantages and drawbacks of a franchising strategy for consolidating a fragmented industry? a. Advantages: rapid expansion, deep knowledge of local markets, latitude for developing new offerings and processes. Drawbacks: less control, franchisees capture some economic profit, higher cost of capital. b. Advantages: strict control, all economic profit flows to the company, lower cost of capital. Drawbacks: slower expansion, lack of local market knowledge, limited latitude for innovation. c. Advantages: lower costs, faster expansion, strong brand loyalty. Drawbacks: limited control, inability to capture economic profit, low innovation potential. d. Advantages: deep knowledge of local markets, strong barriers to entry, high innovation potential. Drawbacks: slow expansion, limited control, higher cost of capital. e. Advantages: strict control, strong barriers to entry, high innovation potential. Drawbacks: slower expansion, less local market knowledge, less economic profit captured by franchisees.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-1 Strategy in a Fragmented Industry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.01 - Identify the strategies managers can develop to increase profitability in fragmented industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/23/2023 1:14 PM DATE MODIFIED: 5/23/2023 3:29 PM Copyright Cengage Learning. Powered by Cognero.

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47. Which of the following is a reason why customer demand for the products of an embryonic industry is initially limited? a. The products have high quality. b. The products have a well-developed distribution channel. c. The customers are familiar with the new product and its benefits. d. The products have low production costs due to large volumes of production. e. Prices are high due to high production costs because of small volumes of production.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:16 PM DATE MODIFIED: 5/28/2023 7:58 AM 48. Which of the following is NOT a factor that leads to the emergence of a mass market for a product in a growth industry? a. Ongoing technological progress that increases the value of the product for the average customer b. The development of complementary products that increase the value of the product c. Companies in the industry find ways to reduce the costs of producing the new products. d. A decline in the rate of new adoptions as demand becomes increasingly limited to replacement demand. e. A decrease in the performance of the product ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:18 PM DATE MODIFIED: 5/23/2023 3:29 PM 49. Which of the following is true about the early majority group of customers in a growth industry? a. They are often technophiles who are delighted to be the first to purchase and experiment with a product based on a new technology. b. They are practical and generally understand the value of new technology. c. They are the first group of customers to enter the market.

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d. They purchase a new technology or product only when many of their peers already have done so and it is obvious the technology has great utility and is here to stay. e. They are inherently conservative and unappreciative of the uses of new technology.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:20 PM DATE MODIFIED: 5/23/2023 3:29 PM 50. What are the two main customer groups that pioneering companies must consider when developing business-level strategies to succeed in a market? a. Innovators and early adopters b. Early majority and late majority c. Innovators and late majority d. Early adopters and late majority e. Innovators and skeptics ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:21 PM DATE MODIFIED: 5/23/2023 3:29 PM 51. According to Geoffrey Moore, why are the business-level strategies required for companies to succeed in the emerging mass market quite different from those required to succeed in the embryonic market? a. Because early majority customers have very different customer needs from innovators and early adopters b. Because the embryonic market is small, and the mass market is large c. Because early majority customers are more price sensitive than innovators and early adopters d. Because early majority customers are more technologically sophisticated than innovators and early adopters e. Because the embryonic market is focused on performance and the mass market is focused on ease of use and reliability ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:23 PM DATE MODIFIED: 5/28/2023 7:59 AM 52. What is the consequence for pioneering companies that do not change their business-level strategies as a market develops over time? a. They will have a competitive advantage over their competitors. b. They will be able to serve both the early and late majority. c. They will maintain their dominance as market leaders. d. They will lose their competitive advantage to companies that implement new strategies aimed at best serving the needs of the early and late majority. e. They will be able to serve only the early adopters and innovators.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:25 PM DATE MODIFIED: 5/23/2023 3:29 PM 53. What are the four reasons why new strategies are often required to strengthen a company’s business model as a market develops over time? a. Technological sophistication, mass-market distribution channels, price sensitivity, and customer adoption b. Ease of use, reliability, mass production, and ubiquitous perception c. Product development, marketing and sales strategies, mass production, and customer adoption d. Specialized distribution channels, word of mouth, mass-market distribution channels, and mass-media advertising campaigns e. Performance, ease of use, reliability, and price point ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:29 PM DATE MODIFIED: 5/23/2023 3:29 PM 54. What is the main strategy that companies serving the rapidly growing mass market typically pursue to serve the early and late majority customers? a. Produce large quantities of a product and price high. b. Produce small quantities of a product and price high. c. Produce large quantities of a product and price low. d. Produce small quantities of a product and price low. e. Produce customized products at a high price.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:30 PM DATE MODIFIED: 5/23/2023 3:29 PM 55. What are the key marketing and sales strategies required for companies to reach the early majority in a rapidly growing mass market? a. Specialized distribution channels and word of mouth b. Mass-market distribution channels and word of mouth c. Specialized distribution channels and mass-media advertising campaigns d. Mass-market distribution channels and mass-media advertising campaigns e. Social media campaigns and email marketing ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:33 PM DATE MODIFIED: 5/23/2023 3:29 PM Copyright Cengage Learning. Powered by Cognero.

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56. Why do pioneering companies often lose their competitive advantage over time? a. Because they don't have enough funding b. Because they don't pay attention to increasing the performance of the product c. Because they don't focus on innovators and early adopters d. Because they don't use mass-market distribution channels e. Because they fail to change their strategies to best serve the needs of the early and late majority ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:34 PM DATE MODIFIED: 5/23/2023 3:29 PM 57. What is one reason why companies competing in an embryonic market pay more attention to increasing the performance of a product rather than its ease of use and reliability? a. Because innovators and early adopters are willing to tolerate the limitations of the product b. Because the early majority values ease of use and reliability c. Because mass-market distribution channels are not yet available d. Because the embryonic market is too small to support large-scale mass production e. Because the product is not yet suitable for a large-scale market ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/23/2023 1:37 PM DATE MODIFIED: 5/23/2023 3:29 PM 58. What are the product development strategies required for success in a mass market compared to an embryonic market? a. Increasing the performance of the product in both markets b. Increasing the performance of the product in the embryonic market and focusing on ease of use and reliability in the mass market c. Focusing on small quantities and high pricing in the embryonic market and large-scale mass production and low pricing in the mass market Copyright Cengage Learning. Powered by Cognero.

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d. Focusing on specialized distribution channels in the embryonic market and mass-market distribution channels in the mass market e. Focusing on large quantities and low pricing in the embryonic market and niche production and high pricing in the mass market ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 1:39 PM DATE MODIFIED: 5/23/2023 3:29 PM 59. According to Geoffrey Moore, why is it important for companies to implement new strategies to best serve the needs of the early and late majority? a. Because innovators and early adopters have very different customer needs from the early majority b. Because mass-market distribution channels require a different set of marketing and sales strategies c. Because companies serving the early majority need to pursue a differentiation or cost-leadership business model to remain a dominant industry competitor d. Because companies must cross a competitive chasm or gulf to transition from the embryonic market to the mass market e. Because companies that do not change their strategies will lose their competitive advantage to those that do ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/23/2023 2:35 PM DATE MODIFIED: 5/23/2023 3:29 PM 60. What kind of distribution channels are typically required to reach the early majority in a mass market? a. Specialized distribution channels b. Word of mouth c. Mass-market distribution channels d. Social media advertising e. Email marketing channels ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:37 PM DATE MODIFIED: 5/23/2023 3:29 PM 61. Why is large-scale mass production critical for serving the rapidly growing mass market? a. Because the early majority values ease of use and reliability b. Because companies serving the early majority need to pursue a cost-leadership business model c. Because companies need to make sure that the product is reliable and easy to use d. Because companies need to produce small quantities of a product and price high e. Because the mass market requires a high-quality product that can be reliably produced at a low price point ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-3 Strategic Implications: Crossing the Chasm QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.03 - Describe strategies enterprises can use to effectively compete in both embryonic and growth industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:39 PM DATE MODIFIED: 5/23/2023 3:29 PM 62. What is a common characteristic of mature industries? a. They are dominated by many small companies. b. They are dominated by a small number of large companies. c. They are dominated by medium-sized companies. d. They are dominated by specialized companies. e. They offer niche products and services.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 5/23/2023 2:40 PM 5/23/2023 3:29 PM

63. What is the primary focus of business-level strategy in mature industries? a. To maximize industry competition b. To deter entry into an industry c. To increase the level of rivalry within an industry d. To maintain company profitability at the expense of industry profitability e. The offering of a niche product or service ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:42 PM DATE MODIFIED: 5/23/2023 3:29 PM 64. How can interdependent companies protect their competitive advantage in mature industries? a. By lowering their prices to undercut competitors b. By reducing product quality to reduce costs c. By adopting strategies to deter entry into the industry d. By increasing the level of rivalry within the industry e. By creating competitive mergers and strategies ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:43 PM DATE MODIFIED: 5/23/2023 3:29 PM 65. Why is understanding competitive interdependence important for companies in mature industries? a. It allows them to maximize industry competition. b. It allows them to increase their own profitability at the expense of industry profitability. c. It allows them to develop successful business models and strategies. d. It allows them to protect their competitive advantage and profitability.

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e. It allows them to diversify their product offerings.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-4 Strategy in Mature Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.04 - Describe competitive dynamics in mature industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/23/2023 2:45 PM DATE MODIFIED: 5/23/2023 3:29 PM 66. What is the main focal point of the strategy of product proliferation? a. A strategy to deter entry by making sure that every niche or segment in the marketplace is well served b. A strategy to limit pricing to signal to a potential entrant that the incumbent could price the new entrant out of the market c. A strategy to upgrade technology to make sure new entrants have difficulty matching investments d. A strategy to invest in excess productive capacity to signal to potential entrants that if they enter, the incumbents have the ability to expand output and drive down prices e. A strategy to raise perceived costs of entry through investments that signal an incumbent’s long-term commitment to a market or market segment ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:47 PM DATE MODIFIED: 5/23/2023 3:29 PM 67. Which of the following strategies can incumbents use to deter entry when they face potential entrants that may be willing to match its pricing? a. Product proliferation b. Limit pricing c. Technology upgrading d. Strategic commitments e. Increased productive activities ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:49 PM DATE MODIFIED: 5/23/2023 3:29 PM 68. What is a limit price strategy? a. A strategy to deter entry by making sure that every niche or segment in the marketplace is well served b. A strategy to limit pricing to signal to a potential entrant that the incumbent could price the new entrant out of the market c. A strategy to upgrade technology to make sure new entrants have difficulty matching investments d. A strategy to invest in excess productive capacity to signal to potential entrants that if they enter, the incumbents have the ability to expand output and drive down prices e. A strategy to raise perceived costs of entry through investments that signal an incumbent’s long-term commitment to a market or market segment ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:50 PM DATE MODIFIED: 5/23/2023 3:29 PM 69. Which is the best way to describe a strategic commitment? a. A strategy to deter entry by making sure that every niche or segment in the marketplace is well served b. A strategy to limit pricing to signal to a potential entrant that the incumbent could price the new entrant out of the market c. A strategy to upgrade technology to make sure new entrants have difficulty matching investments d. A strategy to invest in excess productive capacity to signal to potential entrants that if they enter, the incumbents have the ability to expand output and drive down prices e. Investments that signal an incumbent’s long-term commitment to a market or market segment to raise the perceived costs of entering the market, thereby reducing the likelihood of entry ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when Copyright Cengage Learning. Powered by Cognero.

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competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:52 PM DATE MODIFIED: 5/23/2023 3:29 PM 70. How did Japanese automobile companies enter the U.S. market in the late 1970s and early 1980s? a. By targeting segments at the top end of the market for large, luxury cars b. By targeting segments at the bottom end of the market for small, inexpensive, fuel-efficient cars c. By targeting segments in the middle of the market for medium-sized cars d. By targeting segments that were not well served by American manufacturers for pickup trucks and SUVs e. By targeting segments for electric cars before American manufacturers did ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:53 PM DATE MODIFIED: 5/23/2023 3:29 PM 71. Which strategy involves a company's pursuit of new market segments for its existing products? a. Market penetration b. Product development c. Market development d. Product proliferation e. Capacity control ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:55 PM DATE MODIFIED: 5/23/2023 3:29 PM 72. Which of the following is a factor that can cause excess capacity within an industry? a. Technological developments Copyright Cengage Learning. Powered by Cognero.

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b. Product differentiation c. Price wars d. Market saturation e. Increased demand ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:56 PM DATE MODIFIED: 5/23/2023 3:29 PM 73. Which of the following capacity-control strategies is considered illegal under antitrust law? a. Preempting rivals and seizing the initiative b. Collaborating with rivals through market signaling c. Increasing advertising to deter competitors d. Sharing information on production levels and demand forecasts e. Engaging in price cutting to increase market share ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.05 - Compare strategies managers can develop to increase profitability when competition is intense.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:57 PM DATE MODIFIED: 5/23/2023 3:29 PM 74. Which of the following is NOT a reason for industry decline? a. Technological change b. Social trends c. Economic growth d. Demographic shifts e. Technological change, social trends, economic growth, and demographic shifts are all reasons for industry decline.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 2:59 PM DATE MODIFIED: 5/23/2023 3:29 PM 75. In which declining industry is differentiation most likely to give rise to significant brand loyalty? a. Railroad industry b. Steel industry c. Tobacco industry d. Newspaper business e. Office supply industry ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 3:01 PM DATE MODIFIED: 5/23/2023 3:29 PM 76. Which strategy focuses on optimizing cash flow in a declining industry? a. Leadership strategy b. Niche strategy c. Harvest strategy d. Divestment strategy e. Arbitrage strategy ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 3:04 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

5/23/2023 3:29 PM

77. A niche strategy makes sense when the company has unique strengths relative to which of the following? a. Pockets of demand in which demand is stable or declining less rapidly than the industry as a whole b. Companies that are leaving the industry c. The best option may be to sell to a company that is pursuing a leadership strategy in the industry d. Portions of demand in which demand is stable or declining more rapidly than the industry as a whole e. Pockets of demand in which demand of the industry is less rapid than that of the company ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 3:05 PM DATE MODIFIED: 5/23/2023 3:29 PM 78. A divestment strategy is appropriate when which of the following conditions are met? a. The company has few strengths relative to whatever pockets of demand are likely to remain in the industry. b. The competition in the declining industry is likely to be intense. c. The company wishes to exit a declining industry and optimize cash flow in the process. d. The company has few strengths relative to whatever pockets of demand are likely to remain in the industry and competition in the declining industry is likely to be intense. e. The competition in the declining industry is likely to be intense the company wishes to exit a declining industry and optimize cash flow in the process.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 3:08 PM DATE MODIFIED: 5/23/2023 3:29 PM 79. Which of the following is NOT a tactical step companies might use to achieve a leadership position? a. Using aggressive pricing and marketing to build market share b. Acquiring established competitors to consolidate the industry c. Halting all new investments in capital equipment, advertising, research and development (R&D), and so forth Copyright Cengage Learning. Powered by Cognero.

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d. Raising the stakes for other competitors e. Using aggressive pricing and marketing to build market share, acquiring established competitors to consolidate the industry, halting all new investments in capital equipment, advertising, research and development (R&D), and so forth, and raising the stakes for other competitors are tactical steps companies might use to achieve a leadership position.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/23/2023 3:10 PM DATE MODIFIED: 5/23/2023 3:29 PM Essay 80. In his book Crossing the Chasm, Geoffrey Moore discusses some of the issues involved in marketing technologically new products as markets develop through different stages. What customer groups does Moore identify as critical to the movement into mass market, and what must companies do if they are to successfully cross the chasm?

ANSWER: The first group of customers to enter the market is referred to as innovators. Innovators are ―technocrats‖ or ―gadget geeks‖; people who are delighted to be the first to purchase and experiment with a product based on a new technology—even if it is imperfect and expensive.

They tend to be less risk averse than other customer groups and often have greater resources to spare.

Early adopters are the second group to enter the market; they understand that the technology may have important future applications and are willing to experiment with it to see if they can pioneer new uses for the technology. They are comfortable with technical information and will adopt products that seem appealing even if none of their peers have purchased those products. Early adopters often envision how the technology may be used in the future, and they try to be the first to profit from its use.

The next group of customers, the early majority, forms the leading wave or edge of the mass market. Customers in the early majority are practical and generally understand the value of new technology. They weigh the benefits of adopting new products against the costs and wait to enter the market until they are confident they will benefit.

The late majority are the customers who purchase a new technology or product only when many of their peers already have done so and it is obvious the technology has great utility and is here to stay. A typical late majority customer group is a somewhat ―older‖ and more conservative set of customers. They are often unfamiliar with the advantages of new technology. The late majority can be a bit nervous about buying new technology but will do so if they see many people adopting it and finding value in it.

Laggards, the last group of customers to enter the market, are inherently conservative and unappreciative of the uses of new technology. Laggards frequently refuse to adopt new products even when the benefits are obvious, or unless they are forced to do so by circumstances—for example, due to work-related reasons.

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In his book, Moore argues that because of the differences in customer needs between these groups, the business-level strategies required for companies to succeed in the emerging mass market are quite different from those required to succeed in the embryonic market.

Pioneering companies that do not change the strategies they use to pursue their business model will therefore lose their competitive advantage to those companies that implement new strategies aimed at best serving the needs of the early and late majority. New strategies are often required to strengthen a company’s business model as a market develops over time for the following reasons: 





Innovators and early adopters are technologically sophisticated customers willing to tolerate the limitations of the product. The early majority, however, values ease of use and reliability. Companies competing in an embryonic market typically pay more attention to increasing the performance of a product than to its ease of use and reliability. Those competing in a mass market need to make sure that the product is reliable and easy to use. Thus, the product development strategies required for success vary as a market develops over time.

Innovators and early adopters are typically reached through specialized distribution channels, and products are often sold by word of mouth. They are active consumers of technical information. Reaching the early majority requires mass-market distribution channels and mass-media advertising campaigns that require a different set of marketing and sales strategies.

Because innovators and the early majority are relatively few in number and are not particularly price sensitive, companies serving them typically pursue a focus model, produce small quantities of a product, and price high. To serve the rapidly growing mass market, large-scale mass production may be critical to ensure that a highquality product can be reliably produced at a low price point.

In sum, the business models and strategies required to compete in an embryonic market populated by early adopters and innovators are very different from those required to compete in a high-growth, mass market populated by the early majority. Consequently, the transition between the embryonic market and the mass market is not a smooth, seamless one. Rather, it represents a competitive chasm or gulf that companies must cross. According to Moore, many companies do not or cannot develop the right business model; they fall into the chasm and go out of business.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:00 AM 81. What are the factors that cause the variation in market growth rates for different products? Evaluate whether these factors result in accelerating or retarding the rate at which a market grows.

ANSWER: Different markets develop at different rates. The speed at which a market develops can be measured by its growth rate, that is, the rate at which customers in that market purchase Copyright Cengage Learning. Powered by Cognero.

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the industry’s product. A number of factors explain the variation in market growth rates for different products, and, thus, the speed with which a particular market develops. It is important for managers to understand the source of these differences because their choice of strategy can accelerate or retard the rate at which a market grows.

The first factor that accelerates customer demand is a new product’s relative advantage; that is, the degree to which a new product is perceived as being better at satisfying customer needs than the product it supersedes. A second factor of considerable importance is complexity. Products that are viewed by consumers as being complex and difficult to master will diffuse more slowly than products that are easy to master. Another factor driving growth in demand is compatibility, the degree to which a new product is perceived as being consistent with the current needs or existing values of potential adopters. A fourth factor is trialability, the degree to which potential customers can experiment with a new product during a hands-on trial basis. A final factor is observability, the degree to which the results of using and enjoying a new product can be seen and appreciated by other people.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-2 Strategies in Embryonic and Growth Industries QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 82. What are the causes and effects of excess capacity? How can companies seek to control these effects? Why must companies exercise caution when using capacity control strategies?

ANSWER: Excess capacity may be caused by a shortfall in demand, as when a recession lowers the demand for cars and causes automakers to offer customers price incentives to purchase new cars. In this situation, companies can do nothing but wait for better times. By and large, however, excess capacity results from companies within an industry simultaneously responding to favorable conditions; they all invest in new plants to take advantage of the predicted upsurge in demand. Paradoxically, each individual company’s effort to outperform the others means that, collectively, they create industry overcapacity—which hurts them all.

Although demand is rising, the consequence of each company’s decision to increase capacity is a surge in industry capacity, which drives down prices. Excess capacity often derives from technological developments. New, low-cost technology sometimes can create an issue because all companies invest in it simultaneously to prevent being left behind. Excess capacity occurs as the new technology produces more efficiently than the old. In addition, new technology is often introduced in large increments, which generates overcapacity. If all companies within an industry try to change technologies, industry capacity may double, and enormous problems can ensue. Competitive factors within an industry can cause overcapacity. Entry into an industry is one such factor. To prevent the accumulation of costly excess capacity, companies must devise strategies that enable them to control—or at least benefit from—capacity-expansion programs.

Excess capacity arises when companies collectively produce too much output; to dispose of it, they cut prices. When one company cuts prices, others quickly do the same because they fear that the price cutter will be able to sell its entire inventory and leave them Copyright Cengage Learning. Powered by Cognero.

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with unwanted goods. The result is a developing price war.

Given the various ways in which capacity can expand, companies clearly need to find means of controlling it. Companies that are always plagued by price cutting and price wars will be unable to recoup their investments in generic strategies. Low profitability caused by overcapacity forces not only the weakest companies but also sometimes major players to exit the industry. In general, companies have two strategic choices: (1) each company must try to preempt its rivals and seize the initiative, or (2) the companies must collectively find indirect means of coordinating with each other so that they are all aware of the mutual effects of their actions. To preempt rivals, a company must forecast a large increase in demand in the product market and then move rapidly to establish large-scale operations that will be able to satisfy the predicted demand. By achieving a first-mover advantage, the company may deter other firms from entering the market because the preemptor will usually be able to move down the experience curve, reduce its costs, and therefore reduce its prices as well—and threaten a price war if necessary. This strategy is extremely risky, for it involves investing resources before the extent and profitability of the future market are clear. A preemptive strategy is also risky if it does not deter competitors that decide to enter the market. If competitors can develop a stronger generic strategy, or have more resources, they can make the preemptor suffer. Thus, for the strategy to succeed, the preemptor must generally be a credible company with enough resources to withstand a possible advertising/price war. To coordinate with rivals as a capacity-control strategy, caution must be exercised because collusion on the timing of new production capacity investments is illegal under antitrust law.

However, tacit coordination is practiced in many industries as companies attempt to understand and forecast one another’s competitive moves. Generally, companies use market signaling to secure coordination. They make announcements about their future investment decisions in trade journals and newspapers. In addition, they share information about their production levels and their forecasts of demand within an industry to bring supply and demand into equilibrium. Thus, a coordination strategy reduces the risks associated with investment in the industry.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-5 Strategies to Deter Entry QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.06.02 - Discuss the special problems that exist in embryonic and growth industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/23/2023 3:29 PM 83. Intensifying competition in a declining industry is dependent on which four factors? Explain how these factors are considered when a company chooses a strategy in a declining industry.

ANSWER: Competition tends to intensify in a declining industry, and profit rates tend to fall. The intensity of competition in a declining industry depends on the four critical factors. First, the intensity of competition is greater in industries in which decline is rapid, as opposed to industries such as tobacco in which decline is slow and gradual. Second, the intensity of competition is greater in declining industries in which exit barriers are high. The result is excess productive capacity and hence an increased probability of fierce price competition.

Third, and related to the previous point, the intensity of competition is greater in declining industries in which fixed costs are high. The reason is that the need to cover such fixed costs Copyright Cengage Learning. Powered by Cognero.

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as the costs of maintaining productive capacity can drive companies to try to use excess capacity by slashing prices, which can trigger a price war. Finally, the intensity of competition is greater in declining industries in which the product is perceived as a commodity in contrast to industries in which differentiation gives rise to significant brand loyalty.

Companies can adopt four main strategies to deal with decline: (1) a leadership strategy, by which a company seeks to become the dominant player in a declining industry; (2) a niche strategy, which focuses on pockets of demand that are declining more slowly than the industry as a whole; (3) a harvest strategy, which optimizes cash flow; and (4) a divestment strategy, by which a company sells the business to others. With a leadership strategy, there are many company strengths relative to remaining pockets of demand and a low intensity of competition in declining industry. With a niche strategy, there are many company strengths relative to remaining pockets of demand but the intensity of competition in declining industry can be low or high. In a divestment strategy, there are few company strengths relative to remaining pockets of demand and a high intensity of competition in declining industry. In a harvest strategy, is the best choice when a company wishes to exit a declining industry and optimize cash flow in the process. This strategy makes the most sense when the company foresees a steep decline and intense future competition, or when it lacks strengths relative to remaining pockets of demand in the industry.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 6-6 Strategies in Declining Industries QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.06.06 - Outline the different strategies that companies in declining industries can use to support their business models and profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:08 AM

Chapter 07 - Strategy and Technology True / False 1. The increase in sales of a certain type of cell phone due to the availability and increase in demand of a specific game application only designed for that cell phone is an example of indirect or ―cross-side‖ network effects. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Apply 4/19/2023 4:51 PM 5/25/2023 6:40 AM

2. Microsoft's near monopoly of PC operating systems substantially reduces the risks facing the makers of complementary products and the costs of those products. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 3. Antibody Solutions is a company that specializes in cell-bank storage and producing antibodies for bacterial and viral infections. It is not considered a high-tech company since it is not technically in the computer or software industry, which is typically considered high-tech. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM Multiple Choice 4. Which of the following statements is true of technology in industries? a. Technology in industries is accounting for only a minimal share of economic activity. b. Technology is revolutionizing aspects of the product or production system even in industries not typically considered high-tech. c. High-technology industries are not required to adhere to technical standards to achieve product differentiation. d. The lack of complementary products does not affect the success of a high-technology industry.

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e. High-technology industries are usually not faced with the challenge of developing business models to achieve a competitive advantage like low-technology industries.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 5. Which of the following is a source of competitive advantage for a company and is the basis for the product differentiation that tends to dominate the industry? a. Paradigm shift b. First mover c. Public domain d. Technical standard e. Dominant design ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 6/15/2023 3:22 PM 6. With reference to high-technology industries, which of the following is an example of a technical standard? a. Prices of complementary products b. Medium of advertising used for technology products c. Color of gadgets produced d. Layout of keys on a keyboard e. Number of manufacturing units per industry ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 7. When standards are part of the public domain, they can be used a. only by companies in one particular industry. b. only by federal contractors. c. by paying a fee to the Federal Communications Commission. d. freely by any company. e. only once without payment of a fee.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 8. With reference to high-technology industries, which of the following statements is true about technical standards? a. They emerge because there are economic benefits associated with them. b. They cause compatibility problems between products and their complements. c. They can create a lot of confusion in the minds of consumers. d. They often result in higher production costs. e. They increase the risks associated with supplying complementary products.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 9. Which of the following statements is true about establishing technical standards? a. Companies in an industry cannot lobby the government to mandate an industry standard. b. Technical standards are often set by cooperation among businesses, without government help.

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c. Companies cannot adopt technical standards that are in the public domain. d. Market demand is not taken into consideration when it comes to establishing technical standards. e. The strategy and business model a company has developed for promoting its technological standard holds little importance when it comes to establishing standards.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 10. Which of the following is NOT a way that standards can emerge in an industry? a. Lobbying the government to mandate an industry standard when the benefits of establishing a standard are recognized b. Emerging rules and regulations about resource use and worker safety c. Government- or association-set standards fall into the public domain d. Market demand e. Industry association between cooperating businesses without government assistance ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 11. Network effects arise in industries where a. the size of the network of complementary products is a primary determinant of demand for an industry's product. b. a large network of companies in an industry use the same business model and strategies. c. a company adheres to the same technical standards across its network of outlets. d. companies network together and lobby for establishing certain technical standards. e. companies that are not in favor of a technical standard network together.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 12. There is a set of fixed specifications for turbine blades for jet engines. The specifications include the material that needs to be used to manufacture the blades as well as the specific dimensions that they need to have; the same specifications are used by all manufacturers. In this scenario, the specifications for jet blades can be referred to as a. format wars. b. technical standards. c. technological paradigm shifts. d. first movers. e. razor and blade strategies.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 13. Switching costs, in the context of technology industries, refer to the costs that a. industries incur in order to adhere to technical standards. b. companies incur to switch from one business model to another. c. customers need to bear to abandon an established standard and adopt a new standard. d. industries need to bear to abandon old technology and get license for a new technology. e. companies need to bear to create product differentiation when they are locked inside an industry.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM Copyright Cengage Learning. Powered by Cognero.

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14. Libra Electronics has invented a new technology to make laptops that are extremely lightweight and unbreakable. The company is advertising aggressively and wishes to create demand for its new range of laptops. To attract customers, the company has priced the laptops attractively. However, to earn a profit, the company has priced the batteries required for the laptops extremely high. Which of the following is illustrated in this scenario? a. Downsizing strategy b. Harvest strategy c. Razor and blade strategy d. Divestment strategy e. Switching costs ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 15. Venus Corp., a high-technology, gadget-making company has introduced a gaming console with attractive features.

Even though the console is priced modestly and has better features than the existing ones, it has failed as many customers are apprehensive about buying it. To create demand, Venus Corp. should a. price the console extremely high. b. create its own set of technical standards. c. ensure that there are adequate complementary products. d. use minimalistic and subtle advertising and marketing strategies. e. avoid licensing the format to other companies.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:14 AM 16. The goal of finding ways to make network effects work in a company’s favor and against competitors can be achieved by a. taking the time to build a quality installed base for its standard after several tests and redesigns.

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b. making sure consumers remain hesitant to bear switching costs. c. focusing on a slow role out and moderating consumer demand. d. leveraging the positive feedback loop. e. relying on other industry members to establish a technological standard or format such that it becomes as quickly as possible as the industry standard.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 17. Which of the following pieces of advice would you give to a firm that wants to exploit network effects? a. Charge a heavy license fee for new technology. b. Refrain from using technical standards. c. Create incentives for other firms to develop complementary products. d. Do not use aggressive marketing strategies for killer applications. e. Increase switching costs.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 18. Which of the following strategies should a company NOT adopt if it wants to win a format war? a. Developing killer applications b. Developing complementary products c. Joining forces with other companies to develop new technologies d. Aggressively marketing to jump-start demand e. Charging extremely high license fee for the technology ANSWER: e POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 19. An adequate supply of complements to a product can result in a. more customers opting for the product. b. higher switching costs. c. a significant decrease in sales of the product. d. a significant decrease in customer demand for the product. e. the company failing to win a format war.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 20. Cooperating with competitors a. reduces competition in the market. b. creates confusion among customers and often leads them to delay their purchases. c. helps lower the entry barriers of the industry, thus allowing new entrants to bring in their own formats. d. curbs network effects by discouraging complementary products. e. results in the creation of several new formats, thus intensifying format wars.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

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DATE CREATED: DATE MODIFIED:

4/19/2023 4:51 PM 5/25/2023 6:40 AM

21. The various strategies that companies should adopt to win format wars revolve around a. getting the federal government to intercede. b. making network effects work in their favor and against their competitors. c. avoiding aggressive marketing and advertising strategies. d. curbing the supply of complementary products. e. charging high license fees.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 22. Mathematica 1.0 was one of the most distinctive applications for the short-lived NeXT Computer. It still sets the standard for symbolic math and visualization on Windows, Mac, Linux, and Unix. Mathematica 1.0 can be described as which of the following applications? a. Dominant b. Analogous c. Hardware d. Strategic e. Killer ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 23. Aggressive marketing strategies such as substantial upfront marketing and point-of-sales promotion techniques a. deters early adopters. b. helps a company jump-start demand. c. results in lower emphasis on killer applications.

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d. attracts potential early adopters who will bear the switching costs associated with adopting the format. e. usually triggers a negative feedback loop.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 24. Cellular phone service providers often sell the phone itself at a very low price and then charge a relatively high fee for usage. This illustrates a. the first-mover strategy. b. competitive cooperation. c. the razor and blade strategy. d. competitive positioning. e. format licensing.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Winning a Format War QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 25. Marginal cost refers to the costs of a. switching to a new technology. b. adhering to technical standards. c. producing one extra unit of product. d. product promotions. e. licensing new technology.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 26. Which of the following statements is true about marginal costs in high-technology industries? a. They are invariably higher than fixed costs. b. They are the costs that customers need to bear to adopt a new technology. c. They include the costs of packaging and product distribution. d. They are extremely high in software-making companies. e. They do not exist if the product is sold by a sales force directly to end-users.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 27. Consider a cost curve with production volume on the horizontal axis and marginal costs on the vertical axis. What shape would the marginal cost curve most resemble in a high-tech industry? a. Upward at a 45-degree angle b. U-shape c. Straight and vertical d. J-shape e. Straight and flat ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM Copyright Cengage Learning. Powered by Cognero.

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28. Which of the following is NOT true of high-technology industries? a. First movers have an advantage because their customers avoid switching costs. b. First movers have higher pioneering costs than later entrants. c. Later entrants can avoid the mistakes made by first movers. d. First movers that create a revolutionary product are in a monopoly position. e. First movers run the risk of building the wrong resources and capabilities.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 29. Which of the following is a disadvantage of first movers? a. They cannot establish significant brand loyalty due to high costs. b. They cannot create switching costs for their customers, thus making it difficult to enter the market. c. They decrease sales volume compared to their rivals and thus, operate at a loss. d. They run the risk of building the wrong resources and capabilities. e. They do not have the power to exploit network effects and positive feedback loops.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 30. Which of the following is NOT a basic strategy for a first mover? a. Develop and market the innovation itself b. Develop and market the innovation jointly with other companies through a strategic alliance or joint venture c. License the innovation to others d. Discourage development of complementary assets e. Increase height of imitation barriers ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 31. When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should a. license the innovation to others. b. enter into a joint venture to protect the product. c. lower the barriers for imitation. d. sell the technology outright to another firm. e. wait until competitors develop an alternative product.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 32. An advantage of being a first mover is that a. the pioneering costs are minimal. b. there are well-defined distribution channels. c. there is no risk of building the wrong resources. d. the focus is always on the mass market. e. there is an opportunity to increase sales volume ahead of rivals.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

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33. Which of the following is true of first movers? a. The first mover cannot be able to establish brand loyalty. b. The first mover has no opportunity to exploit network effects and positive feedback loops. c. The first mover cannot create switching costs for its customers to deter rivals. d. The first mover that creates a revolutionary product is in a monopoly position. e. Being a first mover guarantees instant success.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 34. Cell phone technology is replacing traditional wired phone technology. This is an example of a(n) a. first-mover advantage. b. technological paradigm shift. c. format war. d. complementary product. e. embryonic industry.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 35. Which of the following will NOT help an established company in addressing the potential challenge of a disruptive technology? a. Access to knowledge about how disruptive technologies can revolutionize markets Copyright Cengage Learning. Powered by Cognero.

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b. Investing in newly emerging technologies that may ultimately become disruptive technologies c. Separating out the disruptive technology and creating an autonomous operating division solely for this new technology d. Asking customers if they are interested in the new technology e. Understanding that a disruptive technology will require a radically different value chain with a different cost structure ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 36. Technological disruption a. is typically a temporary phase lasting a few months. b. occurs when the manufacturing plants of a company fail. c. mostly affects the new entrants. d. compels firms to adopt new business models. e. is a problem primarily in embryonic industries.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 37. Which of the following statements is true about new entrants in the context of a technological paradigm shift? a. New entrants often face the risks of product cannibalization. b. Pressures to continue the existing out-of-date business model hamstring new entrants. c. New entrants do not need to worry about their established customer base. d. It is difficult for new entrants to focus all their energies on the opportunities offered by the new disruptive technology.

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e. New entrants are not constrained by lack of capital.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 38. Which of the following correctly describes the events that occur as an industry experiences a technological paradigm shift? a. R&D investments in a new technology tend to yield rapid improvements and increasing returns, inflection point, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, technology starts to approach its natural limit, research attention turns to possible alternative technologies. b. Inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, technology starts to approach its natural limit, research attention turns to possible alternative technologies. c. Technology starts to approach its natural limit, research attention turns to possible alternative technologies, inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows. d. R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, inflection point, research attention turns to possible alternative technologies, technology starts to approach its natural limit. e. Technology starts to approach its natural limit, inflection point, R&D investments in a new technology tend to yield rapid improvements and increasing returns, diminishing returns to cumulative R&D begin to set in and the rate of improvement in performance slows, research attention turns to possible alternative technologies.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:15 AM Copyright Cengage Learning. Powered by Cognero.

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39. Which of the following statements is true about technological paradigm shifts? a. They often do not change the nature of competition in an industry. b. They occur when government regulations restrict the use of certain technologies. c. They have the potential to threaten the survival of established industries. d. They can often be handled by established companies without adopting new strategies. e. They strongly deter new entrants.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 40. Which of the following industries is considered a high-technology industry? a. Textile industry b. Agriculture industry c. Telecommunications industry d. Hospitality industry e. Construction industry ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:06 AM DATE MODIFIED: 5/25/2023 8:07 AM 41. What is a ―winner-take-all‖ market in high-tech industries? a. A market where companies compete to be the first to develop a new technology b. A market where the first company to achieve a technological advantage gains a nearly insurmountable position c. A market where companies compete on price to win customers d. A market where companies collaborate to develop a new technology e. A market where companies compete to establish a new standard ANSWER: b POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:08 AM DATE MODIFIED: 5/25/2023 8:09 AM 42. Which of the following industries has been revolutionized by new technologies based on cell biology, recombinant DNA, and genomics? a. Telecommunications industry b. Textile industry c. Agriculture industry d. Pharmaceutical industry e. Construction industry ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:10 AM DATE MODIFIED: 5/25/2023 8:11 AM 43. What is the circle of high-technology industries? a. A small group of industries that produce high-tech products b. Industries that are becoming more high tech as technology advances c. Industries that are using technology to improve their production processes d. Industries that are investing heavily in research and development e. Industries that are collaborating to develop new technologies ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:11 AM Copyright Cengage Learning. Powered by Cognero.

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44. Which of the following is an example of a ―fintech‖ innovation? a. A new type of fertilizer for agriculture b. A new type of fabric for clothing c. A new type of construction material d. A new type of financial service provided by computers e. A new type of transportation technology ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:13 AM DATE MODIFIED: 5/25/2023 8:14 AM 45. What is the impact of technology on the economy, according to the U.S. Bureau of Labor Statistics? a. Technology accounts for approximately 50% of U.S. gross domestic product. b. Technology accounts for approximately 10% of U.S. gross domestic product. c. Technology accounts for approximately 25% of U.S. gross domestic product. d. Technology accounts for approximately 75% of U.S. gross domestic product. e. Technology has no impact on the economy.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:14 AM DATE MODIFIED: 5/25/2023 8:15 AM 46. What is the competitive advantage of physical stores such as Walmart based on? a. Their use of renewable energy sources b. Their use of genetically modified crops c. Their use of information technology d. Their use of composite materials e. Their use of fuel cells ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:16 AM DATE MODIFIED: 5/25/2023 8:17 AM 47. Which of the following is an example of a technology that is revolutionizing the aerospace industry? a. New types of fertilizer for crops b. New types of fabric for clothing c. New types of construction materials d. New composite materials and more efficient jet engines e. New types of renewable energy sources ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 7-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.01 - Explain the components of high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:17 AM DATE MODIFIED: 5/25/2023 8:18 AM 48. What is a technical standard? a. A set of technical specifications that producers adhere to when making a product or a component of it b. A legal document that mandates a specific design for a product c. A product that is widely used in the industry and has become a standard by default d. A specification that is owned by a company and used to differentiate its products e. A term used to describe a product that is innovative and technologically advanced ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:19 AM Copyright Cengage Learning. Powered by Cognero.

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49. Why do companies compete to set technical standards? a. To differentiate their products from their competitors b. To reduce production costs and increase profitability c. To ensure compatibility between products and their complements d. To establish a monopoly in the market e. To reduce the risks associated with supplying complementary products ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:25 AM DATE MODIFIED: 5/25/2023 8:26 AM 50. Why do companies compete to set technical standards? a. They help companies to establish a monopoly in the market. b. They reduce production costs and increase profitability. c. They ensure compatibility between products and their complements. d. They increase the value of owning a product as the network of compatible products grows. e. They reduce confusion in the minds of consumers.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:26 AM DATE MODIFIED: 5/25/2023 8:27 AM 51. How do technical standards benefit consumers? a. By reducing the costs associated with making sure that products work well with each other b. By reducing the risks associated with supplying complementary products c. By reducing confusion in the minds of consumers d. By ensuring compatibility between products and their complements e. By increasing the level of industry profitability ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:27 AM DATE MODIFIED: 5/25/2023 8:29 AM 52. What are the three primary ways in which technical standards emerge in an industry? a. By lobbying the government to mandate a standard, through cooperation among businesses, and through market demand b. By establishing a monopoly in the market, by reducing production costs, and by increasing profitability c. By reducing the risks associated with supplying complementary products, by reducing confusion in the minds of consumers, and by ensuring compatibility between products and their complements d. By setting standards through industry associations, through cooperation among businesses, and through market demand e. By reducing the costs associated with making sure that products work well with each other, by reducing the risks associated with supplying complementary products, and by reducing confusion in the minds of consumers ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:29 AM DATE MODIFIED: 5/25/2023 8:31 AM 53. Which of the following is NOT a key strategy that companies can adopt to establish their technology as the standard in a market? a. Creating incentives for independent companies to produce complements b. Developing killer applications to limit the compatibility of the application to their own platform c. Adopting a razor and blade strategy to make profits on the sale of complements d. Pricing the product high to capture profits from early adopters e. Endorsing complements to turn them into blockbusters ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Becoming the Dominant Standard QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:31 AM DATE MODIFIED: 5/25/2023 8:32 AM 54. What is a common tactic used to jump-start demand for a new technological standard? a. Endorsing complements to turn them into blockbusters b. Creating incentives for independent companies to produce complements c. Pricing the product high to capture profits from early adopters d. Aggressive marketing to attract potential early adopters e. Developing killer applications to limit the compatibility of the application to their own platform ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Becoming the Dominant Standard QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:33 AM DATE MODIFIED: 5/25/2023 8:34 AM 55. Analyze the importance of cooperation between companies in the establishment of a technological standard. a. Cooperation reduces confusion in the industry and allows a single format to rise to the fore, which can accelerate adoption of the technology. b. Cooperation is unnecessary in the establishment of a technological standard. c. Cooperation only benefits one company while hindering the success of its competitors. d. Companies should never license their format to other enterprises. e. The success of a technological standard is solely dependent on the quality of the product.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Becoming the Dominant Standard QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 8:35 AM DATE MODIFIED: 5/25/2023 8:37 AM Copyright Cengage Learning. Powered by Cognero.

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56. What is the cost structure of many high-technology firms? a. High fixed costs and high marginal costs b. Low fixed costs and high marginal costs c. High fixed costs and low marginal costs d. Low fixed costs and low marginal costs e. Variable fixed costs and variable marginal costs ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 8:38 AM DATE MODIFIED: 5/25/2023 8:39 AM 57. What does it mean for a high-tech product to have low marginal costs? a. The cost of producing one extra unit of the product is very high. b. The cost of producing one extra unit of the product is very low. c. The cost of developing the product is very high. d. The cost of developing the product is very low. e. The cost of producing and developing the product are equal.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/25/2023 8:42 AM DATE MODIFIED: 5/25/2023 8:44 AM 58. How does the cost structure of high-tech firms like Google or Apple affect their profitability? a. Firms with high fixed costs and low marginal costs are less profitable than those with low fixed costs and high marginal costs. b. Firms with high fixed costs and low marginal costs are more profitable than those with low fixed costs and high marginal costs. c. Firms with high fixed costs and low marginal costs have no effect on their profitability. d. Firms with high fixed costs and low marginal costs have similar profitability as those with low fixed costs and Copyright Cengage Learning. Powered by Cognero.

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high marginal costs. e. Firms with high fixed costs and low marginal costs have lower revenue than those with low fixed costs and high marginal costs.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:44 AM DATE MODIFIED: 5/25/2023 8:45 AM 59. What is the strategic implication of a high-tech firm having a cost structure with low marginal costs? a. The firm should raise prices to increase profits. b. The firm should lower prices to increase demand and profits. c. The firm should increase advertising spending to increase sales. d. The firm should increase fixed costs to decrease marginal costs. e. The firm should decrease production to maintain current profits.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:46 AM DATE MODIFIED: 5/25/2023 8:47 AM 60. Why do marginal costs rise for conventional producers as they expand output? a. Due to increasing returns b. Due to high fixed costs c. Due to low variable costs d. Due to decreasing returns e. Due to low fixed costs ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:47 AM DATE MODIFIED: 5/25/2023 8:49 AM 61. How does a high-tech firm's cost structure affect their ability to expand output? a. It is easier for high-tech firms to expand output due to increasing returns. b. It is more difficult for high-tech firms to expand output due to decreasing returns. c. High-tech firms have no effect on their ability to expand output. d. High-tech firms have an easier time expanding output due to low fixed costs. e. High-tech firms have a harder time expanding output due to high marginal costs.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-4 Costs in High-Technology Industries QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.04 - Explain the cost structure of many high-technology firms, including the strategic implications of this structure.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:49 AM DATE MODIFIED: 5/25/2023 8:51 AM 62. Which of the following is NOT a primary source of first-mover advantages? a. Network effects and positive feedback loops b. Brand loyalty c. Scale economies and learning effects d. Switching costs e. Pioneering costs ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:52 AM DATE MODIFIED: 5/25/2023 8:54 AM Copyright Cengage Learning. Powered by Cognero.

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63. What is a first-mover disadvantage? a. The cost of pioneering the technology b. The risk of building the wrong resources and capabilities c. The difficulty of establishing significant brand loyalty d. The inability to accumulate valuable knowledge e. The creation of switching costs ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:55 AM DATE MODIFIED: 5/25/2023 8:57 AM 64. Which company introduced the world’s first microprocessor in 1971? a. Xerox b. Intel c. Cisco d. Microsoft e. Sharp ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:57 AM DATE MODIFIED: 5/28/2023 8:16 AM 65. What is an example of a switching cost? a. Customers must sign a contract agreeing to pay for a phone if they terminate the service contract within a specified time period. b. The first mover has to bear significant pioneering costs that later entrants do not. c. The risk of building the wrong resources and capabilities. d. The inability to accumulate valuable knowledge. e. The purchase of accessories associated with the newly purchased product.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:59 AM DATE MODIFIED: 5/25/2023 9:00 AM 66. What is the best way to describe the ―crossing the chasm‖ problem? a. The difficulty of establishing significant brand loyalty b. The inability to accumulate valuable knowledge c. First movers run the risk of directing their resources and capabilities to the needs of innovators and early adopters and not being able to switch when the early majority enters the market. d. The cost of pioneering the technology e. The inability for first movers to meet market demand despite being on the cutting edge of technology ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 9:00 AM DATE MODIFIED: 5/25/2023 9:02 AM 67. What are technological paradigm shifts? a. The decline of mature technologies in an industry b. The emergence of disruptive technologies that revolutionize an industry c. The decline of new entrants in an industry d. The saturation of a market e. The creation of new market niches ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/25/2023 9:03 AM 5/25/2023 9:04 AM

68. According to Richard Foster, what is the relationship between the performance of a technology and time? a. There is a linear relationship between the two. b. The performance of a technology declines over time. c. The performance of a technology increases rapidly in the early stages and then slows down as it approaches its natural limit. d. The performance of a technology is random. e. The performance of a technology is unrelated to time.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 9:05 AM DATE MODIFIED: 5/25/2023 9:06 AM 69. What is a disruptive technology, according to Clayton Christensen? a. A new technology that originates away from the mainstream of a market and then invades the main market b. A technology that is used only by established companies c. A technology that is used only by new entrants in an industry d. A technology that is already widely adopted by the market e. A technology that has limited functionality ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 9:06 AM DATE MODIFIED: 5/25/2023 9:08 AM 70. What mistake do established companies often make when a disruptive technology emerges? a. They invest too much in the new technology.

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b. They ignore the new technology because their customers do not want it. c. They invest in all potential replacement technologies. d. They refuse to adopt the new technology even when it becomes popular. e. They invest in the wrong potential replacement technology.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 9:08 AM DATE MODIFIED: 5/25/2023 9:10 AM 71. What happens to established companies when a disruptive technology becomes popular? a. They adapt their business models and continue to thrive. b. They invest heavily in the new technology and emerge as the new market leaders. c. They decline and lose market share to new entrants who have accumulated the required knowledge to exploit the new technology. d. They merge with new entrants to share the knowledge required to exploit the new technology. e. They acquire new entrants to exploit the new technology.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 9:10 AM DATE MODIFIED: 5/25/2023 9:12 AM 72. When are paradigm shifts more likely to occur in an industry? a. When the established technology is still developing b. When a new technology is still developing c. When the established technology is mature and approaching its natural limit d. When there is no technology currently in use e. When there is no competition in the market ANSWER: c POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 9:12 AM DATE MODIFIED: 5/25/2023 9:13 AM Essay 73. What are technical standards, why are they important, and how are they established?

ANSWER: Technical standards refer to a set of technical specifications that producers adhere to when making a product or a component of it. Battles to set and control technical standards in a market are referred to as format wars. The outcome of these battles has huge implications because the winner often wins an important source of differentiation.

Technical standards are important because they help guarantee compatibility between products and their complements. They are also important because the existence of a standard helps to reduce confusion in the minds of customers. In addition, the emergence of a standard can help reduce production costs because once a standard is established, economies of scale in manufacturing can begin. Finally, standards help to reduce the risks associated with supplying complementary products.

To establish standards, companies may lobby the government to mandate a standard, or sometimes companies may even cooperate without government involvement. In many cases, however, the standard is set by the cumulative purchasing patterns of customers in the marketplace. In these cases, the winner can realize significant benefits because each company is likely to protect its innovations through copyrights and patents.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-2 Technical Standards and Format Wars QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.07.02 - Summarize technical standardization and its role in competition.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM 74. If you were an outside management consultant, how would you advise a firm attempting to win a format war with a powerful and capable competitor? Give several options.

ANSWER: One important consideration in winning a format war is to ensure a plentiful supply of complementary products. If the firm has the assets required to produce the complements, it should do so. If it doesn't have the required assets, it should enter into a joint venture or create incentives for other firms to produce the complements. The availability of complements should increase sales of the product.

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Another important issue is ensuring adequate consumer demand, and one way to raise demand is to leverage killer applications. The firm should work to create and support applications of its products that are compelling to consumers. For example, online service providers found that instant messaging and chatrooms were compelling and would cause consumers to subscribe to their service. Price is also a powerful determinant of demand, and the firm should price its products at a relatively low level to encourage sales. If the firm finds that a low price doesn't contribute enough to profits, it can sell the product cheaply and then charge a relatively higher cost for complementary products. Promotions can also help build demand.

If these tactics are not sufficient, the firm should also consider a joint venture or cooperative agreement with competitors to establish its technology as the standard, or the firm should consider licensing its technology. Licensing can be an effective way to encourage other firms to adopt the technology as their standard, especially if the licensing fees are kept low.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-3 Strategies for Becoming the Dominant Standard QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.07.03 - Describe the strategies that firms can use to establish their technology as the standard in a market.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:17 AM 75. Describe the advantages and disadvantages of being a first mover or a follower in a high-tech industry. In your opinion, which strategy is preferable, and why?

ANSWER: First movers have the following advantages: a monopoly position in the early days of the industry, ability to exploit positive feedback loops, brand loyalty, better cost savings due to earlier economies of scale, creation of customer switching costs, and the accumulation of specific knowledge. On the other hand, the disadvantages of a first-mover strategy include the high initial costs of product development and marketing, the potential to make strategic mistakes, too much focus on early adopters, and the risk of investing in inferior technology.

The advantages and disadvantages of being a follower are the mirror image of those listed above. Since both first movers and followers enjoy some benefits and face some costs, the choice of a first-mover or a follower strategy should be based on the capabilities of the firm and of its rivals. If the firm is highly innovative or has competence in bringing a new product to market, it should pursue a first-mover strategy. If the firm has skills in copying and improving on other firms' products, a follower strategy would be preferable.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

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76. Identify the three factors that influence the innovation strategies used to exploit the advantages of first movers. When is the best time to use each of these strategies?

ANSWER: The three factors—complementary assets, height of barriers to imitation, and the capability of competitors—influence the choice of innovation strategy. The competitive strategy of developing and marketing the innovation alone makes most sense when: (1) the innovator has the complementary assets necessary to develop the innovation, (2) the barriers to imitating a new innovation are high, and (3) the capability of competitors is limited. Complementary assets allow rapid development and promotion of the innovation. High barriers to imitation give the innovator time to establish a competitive advantage and build enduring barriers to entry through brand loyalty or experience-based cost advantages. The fewer capable competitors there are, the less likely it is that any one of them will succeed in circumventing barriers to imitation and quickly imitating the innovation.

The competitive strategy of developing and marketing the innovation jointly with other companies through a strategic alliance or joint venture makes most sense when: (1) the innovator lacks complementary assets, (2) barriers to imitation are high, and (3) there are several capable competitors. In such circumstances, it makes sense to enter into an alliance with a company that already has the complementary assets—in other words, with a capable competitor. Theoretically, such an alliance should prove to be mutually beneficial, and each partner can share in high profits that neither could earn on its own. Moreover, such a strategy has the benefit of coopting a potential rival.

The third strategy, licensing, makes most sense when: (1) the innovating company lacks the complementary assets, (2) barriers to imitation are low, and (3) there are many capable competitors. The combination of low barriers to imitation and many capable competitors makes rapid imitation almost certain. The innovator’s lack of complementary assets further suggests that an imitator will soon capture the innovator’s competitive advantage. Given these factors, because rapid diffusion of the innovator’s technology through imitation is inevitable, the innovator can at least share in some benefits of this diffusion by licensing out its technology. Moreover, by setting a relatively modest licensing fee, the innovator may be able to reduce the incentive that potential rivals have to develop their own competing, and possibly superior, technology.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-5 Capturing First-Mover Advantages QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.07.05 - Evaluate the pros and cons of first-mover advantage in high-technology industries.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM Copyright Cengage Learning. Powered by Cognero.

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77. Give an example of an industry that has recently undergone a technological paradigm shift. What impact did the shift have on established companies and on new entrants to the industry?

ANSWER: Many industries in retailing and manufacturing have undergone technological paradigm shifts related to the introduction of Internet technology. For example, the bookselling industry has been fundamentally altered by the entrance of Amazon.com into the market.

When Amazon.com entered the book industry, it quickly became one of the largest booksellers in the country because its online business model allowed for very high sales. The high sales led to lower prices for consumers. Service to customers became more sophisticated because the online system could keep track of a customer's previous purchases, make recommendations, and provide access to reviews and other information about the products.

The impact on established companies has been profound because the industry's traditional business model has all but disappeared. Established companies have either built Internet capabilities to compete head-on with Amazon.com, or they have retreated into a focus strategy, serving niches that Amazon.com doesn't find profitable.

New entrants to the industry have experienced lower barriers to entry because a firm can now sell its books nationwide with relatively little investment.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 7-6 Technological Paradigm Shifts QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.07.06 - Explain the nature of technological paradigm shifts and their implications for enterprise strategy.

NATIONAL STANDARDS: United States - BUS PROG: Ethics United States - BUSPROG: Technology KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 6:40 AM

Chapter 08 - Strategy in the Global Environment True / False 1. The result of the shift of national to global markets is the change from oligopolies to segments of fragmented, global industries in which competition threatens profitability and forces these companies to focus intently on qualities such as efficiency and customer responsiveness. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging REFERENCES: 8-1 Global and National Environments QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

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United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic Bloom's: Analyze 4/19/2023 4:51 PM 5/25/2023 10:12 AM

2. Starbucks, Sony, and Coca-Cola conduct business in two or more countries. These companies can be referred to as multinational companies. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 3. To take advantage of the possible value that global subsidiaries can bring, companies must be open to receive resources from outside the corporate center and provide incentives for new ideas and risk-taking by employees. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM Multiple Choice 4. Black and Decker, Capitol One, Gillette, and Unilever are all companies that conduct business in two or more national markets. These companies are known as a. bimarket companies. b. national companies. c. domestic companies. d. multinational companies. e. localized companies.

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ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:19 AM 5. Swedish strength in fabricated steel products (such as ball bearings and cutting tools) has drawn on strengths in Sweden’s specialty steel industry. This is an example of which of the following attributes that impact national competitive advantage? a. Local demand conditions b. Competitiveness of related and supporting industries c. Intensity of rivalry in an industry d. Factor endowments e. Differences in distribution channels ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 6. Which of the following describes an effect of the increased competition caused by the globalization of production and markets in an industry? a. A company must face rivals not only on the domestic, but also on the foreign front. b. There has been a change from consolidated oligopolies to smaller fragmented, global industries that battle each other for market share. c. It has increased both the threat of entry and the intensity of rivalry within many formerly protected national markets. d. The threat of decreased profitability has caused companies to focus on efficiency, quality, customer responsiveness, and innovative ability. e. All of these are effects of the increased competition caused by the globalization of production and markets in an industry.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 7. Japanese customer’s sophisticated knowledge of cameras created pressure for innovation and quality that stimulated the Japanese camera industry to improve product quality and introduce innovative models. This is an example of which of the following attributes? a. Factor endowments b. Local demand conditions c. Related and supporting industries d. Firm strategy, structure, and rivalry e. Using the framework ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 8. Which of the following might necessitate the delegation of manufacturing and production functions to foreign subsidiaries? a. Pressures for local responsiveness due to differences in infrastructure or traditional practices among countries b. When meaningful differentiation on non-price factors is difficult and price is the main competitive weapon c. Where there is persistent excess capacity, and where consumers are powerful and face low switching costs d. In industries producing commodity-type products e. The liberalization of the world trade and investment environment in recent decades ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

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9. When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on a. negative feedback loops. b. economies of scope. c. the transnational strategy. d. location economies. e. its localization strategy.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:20 AM 10. Which of the following strategies is represented by McDonald’s experimenting with their traditional menu, as well as changing the layout and theme of restaurants in foreign locations? a. Realizing location economies b. Realizing cost economies from global volume c. Expanding the market by leveraging products d. Attempting to minimize unit costs e. Leveraging the competencies of global subsidiaries ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 11. Global expansion a. is feasible only for non-technology-based companies. b. can enable companies to increase their profitability and grow their profits more rapidly.

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c. has significantly decreased in the recent years as the industry barriers are now higher. d. does not involve selling existing products to new markets in different countries. e. is not feasible for service-based firms.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:20 AM 12. Which of the following is an example of regional convergence? a. Organization of the Petroleum Exporting Countries (OPEC) b. European Union (EU) c. North American Free Trade Agreement (NAFTA) d. Association of South East Asian Nations (ASEAN) e. All of these are examples of regional convergence.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 13. In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent? a. Global environmental demands b. Host government demands c. Differences in distribution channels d. Differences in customer tastes and preferences e. Differences in infrastructure ANSWER: e POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 14. Which of the following is responsible for the emergence of enormous global markets for standardized consumer products such as McDonald’s hamburgers, Coca-Cola, and GAP clothes? a. Global marketing strategies b. Lowered tariffs and the removal of trade barriers c. Modern communications and transport technologies d. Significant differences in consumer tastes and preferences e. The infrastructure or traditional practices among countries ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 15. Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrimax is most likely to be using which of the following strategies? a. Global standardization b. Localization c. Achilles heel d. Centralization e. Transnational ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the Copyright Cengage Learning. Powered by Cognero.

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global marketplace.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 16. Companies that pursue which of the following strategies are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network of operations? a. Transnational b. Downsizing c. Centralization d. Localization e. Global standardization ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 17. Which of the following environments are optimal for a localization strategy? a. When pressures for local responsiveness and cost reductions are both low b. When pressures for local responsiveness and cost reductions are both high c. When pressures for local responsiveness are low and pressures for cost reductions are high d. When pressures for local responsiveness are high and pressures for cost reductions are low e. When pressures for local responsiveness and cost reductions are both moderate ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 18. The Achilles heel of international strategy is that a. economies of scale cannot be achieved.

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b. customization of products makes the company lose its credibility. c. competitors inevitably emerge. d. non-price differences among products hold little importance. e. customer preferences eventually become identical.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:21 AM 19. Which of the following statements is true about transnational strategy? a. It gives little emphasis to cost reduction and achieving scale economies. b. It makes little sense when the pressures for local responsiveness are intense. c. It is an easy one to pursue because it places minimal demands on the company. d. It fosters a flow of resources such as process knowledge between different subsidiaries in the company’s global network of operations. e. It is adopted by companies that produce standardized goods that do not require product differentiation.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 20. Relish is a large fast-food chain that operates in many countries. As there are several competitors in the fast-food sector, the company has been facing intense pressures to achieve low-cost structures. The company also faces the task of customizing its product line as there are significant differences in tastes and preferences among customers in different geographic locations. To achieve both low costs and product differentiation, the company should aim to pursue which of the following strategies? a. Global standardization b. Transnational c. Localization d. Downsizing e. Divestment ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/30/2023 5:38 AM 21. Aries Travels is a company that offers holiday and travel packages. The company realizes that customer preferences vary, and thus, extensively customizes its packages. As there are not many competitors in the market in which Aries Travels operates, there are minimal pressures to reduce costs. Aries Travels is most likely to have adopted which of the following strategies? a. Global standardization b. International c. Localization d. Transnational e. Harvest ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:22 AM 22. WKL Entertainment Inc. is a service-based firm with very few competitors. The company is looking to sell the same basic product services in different nations and charge a relatively high price for it. WKL does not face direct competitors, so the company does not have to deal with strong pressures to minimize its costs. Which of the following strategies should WKL Entertainment Inc. managers pursue? a. Global standardization b. Transnational c. Localization d. International e. Multinational ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 23. Which of the following statements is true about international strategy? a. It is usually adopted by companies that face intense cost pressures due to competition. b. It makes most sense when the pressures for local responsiveness are very intense. c. It often involves the head office retaining tight control over marketing and product strategy. d. It often involves decentralizing product development functions such as R&D to different subsidiaries. e. It involves extensive scope for localization and product differentiation.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 24. A company, Pluto Inc., employs the franchising strategy to enter a new national market. Which of the following statements is MOST likely to be true of Pluto? a. It is more likely to be a service company. b. It is more likely to have a greater control over the quality the products manufactured in the foreign country. c. It is less likely to impose strict rules regarding how a franchisee does business. d. It is less likely to receive royalty payments from the franchisee. e. It is more likely to bear the development costs associated with opening a foreign market on its own.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 25. Which of the following entry modes allows a company to engage in global strategic coordination? a. Exporting Copyright Cengage Learning. Powered by Cognero.

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b. Licensing c. Joint ventures d. Wholly owned subsidiaries e. Franchising ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 26. Which of the following is a disadvantage of strategic alliances? a. They give competitors a low-cost route to new technology and markets. b. They do not facilitate entry into a foreign market. c. They do not allow for sharing of risks and fixed costs. d. They mandate that the companies do not share complementary competencies and assets. e. They cause problems when it comes to establishing technological standards for the industry.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 27. Which of the following is NOT a desired characteristic of a partner in a strategic alliance? a. A partner should be instrumental in aiding the company accomplish strategic goals such as achieving market access. b. A partner should be willing to share the costs and risks of new-product development. c. A partner should allow access to critical core competencies. d. A partner should bring their own vision for the alliance to help establish a new agenda. e. A partner will not exploit the alliance and will offer as much as it takes from the alliance.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 28. Most manufacturing companies begin their global expansion by a. licensing. b. franchising. c. exporting. d. forming a joint venture. e. setting up a wholly owned subsidiary in the host country.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:23 AM 29. Which of the following is NOT a risk of exporting? a. Tariff barriers b. Transportation costs c. Location diseconomies d. High manufacturing costs e. Delegation of marketing activities to a local agent ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM Copyright Cengage Learning. Powered by Cognero.

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30. Dietizza is a fast-food network that makes low-calorie pizzas. As the firm wishes to expand its operations in different locations, it has licensed a few entrepreneurs to open Dietizza outlets under the company's trademark. The entrepreneurs will take up the responsibility of costs, while Dietizza will assist them in running operations. The company will receive royalty payments and a percentage of profits from the entrepreneurs. Which of the following concepts is illustrated here? a. Exporting b. Franchising c. Wholly owned subsidiary d. Strategic alliance e. Joint venture ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 31. Ford and Mazda have decided to enter into a strategic alliance and have agreed upon an appropriate alliance structure.

The companies have decided to host a conference for management and employees to better understand the purpose and objectives of the alliance and allow employees of both companies to build interpersonal relationships which will build trust and facilitate harmonious relations between the two firms. Which of the following describes this alliance management technique? a. Building relational capital b. Awareness of cultural sensitivity c. Creating learning symmetry d. Securing competitive position e. Establishing a cost-sharing partnership ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 32. Which of the following is a direct result of the globalization of production and markets? a. Lowering the cost of production for all companies b. National markets becoming more distinct entities Copyright Cengage Learning. Powered by Cognero.

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c. Companies disperse important functions of their production processes around the globe d. Entry of efficient foreign competitors becoming less of a threat e. Customers around the world demanding and using different product offerings ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 10:15 AM DATE MODIFIED: 5/25/2023 10:16 AM 33. What is the implication of the shift from national to global markets for companies? a. The home market is under attack from foreign competitors. b. Competitive rivalry has decreased in many industries. c. Oligopolies are now consolidated national oligopolies. d. Companies do not need to consider global competitors. e. National markets are now distinct entities.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 10:19 AM DATE MODIFIED: 5/25/2023 10:20 AM 34. What is the rationale for companies outsourcing their production to foreign suppliers? a. To increase the volume of international trade b. To avoid paying high tariffs on their products c. To boost their profits by exploiting national differences in the cost and quality of factors of production d. To create a more fragmented, global industry e. To reduce the intensity of competitive rivalry in their home market ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 10:28 AM DATE MODIFIED: 5/25/2023 10:29 AM 35. Which country voted to leave the European Union in June 2016? a. Germany b. France c. United Kingdom d. Italy e. Spain ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 10:29 AM DATE MODIFIED: 5/25/2023 10:30 AM 36. What was the impact of President Trump's trade policies on imports from China into the United States? a. Tariffs were lowered on a wide range of imports from China. b. Tariffs were raised on a wide range of imports from China. c. Tariffs were removed on all imports from China. d. The United States stopped importing goods from China. e. Economic tensions between the two countries were lowered.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 10:32 AM DATE MODIFIED: 5/28/2023 8:24 AM 37. What was the impact of Russia's invasion of Ukraine in February 2022?

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a. It had no impact on relationships between Russia and the West. b. It resulted in an increase in investments in Russia by Western businesses. c. Many Western businesses exited Russia entirely due to prohibitive sanctions. d. The Russian economy grew significantly due to increased trade with the West. e. It made it less likely that China would take aggressive action on Taiwan.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 10:33 AM DATE MODIFIED: 5/25/2023 10:34 AM 38. Which trade agreement did President Trump withdraw the United States from? a. NAFTA b. TPP c. USMCA d. WTO e. SEC ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 10:35 AM DATE MODIFIED: 5/28/2023 8:24 AM 39. How could China's increasing authoritarianism and state control of economic activity impact international businesses? a. It could lead to a greater market opportunity for international businesses b. It could have a chilling effect on private enterprise in China c. It would not impact international businesses d. It would result in a significant decrease in trade and investment flows e. It could ease economic tensions with the United States ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 10:36 AM DATE MODIFIED: 5/25/2023 10:37 AM 40. What was the impact of the tariffs on steel and aluminum imports into the United States imposed by the Trump administration? a. Other countries did not respond with retaliatory tariffs. b. The United States was able to significantly increase its steel and aluminum exports. c. American exports to other markets were not impacted. d. Many other countries imposed retaliatory tariffs on American exports to their markets. e. Lowering of the price of domestic steel ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 2:32 PM DATE MODIFIED: 5/25/2023 2:34 PM 41. Evaluate the impact of the countertrends to globalization on international businesses. a. The countertrends will have no impact on international businesses. b. The countertrends will result in a major disruption of trade and investment flows. c. The countertrends will require many enterprises to make major shifts in their global strategy. d. The countertrends will lead to a decrease in competition within industries. e. Many nation-states will need to re-evaluate trade negotiations with their trade partners.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/25/2023 2:34 PM DATE MODIFIED: 5/25/2023 2:36 PM 42. How has the United States-Mexico-Canada Agreement impacted NAFTA? Copyright Cengage Learning. Powered by Cognero.

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a. It has replaced NAFTA. b. It has had no impact on NAFTA. c. It has resulted in the removal of all tariffs between the three countries. d. It has made it easier for the United States to impose tariffs on imports from Mexico and Canada. e. It increased the tax of travel and many goods traded between the two countries.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 2:44 PM DATE MODIFIED: 5/25/2023 3:18 PM 43. Which nation has slipped back into greater authoritarianism and state control of economic activity under the leadership of Xi Jinping? a. Japan b. India c. China d. Brazil e. South Korea ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-2 Countertrends to Globalization QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.02 - Summarize different countertrends to globalization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 3:19 PM DATE MODIFIED: 5/25/2023 3:22 PM 44. According to Michael Porter, what are the four attributes of a national or country-specific environment that have an important impact on the global competitiveness of companies located within that nation? a. Cultural factors, environmental factors, technological factors, and political factors b. Factor endowments, local demand conditions, related and supporting industries, and firm strategy, structure, and rivalry c. Legal factors, economic factors, social factors, and technological factors d. Infrastructure factors, political factors, technological factors, and macroeconomic factors e. Macroeconomic factors, economic factors, social factors, and technological factors ANSWER: b POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 3:21 PM DATE MODIFIED: 5/25/2023 3:22 PM 45. What are some of the basic factors of production that a nation’s position in can determine its competitive advantage in certain industries? a. Raw materials, physical infrastructure, and managerial sophistication b. Skilled labor, technological know-how, and physical infrastructure c. Capital, raw materials, and physical infrastructure d. Managerial sophistication, technological know-how, and skilled labor e. Raw materials only ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 3:23 PM DATE MODIFIED: 5/25/2023 3:26 PM 46. What is the ―diamond‖ in Michael Porter’s study of national competitive advantage, and how does it relate to the competitiveness of companies within a given nation? a. The ―diamond‖ refers to a nation’s precious natural resources, which give it a competitive advantage in certain industries. b. The ―diamond‖ refers to the four attributes of a national or country-specific environment that have an important impact on the global competitiveness of companies located within that nation, and companies from a given nation are most likely to succeed in. c. The ―diamond‖ refers to the network of internationally competitive suppliers and related industries in a given nation, which give companies within that nation a competitive advantage. d. The ―diamond‖ refers to the set of management practices and organizational structures that give a company a competitive advantage in its industry. e. The ―diamond‖ refers to the country’s strategic hold on natural resources.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/25/2023 3:26 PM DATE MODIFIED: 5/25/2023 3:27 PM 47. How can a nation’s domestic customers affect the competitiveness of its companies? a. By creating pressures for innovation and quality b. By providing incentives for investment in advanced factors of production c. By reducing the cost of factors of production d. By providing access to specialized inputs e. It is virtually impossible for its domestic customers to affect the competitiveness of its companies.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:28 PM DATE MODIFIED: 5/25/2023 3:29 PM 48. How can the presence of internationally competitive suppliers or related industries in a nation affect the competitiveness of its companies? a. It can help spill over the benefits of investment in advanced factors of production into a given industry. b. It can reduce the cost of factors of production. c. It can provide access to specialized inputs. d. It can help reduce barriers to entry in a given industry. e. It will likely not have an effect on the competitiveness of its companies.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:30 PM DATE MODIFIED: 5/25/2023 3:32 PM 49. What are the four attributes of a national or country-specific environment that have an impact on the global competitiveness of companies located within that nation, according to Michael Porter's study?

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a. Product demand, supplier industries, transportation, and competition b. Factor endowments, local demand conditions, related and supporting industries, and firm strategy, structure, and rivalry c. Market size, technological advancement, cultural diversity, and legal framework d. Infrastructure, labor force, natural resources, and tax policies e. Firm strategy, structure, competence, and rivalry ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:32 PM DATE MODIFIED: 5/25/2023 3:33 PM 50. What is the meaning of "factor endowments" in the context of national competitive advantage? a. The presence or absence of supplier industries and related industries that are internationally competitive b. The nature of home demand for the industry’s product or service c. The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry d. A nation’s position in factors of production such as skilled labor or the infrastructure necessary to compete in each industry e. A nation’s strategic hold on natural resources ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:33 PM DATE MODIFIED: 5/25/2023 3:35 PM 51. What is the role of local demand conditions in shaping the attributes of domestically made products? a. To provide the impetus for ―upgrading‖ competitive advantage b. To attract foreign investment c. To increase competition d. To decrease product quality e. To increase societal impact ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 8-3 National Competitive Advantage QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.03 - Describe the components of a national competitive advantage.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:36 PM DATE MODIFIED: 5/25/2023 3:37 PM 52. What is the importance of valuable resources and competencies in international expansion? a. Multinational companies can only develop valuable resources and competencies in their home nation. b. Competencies can only be created in the corporate center of a multinational company. c. Multinational companies can develop valuable resources and competencies anywhere in their global network of operations. d. The development of valuable resources and competencies is irrelevant to international expansion. e. The development of a strategic hold on natural resources.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/25/2023 3:37 PM DATE MODIFIED: 5/25/2023 3:39 PM 53. A company can increase its profitability by realizing location economies, which can lead to all of the following EXCEPT a. lowering the costs of value creation. b. enabling a company to differentiate its product offering. c. giving the company the option of charging a premium price. d. increasing transportation costs. e. allowing the firm to minimize the price to the customer.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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54. What is the benefit of locating a value creation activity in the optimal location for that activity? a. It can lower the costs of value creation. b. It can enable a company to differentiate its product offering. c. It can give the company the option of charging a premium price. d. It can minimize value creation and promote economies of scale. e. It can lower the costs of value creation, it can enable a company to differentiate its product offering, and it can give the company the option of charging a premium price.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:42 PM DATE MODIFIED: 5/25/2023 3:43 PM 55. How can a company potentially utilize its production facilities more intensively when selling to a global market? a. By keeping its factories open only for one shift, 5 days a week b. By utilizing those assets for two shifts, 7 days a week c. By keeping its factories open for only one shift, 7 days a week d. By reducing the sales volume of its plants e. By implementing HR policies that increase worker productivity ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 3:44 PM DATE MODIFIED: 5/25/2023 3:45 PM 56. What is a common strategy that companies use to respond to pressures for cost reductions in the global marketplace? a. Customizing products and marketing strategies to local tastes and preferences b. Offering differentiated products and marketing strategies in each country c. Delegating manufacturing and production functions to foreign subsidiaries d. Moving back-office functions such as information processing to developing nations e. Mass-producing a standardized product at an optimal site to realize economies of scale and location economies Copyright Cengage Learning. Powered by Cognero.

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ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:46 PM DATE MODIFIED: 5/25/2023 3:47 PM 57. What are some examples of universal needs that face strong pressures for cost reductions in the global marketplace? a. Personal computers and Android smart phones b. Liquid crystal display screens and bulk chemicals c. Petroleum and steel d. Gold e. Personal computers and Android smart phones; liquid crystal display screens and bulk chemicals; and petroleum and steel ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:48 PM DATE MODIFIED: 5/25/2023 3:49 PM 58. What is an example of a difference in distribution channels that may require companies to adapt their own distribution and sales strategies in the global marketplace? a. Differences in customer tastes and preferences b. Differences in infrastructure and traditional practices c. Economic and political demands imposed by host country governments d. Differences in distribution systems across countries e. Disparities between the national needs of partnering countries ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:49 PM DATE MODIFIED: 5/25/2023 3:52 PM 59. What is the most appropriate strategy for a company facing strong cost pressures and low demands for local responsiveness? a. Global standardization strategy b. Localization strategy c. Transnational strategy d. International strategy e. Hybrid strategy ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:52 PM DATE MODIFIED: 5/25/2023 3:53 PM 60. What is the main challenge for a company pursuing a transnational strategy? a. Developing a global brand b. Balancing the cost and differentiation sides of the business model c. Implementing a low-cost strategy on a global scale d. Adapting to local market demands e. Leveraging subsidiary skills ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:54 PM DATE MODIFIED: 5/25/2023 3:55 PM 61. Which of the following is not one of the five primary modes of entry into global markets? a. Exporting Copyright Cengage Learning. Powered by Cognero.

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b. Licensing c. Franchising d. Merging with a local company e. Setting up a wholly owned subsidiary in the host country ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:55 PM DATE MODIFIED: 5/25/2023 3:57 PM 62. Which entry mode is best suited for companies that lack the capital to develop operations overseas? a. Exporting b. Licensing c. Franchising d. Merging with a local company e. Setting up a wholly owned subsidiary in the host country ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 3:58 PM DATE MODIFIED: 5/25/2023 3:58 PM 63. Which of the following is a disadvantage of franchising that is not a disadvantage of licensing? a. Difficulty in maintaining quality control b. Inability to coordinate strategic moves across countries c. Limited ability to realize scale and location economies d. High transport costs for bulk products e. Exposure to tariff barriers ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 3:58 PM DATE MODIFIED: 5/25/2023 3:59 PM 64. Which entry mode would be most appropriate for a company pursuing a global standardization strategy? a. Exporting b. Licensing c. Franchising d. Entering into a joint venture with a host-country company e. Setting up a wholly owned subsidiary in the host country ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/25/2023 4:01 PM DATE MODIFIED: 5/25/2023 4:02 PM 65. What is a global strategic alliance? a. A formal joint venture between companies from different countries b. A short-term contractual agreement between companies from the same country c. A partnership between companies from different countries to increase competition d. A partnership between companies from different countries to share resources e. A partnership between companies from different countries to reduce competition ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 4:05 PM DATE MODIFIED: 5/25/2023 4:06 PM 66. Which of the following is NOT an objective of strategic alliances between competitors? a. To facilitate entry into a foreign market Copyright Cengage Learning. Powered by Cognero.

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b. To share fixed costs of developing new products or processes c. To bring together complementary skills and assets d. To create technological standards for the industry e. To increase competition between the companies ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 4:08 PM DATE MODIFIED: 5/25/2023 4:09 PM 67. What are the three main factors that contribute to the success of an international strategic alliance? a. Partner selection, alliance structure, and profit sharing b. Partner selection, alliance structure, and alliance termination c. Partner selection, alliance termination, and trust building d. Partner selection, cultural sensitivity, and communication e. Partner selection, alliance structure, and alliance management ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 4:09 PM DATE MODIFIED: 5/25/2023 4:10 PM 68. Why did Warner Brothers enter into a joint venture with two Chinese partners to produce and distribute films in China? a. To avoid going through a complex approval process for every film b. To farm out distribution to a local company c. To produce films for Chinese TV, which foreign firms were not allowed to do d. To reduce competition from Chinese film companies e. To enter into the Chinese market without a local partner ANSWER: a POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/25/2023 4:11 PM DATE MODIFIED: 5/25/2023 4:13 PM 69. Why might some commentators criticize strategic alliances between companies from different countries? a. They provide a low-cost route to new technology and markets for both partners. b. They benefit only one company and hurt the other. c. They lead to the hollowing out of firms and leave them with no competitive advantage. d. They are difficult to manage and maintain. e. They increase competition between the companies.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 4:14 PM DATE MODIFIED: 5/25/2023 4:15 PM 70. Which of the following is an advantage of forming a strategic alliance between competitors? a. Sharing fixed costs of developing new products or processes b. Increasing competition between the companies c. Separating complementary skills and assets d. Establishing technological standards for the industry e. Avoiding the need to select a partner ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-8 Global Strategic Alliances QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 4:16 PM Copyright Cengage Learning. Powered by Cognero.

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Essay 71. What is meant by the term national competitive advantage, and what are the attributes of a nation that affect the global competitiveness of companies located within that nation?

ANSWER: National competitive advantage refers to the fact that the nation within which a company is based may have an important bearing on the competitive position of that company in the global marketplace. There are four attributes of a country-specific environment that have an important impact on the global competitiveness of companies based within that country.

Factor endowments encompass a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Local demand conditions refer to the nature of home demand for the industry’s product or service. Related and supporting industries refer to the presence or absence in a nation of supplier industries and related industries that are internationally competitive. Finally, firm strategy, structure, and rivalry refer to the conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-1 Global and National Environments QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.01 - Describe the process of globalization and how it impacts a company’s strategy.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 72. Identify and discuss the general ways in which companies can increase their profitability and profit growth through global expansion.

ANSWER: Companies can increase their profitability and profit growth from global expansion in several ways. First, companies can take goods or services developed at home and sell them internationally. In so doing, a company instantly expands its market, often by using the same business model. It should be noted that benefits may come from the fact that products are superior, but it is also important that companies use existing competencies in foreign markets as well. Second, companies that expand their sales volume through international expansion can expect to realize savings from economies of scale, thereby increasing profitability through the ability to lower their cost structure. Third, companies can realize location economies by performing value creation activities in the optimal location for that activity, wherever in the world that may be. Different countries offer opportunities to both lower costs and increase differentiation. Finally, a company can leverage the competencies of global subsidiaries by applying best practices and good ideas that may come from anywhere in the organization.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-4 Motives for Global Expansion QUESTION TYPE: Essay HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.04 - Discuss the motives for expanding internationally.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 73. Whirlpool, a leading U.S. maker of household appliances, has a wholly owned subsidiary that is responsible for research and development (R&D), manufacturing, and sales in over two dozen European countries, from Norway to Greece. What are some of the potential advantages that Whirlpool may gain from its use of a wholly owned subsidiary for global expansion? What are some of the potential disadvantages?

ANSWER: Whirlpool stands to make high profits from its wholly owned subsidiary because it doesn't have to share profits with a partner, franchisee, or licensee. Also, the firm maintains control over proprietary technology and know-how. Tight quality control is also possible, which can protect the firm's brand-name reputation. In addition, Whirlpool will likely realize economies of scale and will be able to use profits from U.S. operations to fund further expansion into Europe. Finally, the company will benefit from learning what takes place at its subsidiary.

On the downside, Whirlpool has invested its own capital in the subsidiary and therefore faces a large risk of financial loss.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-7 The Choice of Entry Mode QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.07 - Summarize the five primary modes of entry into global markets.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 74. What are the potential benefits and risks of global strategic alliances? What actions can a firm take to minimize the risks and maximize the benefits?

ANSWER: Global strategic alliances share the risk of global expansion, bring together complementary competencies, facilitate entry into a new market, and can set technological standards.

However, the partners risk loss of control over proprietary know-how, they must learn to work together in a cooperative fashion, and they must share any profits they earn.

POINTS: DIFFICULTY: REFERENCES:

To maximize the benefits and minimize the risks, firms should choose a partner wisely, ensuring that the partner is trustworthy, has a common vision, and has complementary competencies. To reduce the potential for loss of control, the company should consider walling off the technology, writing contractual safeguards, using cross-licensing agreements to exchange competencies, and asking for a credible commitment in advance. Finally, bringing the two firms together is a significant challenge and can be eased if managers are sensitive to cultural differences, if they build interpersonal relationships across company boundaries, and if they look for opportunities for mutual learning and benefit.

1 Moderate 8-8 Global Strategic Alliances

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QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.08 - Discuss how an enterprise would benefit from a global strategic alliance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 75. List and briefly describe each of the four basic global strategies.

ANSWER: Companies that pursue a global standardization strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale and location economies. A localization strategy focuses on increasing profitability by customizing a company’s goods or services so that the goods provide a favorable match to tastes and preferences in different national markets. Companies that pursue a transnational strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of resources such as process knowledge between different subsidiaries in the company’s global network of operations. Lastly, an international strategy is pursued when companies are confronted with low cost pressures and low pressures for local responsiveness.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-6 Choosing a Global Strategy QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.06 - Outline the different global entry strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/25/2023 10:12 AM 76. How do the pressures for cost reductions and pressures to be locally responsive cause conflicting demands on company strategies? What are some strategies a company can use to address the pressures for cost reductions and pressures to be locally responsive?

ANSWER: Companies that compete in the global marketplace typically face two types of competitive pressures: pressures for cost reductions and pressures to be locally responsive.

These competitive pressures place conflicting demands on a company. Responding to pressures for cost reductions requires that a company attempt to minimize its unit costs. To attain this goal, it may have to base its productive activities at the most favorable low-cost location. It may also need to offer a standardized product to the global marketplace in order to realize the cost savings that come from economies of scale and learning effects. On the other hand, responding to pressures to be locally responsive requires that a company differentiate its product offering and marketing strategy from country to country in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies. Because differentiation across countries can involve significant duplication and a lack of product standardization, it may raise costs.

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In competitive global markets, international businesses often face pressures for cost reductions. To respond to these pressures, a firm must try to lower the costs of value creation. A manufacturer, for example, might mass-produce a standardized product at an optimal site to realize economies of scale and location economies. Alternatively, it might outsource certain functions to low-cost foreign suppliers in an attempt to reduce costs.

Pressures for local responsiveness arise from differences in consumer tastes and preferences, infrastructure and traditional practices, distribution channels, and host government demands.

Responding to pressures to be locally responsive requires that a company differentiate its products and marketing strategy from country to country to accommodate these factors, all of which tend to raise a company’s cost structure.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 8-5 Strategies for Competing in the Global Marketplace QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.08.05 - Review the different strategies that companies use to compete in the global marketplace.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:51 PM DATE MODIFIED: 5/28/2023 8:25 AM

Chapter 09 - Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing True / False 1. A company must choose an appropriate corporate-level strategy after selecting the pricing option (lowest, average, or premium price) that will allow it to maximize profitability. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 2. The difference between transfer prices and bureaucratic costs is that transfer prices are associated with in-house cost Copyright Cengage Learning. Powered by Cognero.

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increases and bureaucratic costs are not part of a company’s cost structure. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 3. One negative effect of competitive bidding is that suppliers don’t want to invest in expensive, long-term specialized assets. This is because they will be reluctant to agree upon scheduling that will increase a supplier’s costs and reduce its profitability. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM Multiple Choice 4. Oracle Corp., based in Reno, Nevada, has purchased several other companies to become the world's largest maker of database software. What strategy is this considered? a. Acquisition b. Merger c. Product bundling d. Vertical Integration ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:45 PM DATE MODIFIED: 5/25/2023 7:31 PM 5. What type of corporate strategy would help pharmaceutical companies to lower costs by filling the need to achieve scale economies in research and development (R&D), sales, and marketing and combining the fixed costs of building a nationwide pharmaceutical sales force? a. Vertical integration b. Horizontal integration c. A tapered integration d. Vertical disintegration ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:46 PM DATE MODIFIED: 5/25/2023 7:31 PM 6. By using their enormous bargaining power and efficiency in inventory logistics, Wal-Mart has been able to expand and have a competitive advantage in other discount retail store formats, such as its chain of Sam’s Clubs. This is an example of a. decreasing cost structure. b. enhancing product quality. c. facilitating investments in specialized assets. d. leveraging a competitive advantage more broadly.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:46 PM Copyright Cengage Learning. Powered by Cognero.

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7. Tina’s Technologies is expanding its operations backward into an industry that produces inputs for the company’s products. Tina’s Technologies is utilizing which type of corporate strategy? a. Horizontal integration b. Vertical integration c. A holdup d. Vertical disintegration ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:46 PM DATE MODIFIED: 5/25/2023 7:31 PM 8. The final part of the strategy-formulation process is choosing a. business-level strategies. b. functional-level strategies. c. corporate-level strategies. d. functional-level goals. e. business-level goals.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 9. When a company decides to expand into new industries, it must a. develop a "multibusiness model" that justifies its entry into different businesses. b. halt marketing activities in the current industry to avoid being associated with one specific industry. c. select a new CEO and reappoint the board of directors. d. create one common business model for all the industries rather than each business unit. e. avoid talking about ways of increasing profitability in the business model.

ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 10. Which of the following is NOT an advantage of the corporate-level strategies followed by companies like McDonalds and Wal-Mart? a. Their strategies allow all managerial, financial, technological, and functional resources to focus on competing successfully in one area. b. Their strategies keep them from making the mistake of entering new industries in which existing resources and capabilities create little value. c. Their strategies prepare them to deal with a whole new set of competitive forces and help create ways to address unanticipated threats. d. Their strategies allow them to compete effectively in fast-growing, changing industries in which demands on a company’s resources and capabilities are likely to be substantial. e. Their strategies allow them to capture the substantial long-term profits from establishing a competitive advantage.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 11. Which of the following is a benefit that firms should expect to gain from the use of horizontal integration? a. Reduced risk of coming into conflict with the FTC b. Better realization of economies of scale c. Greater control over the entire supply chain d. Reduced risk of holdup e. Reduced need for investment in core activities ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 12. Product bundling and cross-selling are ways to establish which of the following? a. Lowered cost structure b. Increased product differentiation c. Leveraged broad competitive advantage d. Increased bargaining power e. Reduced industry rivalry ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 13. Adam's boss tells him that their company is pursuing the strategy of horizontal integration. Which of the following is true of this scenario? a. The company will acquire one of its suppliers. b. The company will buy or merge with one of its rivals. c. The company will begin to distribute its own products. d. The company will change the organizational structure to make it increasingly flat. e. The company will merge with another company that belongs to a different industry.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM Copyright Cengage Learning. Powered by Cognero.

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14. A leading software company merged with its competitor to form a new company. Which of the following is likely to be the result of this merger? a. Decreased cost per unit output b. Decreased bargaining power over suppliers and customers c. Increased industry rivalry d. Decreased profitability e. Decreased product differentiation ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 15. Which of the following is NOT a cause for the intervention of antitrust authorities? a. Companies abuse their market power by acquiring new firms that allow for the increase of prices above a level that would occur in a competitive market. b. The merger between two companies allows for several customer options and substantial competition within the industry. c. An acquisition that creates too much consolidation and increases the potential for future abuse of market power. d. A company cuts prices when a new competitor enters the industry to force the competitor out of business. e. Dominant companies use their market power to crush potential competitors.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 16. All of the following are benefits of horizontal integration EXCEPT a. reduced risk of coming into conflict with the FTC. b. increased product differentiation.

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c. reduced industry rivalry. d. increased bargaining power over suppliers. e. reduced cost structure.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 17. Recently, two pharmaceutical companies that held an equal market share decided to pool their operations to create a new firm that was known by a different name. This is an example of a(n) a. merger. b. acquisition. c. procurement. d. takeover. e. dissolution.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 18. Regarding backward vertical integration into upstream industries, which of the following describes the step in the value chain before final assembly? a. Raw materials b. Retail c. Component parts manufacturing d. Customer e. Final assembly is the final step in the value chain.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/30/2023 5:43 AM 19. Rachel, a new mom, is shopping for baby products. She notices that one of the manufacturers, Lucy's, is offering a wide range of products such as baby shampoo, baby lotion, and baby wipes packaged together at a better price as one combined product. Which of the following concepts is the company utilizing to meet customers' needs? a. Product bundling b. Cross-selling c. Hostage taking d. Strategic outsourcing e. Parallel sourcing ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 20. For a company concentrating on final assembly, adding retail and distribution into its value chain will require a. backward integration. b. forward integration. c. taper integration. d. related diversification. e. unrelated diversification.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM Copyright Cengage Learning. Powered by Cognero.

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21. Which of the following is NOT a benefit of vertical integration? a. Facilitated investments in specialized assets b. Enhanced product quality c. Improved scheduling d. Lowered cost structure e. Strengthened differentiation advantage ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 22. Lime, which operates a dockless electric scooter sharing service, makes the business decision to buy its scooters as opposed to manufacturing them. Manufacturing their own scooters would result in large, fixed costs. Which of the following disadvantages of vertical integration does this represent? a. Increasing cost structure b. Technological change c. Demand unpredictability d. Mismatches in optimal scale e. Vertical disintegration ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 23. Which of the following is NOT a difference between in-house and independent suppliers? a. In-house suppliers have much less incentive to look for new ways to reduce operating costs or increase component quality. b. Independent suppliers can pass on cost increases in the form of higher transfer prices. c. Independent suppliers constantly need to increase their efficiency to protect their competitive advantage. d. In-house suppliers do not face competition and the resulting rising cost structure that reduces a Copyright Cengage Learning. Powered by Cognero.

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company’s profitability. e. When company-owned suppliers develop a higher cost structure than those of independent suppliers, vertical integration can be a major disadvantage.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 24. Under which of the following circumstances is vertical integration considered hazardous? a. When the demand for the product fluctuates frequently b. When vertical integration involves moving downstream into retailing c. When the value added by successive stages of production is declining d. When the industries involved are undergoing rapid expansion e. When the company's competitors are also following a strategy of vertical integration ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 25. Vertical disintegration occurs when a company a. decides to exit industries and return to its core industry. b. takes advantage of another company it does business with after the other company has made a substantial investment in assets to meet the needs of the company. c. decides to acquire its suppliers and distributors. d. uses its capital resources to purchase its competitor. e. decides to sell its business model to another company.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/30/2023 5:44 AM 26. Which of the following benefits of vertical integration provides advantages to those businesses that want to use justin-time (JIT) inventory systems correctly? a. Improved scheduling b. Enhancing product quality c. Facilitating investments in specialized assets d. Demand unpredictability e. Increasing cost structure ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 27. Which of the following would be a deterrent to companies seeking to achieve a competitive advantage through one company making an investment in a specialized asset so it can trade with another? a. Tapered integration b. The risk of holdup c. Mutual dependence d. Transfer prices e. Technological change ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 28. Which of the following would be a factor in the decision of strategic managers to vertically disintegrate to strengthen Copyright Cengage Learning. Powered by Cognero.

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their core business model? a. There is a substantial increase in low-cost, global, component parts suppliers that compete for the company’s business. b. The disadvantages of expanding the boundaries of their company by entering adjacent industries outweighs the advantages. c. The firm's asset investments are at greater risk of rapid decrease due to technological change or changing customer demands. d. There have been major shifts in institutional norms or competitive dynamics. e. All of these are factors in the decision of strategic managers to vertically disintegrate to strengthen their core business model.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 29. An automobile company enters into a long-term contract with two suppliers for the same automobile tool. This is to ensure the company is protected in the event one of the suppliers adopts an uncooperative attitude. Which of the following concepts is illustrated in this scenario? a. Outsourcing b. Vertical integration c. Horizontal integration d. Parallel sourcing e. Full integration ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 30. Company A has made substantial investments in specialized assets and, in theory, because of this investment, has become dependent on Company B. Company B can threaten to change orders to other suppliers as a way of driving down Company A’s prices. Company B is highly unlikely to change suppliers because it is, in turn, a major supplier to Company A and also has made major investments in specialized assets to serve their needs. These companies are mutually dependent because of the specialized investment the other has made. Thus, Company B is unlikely to renege on any Copyright Cengage Learning. Powered by Cognero.

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pricing agreements because it knows that Company A would respond the same way. This is an example of which of the following? a. Hostage taking b. Credible commitment c. Parallel sourcing policy d. Market discipline e. Modularity ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/30/2023 5:44 AM 31. Long-term agreements between two or more companies to jointly develop new products or processes that benefit all companies that are part of the agreement are known as a. horizontal integration. b. outsourcing. c. strategic alliances. d. joint ventures. e. vertical integration.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 32. SparklingLeaves is one of the major suppliers of automobile tools to StanMotors, a leading automobile company.

Many of the tools are customized to meet the specific needs of StanMotors and hence have little other value. In return, StanMotors has agreed to make SparklingLeaves its sole supplier of automobile equipment for a period of 15 years. This scenario illustrates a. horizontal integration. b. a credible commitment. c. competitive bidding. d. vertical integration.

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e. parallel sourcing.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 33. Companies invest in specialized assets because these assets allow them to a. lower their cost structure. b. charge excessive prices for their products. c. use materials that are unique. d. develop customized products. e. charge premium prices for their products.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 34. Which of the following describes a benefit of a long-term cooperative relationship over a short-term alliance? a. It is a substitute for vertical integration because it creates a relatively stable, long-term partnership that allows both companies to obtain the same kinds of benefits that result from vertical integration. b. It can help avoid the problems such as bureaucratic costs that arise from managerial inefficiencies that result when a company owns its own suppliers. c. Resulting cost savings are shared by suppliers who make substantial investments in specialized assets to better serve the needs of a particular business, and another company. d. The businesses jointly find ways to lower costs or increase product quality so both players gain from the relationship. e. All of these are benefits of a long-term cooperative relationship. They both gain from their relationship.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 35. John's surfboard shop has a long-term relationship with two surfboard makers that produce similar products. John is using a. parallel sourcing. b. cross-selling. c. product bundling. d. vertical integration. e. horizontal integration.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 36. Which is a quality of long-term contracts? a. They are preferable to short-term contracts when there is a minimal need for cooperation. b. They are preferable to vertical integration when it is not feasible to exchange hostages. c. They generally result in lower prices than competitive bidding. d. They achieve the same outcomes as vertical integration, but they incur higher bureaucratic costs. e. They are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 37. In the process of strategic outsourcing, which of the following would come after managers review noncore functions Copyright Cengage Learning. Powered by Cognero.

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to assess whether independent companies that specialize in those activities can perform them more effectively and efficiently? a. Activities are outsourced to those specialists. b. Structured long-term, contractual relationships, with rich information sharing between the company and the specialist organization to which it has contracted the activity are formed between the company and its specialists. c. Determine whether the companies that specialize in particular activities can perform them in ways that lower costs or improve differentiation. d. Execution of outsourcing. e. Identify the value-chain activities that form the basis of a company's competitive advantage.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 38. In which of the following is a firm MOST likely to lose direct control over value creation activities? a. Merger b. Acquisition c. Vertical integration d. Strategic alliance e. Outsourcing ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 39. Which of the following risks of outsourcing can be reduced by ensuring that there is appropriate communication between the outsourcing specialist and the company? a. Holdup b. Increased competition c. Loss of information and forfeited learning opportunities d. Enhanced differentiation Copyright Cengage Learning. Powered by Cognero.

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e. Lower cost structure ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 40. Strategic alliances are what type of agreements? a. Short-term agreements between two companies to jointly develop new products b. Short-term agreements between two companies to jointly market new products that benefit all companies involved in creating the product c. Short-term partnerships between two companies d. Long-term commitments between two companies to share research and development activities e. Long-term agreements between two or more companies to jointly develop new products or processes that benefit all companies that are a part of the agreement ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 41. As one of the benefits of outsourcing, what are the advantages of focusing on the core values and activities? a. Companies can enhance their core competencies and are able to push out the value frontier and create more value for their customers. b. It allows for the improvement of product differentiation by outsourcing to specialists when they stand out on the excellence dimension of quality. c. It will reduce costs when the price that must be paid to a specialist company to perform a particular valuechain activity is less than what it would cost the company to perform that activity in-house. d. A specialist may be able to achieve a lower error rate in performing an activity precisely because it focuses solely on that activity and has developed a strong, distinctive competency in it. e. It lowers costs and gives companies the flexibility to switch to a more favorable location if labor costs change.

This is the most efficient way to handle production.

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DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 42. GM typically solicits bids from global suppliers to produce a component and awards a 1-year contract to the supplier that submits the lowest bid. At the end of the year, a contract is put out for bid and the lowest cost supplier is most likely to win the bid. Which of the following is GM using? a. Strategic outsourcing b. Competitive bidding c. Strategic bidding d. Long-term alliance e. Hostage taking ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 9-5 Alternatives to Vertical Integration: Cooperative Relationships QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.06 - Discuss the best conditions for using cooperative relationships.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 43. What is the goal of managers regarding a company's value? a. To minimize the value of a company for its shareholders b. To maximize the value of a company for its shareholders c. To maintain the value of a company for its shareholders d. To reduce the value of a company for its stakeholders e. To increase the value of a company for its employees ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

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DATE CREATED: DATE MODIFIED:

5/26/2023 4:19 AM 5/26/2023 4:20 AM

44. What is the focus of corporate-level strategy? a. Defining the boundaries and scope of the firm b. Improving a company's competitive advantage and profitability in its current business or industry c. Choosing the most profitable way to enter new businesses or industries, or to exit others d. Maximizing profit over the long-term e. Minimizing risk over the long-term ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/26/2023 4:22 AM DATE MODIFIED: 5/26/2023 4:23 AM 45. What are the three corporate-level strategies discussed in the chapter? a. Diversification, strategic outsourcing, and integration b. Horizontal integration, vertical integration, and strategic outsourcing c. Diversification, horizontal integration, and vertical integration d. Strategic outsourcing, horizontal integration, and diversification e. Vertical integration, strategic outsourcing, and diversification ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/26/2023 4:23 AM DATE MODIFIED: 5/26/2023 4:24 AM 46. Which corporate-level strategy is Volkswagen's move into producing its own batteries an example of? a. Horizontal integration b. Vertical integration c. Strategic outsourcing d. Diversification e. A spin-off Copyright Cengage Learning. Powered by Cognero.

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ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:24 AM DATE MODIFIED: 5/26/2023 4:26 AM 47. What is an example of how a firm can create value through leveraging its expertise into adjacent fields? a. Expanding its supply chain b. Increasing bargaining power over suppliers c. Producing its own batteries d. Increasing customer loyalty e. Exiting its current business ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:26 AM DATE MODIFIED: 5/26/2023 4:27 AM 48. Why is it crucial to understand the sources of value, probability of harvesting that value, and costs and trade-offs involved in potential scope expansion moves? a. To maximize top-line growth b. To increase profitability c. To minimize shareholder anger d. To avoid eroding a firm's value creation e. To achieve sustainable advantage for the firm ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

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KEYWORDS: DATE CREATED: DATE MODIFIED:

Bloom's: Apply 5/26/2023 4:28 AM 5/26/2023 4:29 AM

49. When formulating corporate-level strategy, what should managers consider to allow a company to increase its competitive advantage in a changing industry environment? a. The next best use of its resources b. Changes taking place in an industry and in its products, technology, customers, and competitors c. How to promote its competitive advantage in its present business d. How to exit its current business and enter new businesses or industries e. Means to best hang on to trade secrets ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:29 AM DATE MODIFIED: 5/26/2023 4:30 AM 50. Why might potential value from vertical or horizontal integration be overestimated? a. Because of a lack of understanding of the sources of value b. Because of the probability of harvesting that value c. Because of the costs and trade-offs involved d. Because of the potential eroding of a firm's value creation e. There is poor internal managerial accounting ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.01 - Define corporate-level strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/26/2023 4:30 AM DATE MODIFIED: 5/26/2023 4:31 AM 51. How can corporate-level strategy increase profitability? a. By reducing industry rivalry through reduced price competition b. By enabling value-chain functional activities at a lower cost c. By enabling value-chain functional activities resulting in increased differentiation d. By finding loopholes in operating countries tax codes Copyright Cengage Learning. Powered by Cognero.

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e. By reducing industry rivalry through reduced price competition and enabling value-chain functional activities at lower costs and increased differentiation ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:32 AM DATE MODIFIED: 5/26/2023 4:33 AM 52. What should a multibusiness model explain when a company expands into different businesses and industries? a. How and why entering a new industry will allow the company to use its existing functional competencies and business strategies to increase its overall profitability b. How and why entering a new industry will allow the company to eliminate its existing functional competencies and business strategies to increase its overall profitability c. How and why entering a new industry will allow the company to use its existing functional competencies and business strategies to reduce its overall profitability d. How and why entering a new industry will allow the company to reduce industry rivalry by increasing price competition e. Where and when the company decided to locate different functional competencies and business strategies to reduce risk ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:34 AM DATE MODIFIED: 5/26/2023 4:35 AM 53. What test asks if additional value is created by having multiple businesses under one roof and if it achieves more value than businesses could achieve under any non-ownership configuration? a. The cost-of-entry test b. The better-off test c. The market contract test d. The collaboration test e. The ownership test ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:35 AM DATE MODIFIED: 5/26/2023 4:36 AM 54. When does a move to enter a new industry pass the cost-of-entry test? a. When the combination of two companies creates additional value that exceeds the premium paid b. When the combination of two companies creates less value than the premium paid c. When the combination of two companies creates the same value as the premium paid d. When a company enters a new industry at a lower cost than its competitors e. When bureaucratic costs are minimized ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:37 AM DATE MODIFIED: 5/26/2023 4:38 AM 55. Which of the following is NOT a way that managers must have a deep understanding of when creating value through corporate-level strategy? a. How businesses create value separately b. How businesses create value in combination c. What the absolute amount of value is likely to be d. How much it will cost to realize that value e. How the stock price is doing and how shareholders feel about the company ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

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United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/26/2023 4:38 AM 5/26/2023 4:39 AM

56. What are the challenging hurdles that corporate-level strategy must meet to create value? a. Staying inside one industry, pursuing horizontal integration, and expanding into new industries b. The better-off test and cost-of-entry test c. Pursuing related and unrelated diversification d. Maximizing long-term profitability and developing a higher-level multibusiness model e. The bureaucratic cost test and barrier-to-entry test ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/26/2023 4:39 AM DATE MODIFIED: 5/26/2023 4:40 AM 57. What is vertical integration? a. Entering new industries to support the business model of the ―core‖ industry b. A strategy for a company to expand operations in the same industry c. A company entering new industries that does not add value to its core products d. A strategy for a company to reduce the number of businesses it operates e. A strategy for a company to focus on diversification ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the ―Core‖ Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:41 AM DATE MODIFIED: 5/26/2023 4:42 AM 58. What is backward vertical integration? a. Moving into an industry that uses, distributes, or sells the company’s products b. Moving into distribution and sales (retail) c. Moving into component parts manufacturing and raw materials production Copyright Cengage Learning. Powered by Cognero.

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d. Moving into an industry that produces inputs for the company’s products e. When a systematic use of internal mechanisms are mandated to reduce bureaucratic costs ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the ―Core‖ Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:43 AM DATE MODIFIED: 5/26/2023 4:44 AM 59. Which of the following best describes the value-added chain? a. A separate industry, or industries, in which many different companies compete b. A value chain composed of the value creation activities within each industry c. The process of companies adding value to the raw materials they purchase d. A chain of events that occur from raw materials to finished products e. A chain of events that occur from product assembly to distribution ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-3 Vertical Integration: Entering New Industries to Strengthen the ―Core‖ Business Model QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 4:44 AM DATE MODIFIED: 5/26/2023 4:51 AM 60. A company invests in specialized assets to achieve which of the following competitive advantages? a. Lowering input costs b. Reducing industry competition c. Enhancing product quality d. Improving scheduling e. Increasing market demand ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

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United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/26/2023 4:51 AM 5/26/2023 4:52 AM

61. What disadvantage can arise when a company-owned supplier develops a higher cost structure than that of independent suppliers? a. Technological change b. Mismatches in optimal scale c. Rising bureaucratic costs d. Unpredictable demand e. Holdup risk ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:08 AM DATE MODIFIED: 5/26/2023 5:09 AM 62. Why might a supplier be hesitant to invest in specialized assets for a specific company? a. They fear holdup risk by the company b. They lack the know-how or skills for specialized assets c. They cannot find enough demand for the specialized assets d. They do not have enough resources to invest in the specialized assets e. They do not see the benefits of specialized assets for their business ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:09 AM DATE MODIFIED: 5/26/2023 5:10 AM 63. What advantage can be obtained by a company through improved scheduling resulting from vertical integration? a. Lowering input costs b. Reducing industry competition c. Increasing market demand Copyright Cengage Learning. Powered by Cognero.

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d. Enhancing product quality e. Achieving just-in-time inventory systems ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:11 AM DATE MODIFIED: 5/26/2023 5:12 AM 64. What is strategic outsourcing? a. The decision to perform all value-chain activities in-house b. The decision to allow one or more value-chain activities to be performed by independent specialist companies c. The decision to focus on noncore activities that are a source of competitive advantage d. The decision to outsource activities that are considered strategic e. The decision to outsource activities that can be performed more efficiently in-house ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:12 AM DATE MODIFIED: 5/26/2023 5:13 AM 65. What is a benefit of outsourcing for companies? a. Increased competition b. Reduced control over the value-chain activities c. Increased costs d. Enhanced differentiation and lower cost structure e. Reduced focus on core business activities ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

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United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/26/2023 5:15 AM 5/26/2023 5:16 AM

66. Which of the following activities is NOT commonly outsourced by companies? a. Manufacturing b. Human resource management c. IT support d. Marketing and sales e. Customer service ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:16 AM DATE MODIFIED: 5/26/2023 5:17 AM 67. What is holdup in the context of outsourcing? a. The risk of a company becoming too dependent upon a specialist provider b. The risk of losing important information when an activity is outsourced c. The risk of increased competition from contract manufacturers d. The risk of overestimating the cost savings associated with outsourcing e. The risk of a company losing control over its value-chain activities ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:17 AM DATE MODIFIED: 5/26/2023 5:18 AM 68. What advantage does strategic outsourcing provide to companies? a. Increased cost structure b. Reduced focus on core competencies c. Reduced differentiation Copyright Cengage Learning. Powered by Cognero.

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d. Increased profitability and focus on core competencies e. Increased focus on noncore activities ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 5:19 AM DATE MODIFIED: 5/26/2023 5:20 AM Essay 69. What is the relationship between a company's corporate-level strategy and its business model?

ANSWER: Corporate-level strategies drive a company's business model over time and determine which types of business- and functional-level strategies managers will choose to maximize longterm profitability. The link between corporate strategy and profitability should be underscored. To increase profitability, a corporate-level strategy should enable a company or one or more of its business divisions or units to perform value-chain functional activities at a lower cost and/or in a way that results in increased differentiation. In addition, corporate strategy may have a positive impact on profitability if it helps a company achieve a better competitive position in the marketplace. Thus, a company's corporate-level strategies should be chosen to promote the success of a company's business model and to help achieve sustainable competitive advantage at the business level.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-1 Corporate-Level Strategy and the Multibusiness Model QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.09.02 - Discuss how corporate-level strategy can be used to strengthen a company’s business model and business-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 70. Compare the benefits and risks associated with horizontal and vertical integration. Under what circumstances would a firm prefer one over the other?

ANSWER: Horizontal integration has many of the same benefits and risks as vertical integration. For example, both risk the inability to blend two different organizational cultures, both can lead to lower costs, and so on. One area of difference is that horizontal integration is always with rivals, while vertical integration is with buyer or supplier firms. Therefore, the nature of the integration, implementation, and anticipated cost savings is different. Another difference is that vertically integrated firms face the risk of high operating costs relative to outside suppliers or buyers due to lack of competitive pressure. A third difference is that the Copyright Cengage Learning. Powered by Cognero.

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bureaucratic costs of vertical integration are likely to be higher because of the need for close coordination between business units that are connected in the same supply chain, which is not a concern for a horizontally integrated firm.

Mergers are more common than acquisitions when the two firms are of approximately equal size, although there have been acquisitions between equals, and smaller firms have even acquired larger ones. An acquisition requires cash or some other form of payment to meet the purchase price, while a merger is a mere blending of assets and so may be preferable for cash-poor companies. Also, a merger is always friendly, while an acquisition may be either friendly or hostile. When one party is reluctant to enter into the deal, acquisition would be the preferred method.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-2 Horizontal Integration: Single-Industry Corporate Strategy 9-3 Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.09.03 - Discuss the primary advantages and disadvantages associated with the corporate-level strategy of horizontal integration.

SM.HILL.24.09.04 - Summarize vertical integration and its impact on the value chain.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 71. Consider the case of a manufacturing firm that purchases subassemblies from a supplier, creates a finished product, and then sells that product to a wholesale distributor. What advantages might this firm gain from forward integration?

From backward integration? What potential pitfalls of vertical integration might the firm face?

ANSWER: Forward integration would allow the manufacturing firm to own its distributors, which could enable it to realize higher profits because it will be able to capture the profits that were previously going to the distributor. Also, the vertically integrated firm will be larger and therefore can more easily build barriers to entry, limit competition, and charge higher prices.

The firm may also find that it can invest more readily in specialized assets, which protect product quality, enabling differentiation and higher prices. A final benefit would be the increased ease of scheduling and coordination and the increased opportunities for organizational learning.

POINTS: DIFFICULTY: REFERENCES: QUESTION TYPE: HAS VARIABLES:

Backward integration would require the firm to build its own subassemblies. The benefits of backward integration are the same as those found in forward integration. However, whether the firm chooses forward or backward integration, it must consider some potential pitfalls.

First, by owning more value creation activities, the firm's complexity is increasing, which will increase bureaucratic costs. Second, the buyer or supplier business units may be less motivated to keep expenses low because they have a guaranteed seller or buyer for their output. Third, ownership of the additional steps in the process locks the firm into technology, capacity, cost, and other choices, whereas the nonintegrated firm is free to choose other suppliers, other technology, other quantities, and so on, through purchasing agreements.

1 Moderate 9-4 Advantages and Disadvantages of Vertical Integration Essay False

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STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 72. How can strategic outsourcing strengthen a company's business model and increase its profitability?

ANSWER: Strategic outsourcing is the decision to allow one or more of a company's value-chain activities or functions to be performed by independent specialist companies that focus all their skills and knowledge on just one kind of function, such as the manufacturing function, or on just one kind of activity that a function performs. Companies generally outsource noncore activities. Strategic outsourcing can help strengthen a company's business model and increase its profitability in several ways. First, outsourcing can help reduce a company's cost structure. Outsourcing reduces costs when the price that it pays to an independent company to perform one or more of its value-chain activities is lower than the cost of performing the activities itself. Second, outsourcing can help a company enhance its differentiation. This occurs when the independent firm performs an activity at a higher level of quality than the company performs the activity. Finally, outsourcing allows companies to focus their energies and company resources on performing those core activities that have the most potential to create value and competitive advantage.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-6 Strategic Outsourcing QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM 73. Strategic alliances and outsourcing are two alternatives to vertical integration. What are the advantages and disadvantages of each compared to vertical integration? What can managers do to eliminate or reduce the risks?

ANSWER: Compared to vertical integration, strategic alliances allow the firm to reduce its bureaucratic costs because the firm doesn’t have to manage the entire set of complex activities. Also, strategic alliances enable the firm to remain flexible, for example, by renegotiating the contract terms. This means the firm is not locked into choices about technology, capacity, and so on. Thus, strategic alliances provide the advantages of vertical integration, closer coordination, investment in specialized assets, and so on, but with lower costs and increased flexibility. The major disadvantages of strategic alliances are the potentially higher costs of allowing the partner to profit and the possibility of losing control over scheduling, proprietary know-how, and other items.

Outsourcing will reduce costs when the price paid to a specialist company is less than performing the function internally. Specialists can control their cost structure (and therefore offer their services at attractive prices) because of economies of scale, learning effects, location scale, and other efficiencies not available to the client company. Second, outsourcing will afford the client company greater ability to differentiate its final products if the quality of the activity is greater than the quality that could be achieved internally. Higher quality Copyright Cengage Learning. Powered by Cognero.

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products with lower defect rates, for example, translate into reliability, a key factor in differentiation. Third, outsourcing allows managers to focus their energies and the company's resources on core activities. The pitfalls to outsourcing include the risk of overdependence on the specialist (sometimes leading to holdup, an extreme effect of bargaining power), and the loss of critical information (such as customer complaints). Compared to vertical integration, outsourcing requires much less outlay of resources, affords greater flexibility and less complexity, and keeps an organization on track with its core business.

To reduce or eliminate risks, managers considering the use of strategic alliances or outsourcing can take actions that align the interests of the parties more closely. For example, the parties can exchange hostages by using mutual investments in specialized assets, also called credible commitments. This will ensure that each party can inflict some costs on the other, lessening the chance that either will do so. Market discipline, in the form of a willingness to renegotiate contractual agreements or switch to a different partner altogether, also reduces the chances of one firm taking advantage of the other. Another way to accomplish market discipline is using parallel sourcing so that the firm uses two or more partners, signaling its independence from both. Finally, any action that serves to build trust, encourage cooperation, improve communication, support personal friendships, and so on, will increase the chances that the firms will act in a way that enhances the benefits for both.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 9-4 Advantages and Disadvantages of Vertical Integration 9-6 Strategic Outsourcing QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.09.05 - Review the advantages and disadvantages of vertical integration.

SM.HILL.24.09.07 - Explain the strategic reasons for outsourcing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/25/2023 7:31 PM

Chapter 10 - Corporate-Level Strategy: Related and Unrelated Diversification True / False 1. Since the free cash flow of a firm technically belongs to the company's owners or its shareholders, in order for diversification to create value, a company's future ROIC must be less than the value shareholders would reap by returning the cash to them. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase Copyright Cengage Learning. Powered by Cognero.

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company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/14/2023 3:42 PM 2. Disposable diapers, toilet paper, and paper towels, are all paper-based products that customers value for their ability to absorb fluids without disintegrating. P&G shares the R&D costs associated with developing and making even more advanced absorbent, paper-based products across these three distinct businesses units. They also use the same sales force to sell their whole array of products to retailers. These strategies allow P&G to obtain economies of scope from the ability to share resources and obtain synergies across business units. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/14/2023 3:43 PM 3. A laundromat and a pool hall together invest in a new store, where customers can wash their clothes and play pool while waiting. This is an example of an internal new venture. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/14/2023 3:46 PM Multiple Choice 4. When Philip Morris used its distinctive competencies in product development, consumer marketing, and brand positioning to help develop their new acquisition of Miller Brewing from small brewery to number two in market share, it Copyright Cengage Learning. Powered by Cognero.

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is referred to as a. sharing resources and capabilities. b. leveraging competencies. c. economies of scale. d. economies of scope.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 10:47 AM DATE MODIFIED: 6/14/2023 3:47 PM 5. At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined to create a complete meal. This is an example of a. diversification. b. leveraging competencies. c. product bundling. d. general organizational competencies.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 10:51 AM DATE MODIFIED: 5/27/2023 10:55 AM 6. Sara Lee Corp., a clothing firm, purchased Platex Apparel Inc. This purchase helped to make Sara Lee Corp. one of the largest makers of women's apparel in the United States. Sara Lee Corp. utilized which type of strategy? a. Unrelated diversification b. Competency leverage c. Economies of scope d. Acquisition ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 10:57 AM DATE MODIFIED: 6/14/2023 3:48 PM 7. The use of distinctive competencies in precision mechanics, fine optics, and electronic imaging by Canon to enter into a new business in a new industry to produce laserjet printers is an example of which strategy? a. Leveraging competencies b. Economies of scope c. Commonality d. Transferring competencies ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 11:02 AM DATE MODIFIED: 5/27/2023 11:05 AM 8. Which of the following is NOT a way to use diversification to increase profitability? a. The use of general organizational competencies to increase the performance of all a company's business units b. Trying to leverage competencies to create business units in new industries c. Sharing resources between business units to realize synergies or economies of scope d. Transfer competencies between business units in different industries e. Evaluate business units to determine which needs to be shut down to give more time and attention to more successful units ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM Copyright Cengage Learning. Powered by Cognero.

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9. Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another line of business? a. A technology acquisition strategy b. Related diversification c. A restructuring strategy d. Total diversification e. A taper diversification strategy ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:20 AM 10. Microsoft's relationships and experiences in the computer industry and expertise in managing industries surrounding external networks led them to create new business units in the video game, online portal, and search engine industries.

This is an example of which of the following? a. Sharing resources and capabilities b. Leveraging competencies to create a new business c. Transferring competencies across businesses d. Utilizing general organizational competencies e. Economies of scope ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:53 AM 11. When Coca-Cola decided to use its successful marketing experience and global distribution network to buy Colombia Pictures and get into the business of making movies, which of the following ways of pursuing a multibusiness model based on diversification was it utilizing? a. Sharing resources and capabilities Copyright Cengage Learning. Powered by Cognero.

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b. Leveraging competencies to create a new business c. Transferring competencies across businesses d. Utilizing general organizational competencies e. Economies of scope ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:54 AM 12. Which of the following describes when diversification to obtain economies of scope is possible? a. When there are significant commonalities between one or more value-chain functions in a company's different business units or divisions that result in synergies which increase profitability b. The sharing of competencies will result in increased costs which will cause a streamlining of one or more of a company's new or existing business units c. When the advantages of sharing competencies will exceed the costs and risks created d. Product bundling allows a company to satisfy customers' needs for a complete package of related products but makes it more difficult to achieve economies of scope e. When the costs of coordination necessary to achieve synergies within a company are higher than the value that can be created by such a strategy ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:26 AM 13. Which of the following involves taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry? a. Sharing resources and capabilities b. Leveraging competencies c. Transferring competencies d. Product bundling Copyright Cengage Learning. Powered by Cognero.

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e. Strategic management capabilities ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:28 AM 14. Some managers have hard-to-define governance skills that are required to manage different business units in a way that enables these units to perform better than they would if they were independent companies. Which of the following general organizational competencies helps business-unit managers probe for information and helps them think through strategic problems? a. Entrepreneurial capabilities b. Capabilities in organizational design c. Superior strategic management capabilities d. Sharing resources and capabilities e. Leveraging competencies to create a new business ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:55 AM 15. Tom Smith, a top manager at a diversified company, has been tasked to identify inefficient, poorly managed companies in other industries. He then is tasked to acquire and restructure them to improve their performance and increase the profitability of the total corporation. Which of the following would be a strategy Tom might take to increase the performance of one of these newly acquired companies? a. Top managers of the acquired company are trained in more aggressive management techniques. b. The new top-management team consolidates assets and terminates staff to reduce the cost structure. c. The management team recommits to traditional strategies. d. All bonuses and incentive programs are terminated. e. The acquiring company uses the established goals to evaluate and review employees at all levels.

ANSWER: b POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:55 AM 16. Miller Brewing, which was acquired by Philip Morris, was related to the parent company's tobacco business because it was possible to create important marketing commonalities. Both beer and tobacco are mass market consumer goods in which brand positioning, advertising, and product development skills are crucial to create successful new products. This is an example of which of the following? a. Transferring competencies b. Leveraging competencies c. General organizational competencies d. Economies of scope e. Organizational design skills ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:55 AM 17. Which of the following statements is NOT generally true of a diversification strategy based on the realization of economies of scope? a. The strategy requires the head office to evaluate each business unit as a stand-alone operation. b. The strategy allows a company to realize cost economies among business units. c. The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale. d. The strategy requires managers to be aware of the costs of coordination. e. The strategy requires close coordination among different business units.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:37 AM 18. Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification? a. The company must achieve coordination between business units. b. The company has narrow organizational competencies. c. The company has superior strategic management and organizational design. d. The company has no bureaucratic costs that arise from the number of businesses in its portfolio. e. The company has no difficulty in keeping its corporate managers informed about the complexities of each business.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing a Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:39 AM 19. A company should pursue related diversification instead of unrelated diversification when the company's a. core skills are applicable to a wide variety of industrial and commercial situations. b. core skills are highly specialized and have few applications outside the core business. c. top managers are skilled at acquiring and turning around poorly run enterprises. d. main objective is to maximize its growth. e. free cash flow is high enough that it has funds available for investment.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing A Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:41 AM Copyright Cengage Learning. Powered by Cognero.

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20. A company should pursue unrelated diversification instead of related diversification when a. its core skills are highly specialized and have few applications outside its core business. b. the company's top managers are skilled at acquiring and turning around poorly run enterprises. c. its core technological skills are applicable to a wide variety of industrial and commercial situations. d. it wants to maximize growth. e. the bureaucratic costs of implementation do not exceed the value that can be created by realizing economies of scope.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing A Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:42 AM 21. Which of the following is an ill-advised justification that a business adopts to justify diversification? a. The strategy would allow a company to save themselves from the drawbacks of risk pooling. b. Entry into new industries will rescue the core business and lead to long-term growth and profitability. c. It decreases the range of threats the company encounters and gives more time to managers had to spend dealing with these threats. d. Business cycles of different industries are inherently easy to predict, so it is likely that a diversified company will find that an economic downturn affects only one of its business units. e. Growth creates value for stockholders and growth is the objective of a diversification strategy.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:47 AM 22. In which of the following cases are bureaucratic costs likely to be lowest? a. A vertically integrated company with five divisions that pursues full integration b. A company with five divisions that pursues related diversification based on economies of scope c. A company with five divisions that pursues related diversification based on transferring competencies d. A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring e. A company with twenty divisions that pursues taper integration ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:46 AM 23. Which of the following is NOT an effect of an extensively diversified company with multiple business units? a. It leads managers to base important resource-allocation decisions on a superficial analysis of each business unit's competitive position. b. It makes it easier for corporate managers to remain informed about the complexities of each business. c. Managers simply do not have the time to assess the business model of each unit. d. The distance from the day-to-day operations may catch corporate managers unaware of information that is hidden by business-unit managers who want to protect their own jobs. e. As organizational problems increase, the time and effort spent by top managers to solve them increases bureaucratic costs and cancels out the profit-enhancing advantages of pursuing diversification.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:49 AM 24. Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue? a. Steady industry conditions b. Varying firm-specific conditions c. Diversification for pooling risks d. Decreasing bureaucratic costs e. Greater differentiation of products ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic Bloom's: Understand 4/19/2023 4:52 PM 5/27/2023 11:50 AM

25. The three main types of diversification strategies are a. acquisitions, joint ventures, and divestments. b. acquisitions, mergers, and buyouts. c. acquisitions, internal new ventures, and joint ventures. d. related acquisitions, unrelated acquisitions, and mergers. e. joint ventures, strategic alliances, and long-term contracts.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 11:52 AM 26. Which of the following is NOT a reason that explains the relatively high failure rate of internal new ventures? a. Businesses choose a small-scale entry strategy, which often means they fail to build the market share necessary for long-term success. b. A company is marketing a product based on a technology for which there is no demand. c. The company fails to correctly position or differentiate the product in the market to attract customers. d. A company tries to increase their chances of introducing successful products by establishing too many internal new-venture divisions. e. Companies are focused on and excel at R&D in which they help to advance basic science and discover important commercial applications for it.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:04 PM 27. Which of the following statements concerning research and development is correct? a. Exploratory research is more important than development research.

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b. Development research is more important than exploratory research. c. Exploratory research is directed toward commercialization of a new technology. d. Development research advances basic science. e. Exploratory research and development research are needed for internal new venturing.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:04 PM 28. Bob's Running Shoes acquired Fleet Feet about six months ago. Due to the differences in processes and cultures of the two companies, it has taken a long time to adopt a common management and financial control system. They share information and personnel but have had difficulty in creating a common culture. Management is threatening to leave because the employees do not like the acquiring company's way of operating. Which of the following acquisition pitfalls does this scenario describe? a. Integrating the acquired company b. Overestimating economic benefits c. The expense of acquisitions d. Inadequate pre-acquisition screening e. Agency problems ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/1/2023 2:14 PM 29. Which of the following is considered a negative effect of sharing the risks and costs of developing a new business in a joint venture? a. The main risk is that there is rarely an established leading company in an emerging industry. b. If one partner's skills are more important than the other partner's skills, the partner with more valuable skills may feel they might "give away" profits to the other party because of the 50/50 agreement. c. Partners may have different business models or time horizons which can cause conflict about how the business is run. d. There is a risk of giving away important, company-specific knowledge to its partner, which might then use it Copyright Cengage Learning. Powered by Cognero.

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to compete with its other partner in the future. e. Conflict can sour the working relationship between the partners and cause the venture to disintegrate.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:08 PM 30. In order to make a successful acquisition, which of the following would occur after a detailed assessment of the potential acquisition's strengths and weaknesses? a. Generation of significant value from the experience of the acquisition process b. Eliminating any duplication of facilities or functions c. Integration of the acquired company into its operations and quickly develop a viable multibusiness model d. Targeting an identification and pre-acquisition screening e. Developing and initiating a bidding strategy ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:10 PM 31. In which of the following stages of successful acquisition is timing an essential component? a. Learning from experience b. Identification and screening c. Bidding strategy d. Integration e. Elimination of any duplication of facilities or functions ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:37 PM 32. Which of the following is NOT necessary for a successful acquisition? a. Good bidding strategy b. Clear strategic rationale for making the acquisition c. Quick completion of the acquisition d. Thorough pre-acquisition screening e. Post-acquisition audit to review the process and discuss ways to improve it ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:39 PM 33. Which of the following is the main reason for a company to restructure? a. The stock market has valued the stock lower than the stock of less-diversified companies. b. Innovations in strategic management have diminished the advantages of vertical integration or diversification. c. Fulfilling the need to exit industries to increase profitability split existing businesses into separate, independent companies. d. It is an attempt to boost returns to shareholders by splitting up a multibusiness company into separate, independent parts. e. Diversification has reduced profitability.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/1/2023 2:15 PM Copyright Cengage Learning. Powered by Cognero.

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34. Which of the following statements is false? a. Joint ventures are preferable to acquisitions when the new business is related to the existing business. b. Acquisitions are preferable to new ventures when speed is important. c. Joint ventures are generally preferable to acquisitions when entry barriers are high. d. Acquisitions can be both a reason for corporate decline and part of a turnaround strategy. e. New ventures are preferable to acquisitions in the embryonic stage of the industry life cycle.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:43 PM 35. Stanley's services firm wants to enter an embryonic market, but it doesn't have enough cash to purchase the required assets. Which of the following strategies would you recommend to Stanley? a. Diversify through acquisition. b. Do not diversify at all. c. Diversify with an internal new venture. d. Diversify with a joint venture. e. Diversify through vertical integration.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:45 PM 36. Which of the following is instrumental in increasing the probability of a joint venture's success? a. The companies share complementary skills or distinctive competencies. b. The companies’ bidding strategy is well-developed and timed correctly. c. The duplication of facilities or functions is eliminated, and any unwanted business units are divested. d. Companies have a strong competency in the R&D unit and devote funding for continuing research. e. There is large-scale entry.

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ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/1/2023 2:26 PM 37. In 2007, Google bought YouTube. This is an example of which of the following means to enter a new industry? a. Partnership b. Strategic alliance c. Joint venture d. Acquisition e. Merger ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:49 PM 38. Which strategy is based upon a company's decision to enter one or more new industries to leverage its existing distinctive competencies and business model? a. Market penetration strategy b. Market development strategy c. Product development strategy d. Diversification strategy e. Cost leadership strategy ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Remember 5/27/2023 1:12 PM 5/27/2023 1:14 PM

39. What is one potential disadvantage of diversification? a. It can lead to a loss of focus and transparency. b. It always leads to financial loss. c. It prevents the development of new products. d. It results in a company being unable to enter new markets. e. It hinders the adoption of new technologies.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 1:15 PM DATE MODIFIED: 5/27/2023 1:17 PM 40. What are the three different ways companies can implement a diversification strategy? a. Internal new ventures, divestment, and mergers b. Divestment, acquisitions, and joint ventures c. Acquisitions, joint ventures, and horizontal integration d. Internal new ventures, acquisitions, and joint ventures e. Joint ventures, mergers, and horizontal integration ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 1:17 PM DATE MODIFIED: 5/27/2023 1:20 PM 41. Given that a firm has a strong competency in online search, what industry could the company diversify into to leverage this strength, as Google did? a. Merchandise b. Online video content creation c. Online travel booking Copyright Cengage Learning. Powered by Cognero.

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d. Retail e. Drop shipping ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:20 PM DATE MODIFIED: 5/27/2023 1:23 PM 42. A company realizes that its diversification into a new industry is leading to a loss of focus and transparency. What should the company do in this situation? a. Continue with the diversification strategy. b. Exit the industry and allow the business to operate on its own. c. Merge with another company in the same industry. d. Ignore the issues and focus on increasing profits. e. Sell the entire company.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:23 PM DATE MODIFIED: 5/27/2023 1:26 PM 43. If a company overestimates potential synergies from a diversification strategy, what can be the potential outcome? a. The company can lose its key strengths. b. The company can increase its profits significantly. c. The company will definitely go bankrupt. d. The company will become a market leader. e. The company will have no notable changes.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:26 PM DATE MODIFIED: 5/27/2023 1:29 PM 44. Analyze the scenario where a company decided to diversify into a new industry, but it ended up reducing the firm's transparency in reporting its results. What could be a potential reason for this outcome? a. The company is not familiar with the new industry. b. The company has not properly calculated the risks involved. c. The company's managers failed to provide adequate oversight. d. The company did not consider the customer needs. e. The company has invested in the wrong industry.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/27/2023 1:29 PM DATE MODIFIED: 5/27/2023 1:32 PM 45. Evaluate the scenario where a company's diversification strategy into a new industry did not create additional value.

What should be the company's next step? a. The company should invest more resources into the new industry. b. The company should exit the new industry. c. The company should ignore the situation. d. The company should acquire another company in the new industry. e. The company should merge with a competitor.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-1 Overview QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.01 - Define diversification as a strategy.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Evaluate DATE CREATED: 5/27/2023 1:32 PM DATE MODIFIED: 5/27/2023 1:35 PM 46. What is the main difference between related diversification and unrelated diversification? a. Related diversification focuses on transferring and leveraging competencies between business units, while Copyright Cengage Learning. Powered by Cognero.

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unrelated diversification does not. b. Related diversification is a corporate-level strategy, while unrelated diversification is a business-level strategy. c. Unrelated diversification involves establishing a business unit in a new industry that is related to a company's existing business units, while related diversification does not. d. Unrelated diversification is based on taking advantage of strong technological, manufacturing, marketing, and sales commonalities between new and existing business units, while related diversification is not. e. Related diversification aims to increase the value of the company through an internal capital market, while unrelated diversification does not.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 1:36 PM DATE MODIFIED: 5/27/2023 1:40 PM 47. What is an internal capital market? a. An internal capital market is a situation whereby corporate headquarters assesses the performance of business units and allocates money across them. b. An internal capital market is an arbitrage strategy whereby managers make money by making better investment decisions within the firm than the external capital market would. c. An internal capital market is a market with a less efficient capital market where conglomerates may create significant value. d. An internal capital market is a situation where cash generated by units that are profitable but have poor investment opportunities within their business is used to cross-subsidize businesses that need cash. e. An internal capital market is a strategy of unrelated diversification where firms own unrelated businesses and attempt to increase their value through the use of general organizational competencies.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 1:40 PM DATE MODIFIED: 5/27/2023 1:44 PM 48. A company that wants to benefit from transferring competencies and sharing resources between its existing and new business units should pursue which diversification strategy?

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a. Related diversification b. Unrelated diversification c. Business-level diversification d. Vertical integration e. Forward integration ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:44 PM DATE MODIFIED: 5/27/2023 1:47 PM 49. Which of the following is an advantage of unrelated diversification? a. It allows a company to use any general organizational competency it possesses to increase the overall performance of all its different industry divisions. b. It can allow a company to cross-subsidize businesses that need cash and have strong promise for long-run profitability. c. It can result in superior performance and profitability if the strategic managers have the special skills needed to manage many companies in diverse industries. d. It allows a company to obtain benefits from transferring competencies, leveraging competencies, sharing resources, and bundling products. e. It enables a company to establish a business unit in a new industry that is related to its existing business units.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:50 PM DATE MODIFIED: 5/27/2023 1:55 PM 50. Which of the following is an example of how a company pursuing related diversification can use strong technological commonalities between new and existing business units to increase its competitive advantage? a. A clothing company expands into the food industry to leverage its expertise in supply chain management. b. A car manufacturer acquires a software company to transfer its expertise in digital innovation. c. A telecommunications company enters the healthcare industry to share its expertise in consumer service.

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d. A cosmetics company buys a hotel chain to bundle its products with hotel services. e. An electronics company acquires a home appliance company to modify and enhance the features of its products.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-3 Related and Unrelated Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 1:56 PM DATE MODIFIED: 5/27/2023 2:01 PM 51. What is one reason why diversification may lead to a loss of competitive advantage? a. The inability of top managers to recognize profitable opportunities to enter new industries b. The lack of competency or commitment of a company's new leaders c. Rapid and unpredictable changes in the environment d. Bureaucratic costs e. Limits on the ability to fulfill orders ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:01 PM DATE MODIFIED: 5/27/2023 2:04 PM 52. Why do managers often refuse to recognize that their diversification strategy is failing? a. They lack the competency or commitment necessary to pursue diversification successfully. b. They make up reasons to keep their collection of businesses together. c. They are unwilling to divest unprofitable businesses. d. They are emotionally tied to the strategy. e. They lack the competency or commitment necessary to pursue diversification successfully, they make up reasons to keep their collection of businesses together, they are unwilling to divest unprofitable businesses, and they are emotionally tied to the strategy.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:04 PM DATE MODIFIED: 6/1/2023 2:26 PM 53. What is the main source of bureaucratic costs in a diversified organization? a. The inability of top managers to maintain control over their multibusiness models b. The amount of coordination required to realize value from a diversification strategy c. The need to reduce overall costs in order to increase profitability d. The use of administrative employees e. Red tape associated with government filings of multiple organizational units ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:08 PM DATE MODIFIED: 5/27/2023 2:11 PM 54. Why does diversification often fail to boost profitability? a. The benefits created by the strategy are exceeded by the bureaucratic costs of diversification. b. Corporate diversification is not an effective way to pool risks. c. Entry into new industries cannot rescue a core business that is in trouble. d. De-diversification can often occur as a result of the company's efforts. e. The sheer number of businesses in the diversification make managing them unreasonable.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:11 PM DATE MODIFIED: 6/1/2023 2:27 PM 55. Which of the following is a potential disadvantage of related diversification?

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a. Higher bureaucratic costs than unrelated diversification b. Difficulty achieving coordination between business units c. Limited ability to create value in multiple industries d. Lack of opportunities to leverage competencies e. Siloing of business units leading to decreased profitability ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing a Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:14 PM DATE MODIFIED: 5/27/2023 2:17 PM 56. Which of the following is a potential advantage of pursuing unrelated diversification? a. Lower bureaucratic costs than related diversification b. Ability to apply competencies across a greater number of industries c. Superior strategic capabilities to keep bureaucratic costs under control d. Strong functional competencies with useful applications across industries e. Minimizing the need for regulatory oversight ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing a Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:17 PM DATE MODIFIED: 5/27/2023 2:20 PM 57. Which of the following is a factor a company should consider when choosing between related and unrelated diversification? a. The number of business units in its portfolio b. The extent of coordination required between business units c. The ability to apply competencies across industries d. The level of bureaucratic costs associated with each strategy e. The legislation that is regulating each company or asset in the diversification ANSWER: d POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 10-5 Choosing a Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:20 PM DATE MODIFIED: 5/27/2023 2:23 PM 58. When might it be beneficial for a company to pursue unrelated diversification? a. When it has superior strategic capabilities to keep bureaucratic costs under control b. When it can apply its competencies across a greater number of industries c. When each business unit's functional competencies have few useful applications across industries d. When it can achieve coordination between business units e. When maximizing the number of useful applications across products and services ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-5 Choosing a Strategy QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:23 PM DATE MODIFIED: 5/27/2023 2:26 PM 59. When is internal new venturing typically used? a. When a company possesses one or more distinctive competencies in its core business model that can be leveraged or recombined to enter a new industry b. When a company wants to enter a new industry through acquisitions c. When a company wants to enter a new industry through joint ventures d. When a company wants to enter an established industry e. When a company wants to enter a newly emerging industry ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:26 PM DATE MODIFIED: 5/27/2023 2:29 PM Copyright Cengage Learning. Powered by Cognero.

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60. What are the three reasons often put forward to explain the relatively high failure rate of internal new ventures? a. Small-scale entry, poor commercialization, and poor implementation b. Large-scale entry, poor commercialization, and poor implementation c. Small-scale entry, good commercialization, and good implementation d. Large-scale entry, good commercialization, and good implementation e. Small-scale entry, poor commercialization, and good implementation ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:32 PM DATE MODIFIED: 5/27/2023 2:35 PM 61. What is the relationship between scale of entry and profitability for successful small-scale and large-scale ventures? a. Successful small-scale entry generates greater returns in the long term. b. Successful large-scale entry generates greater returns in the short run. c. Successful large-scale entry generates greater returns in the long term. d. Successful small-scale entry generates greater returns in the short run. e. There is no clear relationship between scale of entry and profitability.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:35 PM DATE MODIFIED: 5/27/2023 2:38 PM 62. What is the role of marketing in internal new venturing? a. To advance basic science and discover important commercial applications for it b. To work with R&D scientists to continually develop and improve the business model and strategies c. To foster close links between R&D and manufacturing to ensure cost-effectiveness d. To identify the most important customer requirements for a new product and communicate these requirements to scientists e. To oversee the development of new products from inception to market introduction ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 10-6 Entering New Industries: Internal New Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:39 PM DATE MODIFIED: 5/27/2023 2:42 PM 63. When is acquisition considered a favored entry mode to enter a new industry? a. When a company wants to pursue internal venturing b. When a company lacks distinctive competencies to compete in a new industry c. When the industry is protected by low barriers to entry d. When a company wants to wait years to build a market leadership position e. When a company has a distinctive competitive advantage ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-7 Entering New Industries: Acquisitions QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:42 PM DATE MODIFIED: 5/27/2023 2:45 PM 64. What is a joint venture? a. A merger of two companies b. A collaboration between two or more companies to create a new business c. A company's acquisition of another company d. A company's diversification into a new industry e. A company's decision to enter a new market ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

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65. Company A is contemplating the creation of a new-venture division in an embryonic industry. Why is a joint venture considered an appropriate method to enter this new industry? a. It allows the company to make a huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry. b. It allows the company to purchase an established leading company in the emerging industry. c. It allows the company to share the risks and costs associated with establishing a business unit in the new industry with another company. d. It allows the company to bear the costs and risks of developing new products on its own. e. It allows the company to merge its activities into one company.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:48 PM DATE MODIFIED: 5/27/2023 2:51 PM 66. What are the disadvantages of joint ventures as a method for companies to enter new industries? a. Joint ventures require that both partner companies share in the profits if it succeeds. b. Joint venture partners may have different business models. c. Joint ventures can lead to the unintentional leak of proprietary information across companies. d. Joint ventures require that both partner companies share in the profits if it succeeds, and joint venture partners may have different business models or time horizons. e. Joint ventures require that both partner companies share in the profits if it succeeds, joint venture partners may have different business models or time horizons, and joint ventures can lead to the unintentional leak of proprietary information across companies.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method companies use to enter new industries.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 2:52 PM DATE MODIFIED: 6/5/2023 7:59 PM Copyright Cengage Learning. Powered by Cognero.

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67. What is de-diversification? a. The process of expanding the scope of the firm b. The process of exiting businesses and activities that no longer make sense to have under joint ownership c. The process of buying more businesses than sold d. The process of pursuing too much diversification e. The process of breaking apart conglomerates ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 2:56 PM DATE MODIFIED: 5/27/2023 2:59 PM 68. Why do some managers resist divestiture? a. Because they prefer a flexible and risk averse culture b. Because they want to hold onto businesses that have been kept of the corporation for a long time c. Because they feel that businesses should be kept together regardless of their core strategy d. Because they fear that divestiture will lead to a drain on management time and investor funds e. Because they want to create value for shareholders ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 2:59 PM DATE MODIFIED: 5/27/2023 3:02 PM 69. Which of the following is NOT a reason for a company to divest a business or asset? a. To unlock higher value on the stock market b. To operate more flexibly as an independent company c. To address upside opportunities d. To address downside threats e. To focus more on the core competencies of the business ANSWER: c POINTS: 1 DIFFICULTY: Easy Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 3:02 PM DATE MODIFIED: 6/1/2023 2:28 PM 70. What are the three ways a firm can exit businesses or assets? a. Sell-offs, spinoffs, and mergers b. Carve-outs, sell-offs, and mergers c. Carve-outs, spinoffs, and mergers d. Sell-offs, spinouts, and carve-outs e. Mergers, spinouts, and carve-outs ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 3:05 PM DATE MODIFIED: 6/1/2023 2:29 PM 71. When might a spinoff be a better option than a sell-off for a firm? a. When the division is in an industry with better growth prospects than the overall corporate portfolio b. When the division is generating strong cash flow c. When the division is not generating enough cash flow d. When the division is underperforming compared to the rest of the firm e. When the division is over-diversified ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 3:08 PM DATE MODIFIED: 5/27/2023 3:11 PM

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72. What is the difference between a spinoff and a carve-out? a. A spinoff is a partial divestiture of a business, while a carve-out is when a corporation makes a division or subsidiary of the firm into a separate legal entity. b. A spinoff results in a cash inflow to the corporate parent, while a carve-out results in no cash inflow. c. A spinoff is a tax-free transaction to the company and its shareholders, while a carve-out is not. d. A spinoff is followed by a split-off, while a carve-out is not. e. A spinoff is when a parent company sells some portion of a business unit to outside investors, while a carveout is when a corporation makes a division or subsidiary of the firm into a separate legal entity.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 3:11 PM DATE MODIFIED: 5/27/2023 3:16 PM 73. Which of the following is NOT a reason why highly diversified companies are seen as less attractive investments to investors? a. They often don't have multibusiness models that justify their participation in many different industries. b. The complexity of the financial statements of highly diversified enterprises disguises the performance of individual business units. c. They are riskier than companies that operate in one industry. d. CEOs often pursue growth for its own sake, reducing profitability. e. They have a limited ability to pivot resources when market conditions change.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 3:16 PM DATE MODIFIED: 5/27/2023 3:20 PM 74. Which of the following is NOT generally thought of as a potential benefit of spinning off a business? a. It can give the business the independence it needs to be more successful. b. Its stock can trade separately from the corporate parent's stock. c. The parent company receives cash for spinning off the division. d. The spinoff may rise faster in value than the corporate parent's stock value. e. The businesses involved may gain a narrowed focus on their respective business and industries.

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ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-9 De-Diversification: Sell-Offs, Spinoffs, Carve-Outs, and Split-Offs QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.10.09 - Explain the four ways a company can de-diversify.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/27/2023 3:20 PM DATE MODIFIED: 5/27/2023 3:23 PM Essay 75. Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

ANSWER: Diversification is the process of entering new industries, distinct from a company's core or distinct industry, using a multibusiness model based on finding ways to use the company's distinctive competencies to increase the value of products in those industries to customers, and thus a company's long-run profitability.  

  

Diversification can increase profitability when managers transfer competencies between business units in different industries. This is usually done by companies that acquire others that share some sort of commonality.

Diversification can increase profitability when managers leverage competencies to create business units in new industries. This is based on the idea that a source of competitive advantage in one industry may be a source of competitive advantage in another industry.

Diversification can increase profitability when managers share resources between business units to realize synergies or economies of scope. Sharing resources allows a company to realize cost-saving or differentiation advantages.

Diversification can increase profitability when managers utilize product bundling.

Product bundling allows a company to expand its product line and offer customers a package of related products.

Diversification can increase profitability when managers utilize general organizational competencies that increase the performance of all of a company's business units. These competencies are found in top management and transcend businesses; they may include factors such as entrepreneurial skills, capabilities in organizational design, and strategic capabilities.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-2 Ways Diversification Can Increase Profitability QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.10.02 - Explain the five primary ways in which diversification can increase company profitability.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM Copyright Cengage Learning. Powered by Cognero.

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76. What are the two general types of diversification, and when would one be preferred over the other?

ANSWER: Diversification can take one of two forms: related or unrelated. Related diversification refers to establishing a business unit in a new industry that is related to a company's existing business units by some form of linkage or commonality between their value-chain functions.

Unrelated diversification refers to a corporate-level strategy based on a multibusiness model that uses general organizational competencies to increase the performance of all the company's business units.

A company would pursue related diversification if the company's competencies can be applied across a greater number of industries and the company has superior strategic capabilities that allow it to keep bureaucratic costs under control. A company would pursue unrelated diversification when each business unit's functional competencies have few useful applications across industries, but its top management has superior strategic capabilities and good organizational design skills to build distinctive competencies and keep bureaucratic costs under control.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-3 Related and Unrelated Diversification 10-5 Choosing A Strategy QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.10.03 - Differentiate between multibusiness models based on related and unrelated diversification.

SM.HILL.24.10.05 - Examine why companies choose related or unrelated diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 12:59 PM 77. What would cause a business model based on diversification to lead to a loss of competitive advantage?

ANSWER: There are three principal reasons why a business model based on diversification may lead to a loss of competitive advantage: (1) changes in the industry or inside a company that occur over time, (2) diversification pursued for the wrong reasons, and (3) excessive diversification that results in increasing bureaucratic costs.

Top managers must have the ability to recognize profitable opportunities to enter new industries and implement the strategies necessary to make diversification profitable. Over time, a company's top-management team often changes; sometimes its most able executives join other companies and become CEOs, and sometimes successful CEOs retire or step down. When the managers who possess the hard-to-define skills leave, they often take their vision with them. A company's new leaders may lack the competency or commitment necessary to pursue diversification successfully over time; thus, the cost structure of the diversified company increases and eliminates any gains the strategy may have produced. In addition, the environment often changes rapidly and unpredictably over time. When new technology blurs industry boundaries, it can destroy the source of a company’s competitive advantage.

A diversification strategy may result in falling profitability for reasons noted earlier, but managers often refuse to recognize that their strategy is failing. Although they know they Copyright Cengage Learning. Powered by Cognero.

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should divest unprofitable businesses, managers "make up" reasons to keep their collection of businesses together. One widely used (and false) justification for diversification was that the strategy would allow a company to obtain the benefits of risk pooling. The idea behind risk pooling is that a company can reduce the risk of its revenues and profits rising and falling sharply (something that sharply lowers its stock price) if it acquires and operates companies in several industries that have different business cycles. When a company's core business is in trouble, another mistaken justification for diversification is that entry into new industries will rescue the core business and lead to long-term growth and profitability. Growth does not create value for stockholders; growth is the by-product, not the objective, of a diversification strategy. However, in desperation, companies diversify for reasons of growth alone rather than to gain any well-thought-out, strategic advantage. In fact, many studies suggest that too much diversification may reduce rather than improve company profitability. That is, the diversification strategies many companies pursue may reduce value instead of creating it.

A major reason why diversification often fails to boost profitability is that, very often, the bureaucratic costs of diversification exceed the benefits created by the strategy (that is, the increased profit that results when a company makes and sells a wider range of differentiated products and/or lowers its cost structure). Bureaucratic costs are the costs associated with solving the transaction difficulties that arise between a company's business units and between business units and corporate headquarters, as the company attempts to obtain the benefits from transferring, sharing, and leveraging competencies. They also include the costs associated with using general organizational competencies to solve managerial and functional inefficiencies. The level of bureaucratic costs in a diversified organization is a function of two factors: the number of business units in a company's portfolio, and the degree to which coordination is required between these different business units to realize the advantages of diversification.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 10-4 The Limits and Disadvantages of Diversification QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.10.04 - Discuss the disadvantages of diversification.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 5/27/2023 1:02 PM 78. Differentiate between internal new venture, joint venture, and acquisition as a method to enter new industries. Discuss the advantages and disadvantages associated with each.

ANSWER: Internal new venturing is the process of transferring resources to, and creating a new business unit or division in, a new industry. Internal venturing is used often by companies that have a business model based upon using their technology or design skills to innovate new kinds of products and enter related markets or industries.

Advantages of internal new venturing:  

Good for a company that possesses one or more distinctive competencies in its core business model that can be leveraged or recombined to enter a new industry.

A company may also use internal venturing to enter a newly emerging or embryonic industry—one in which no company has yet developed the competencies or business

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model to give it a dominant position in that industry.

Disadvantages of internal new venturing: 

High risk of failure. Three reasons are often put forward to explain the relatively high failure rate of internal new ventures: (1) market entry on too small a scale, (2) poor commercialization of the new-venture product, and (3) poor corporate management of the new-venture division.

Acquisition is when a company uses its capital resources to purchase another company, whereas joint venture refers to where two or more companies agree to pool their resources to create new business.

Advantages of acquisition:   

Quicker way for a company to establish significant market presence.

Less risk than internal new venture.

Attractive way to enter an industry that is protected by high barriers.

Disadvantages of acquisition:    

Companies frequently experience management problems when they attempt to integrate a different company's organizational structure and culture into their own.

Companies often overestimate the potential economic benefits from an acquisition.

Acquisitions tend to be so expensive that they do not increase future profitability.

Companies are often negligent in screening their acquisition targets.

Joint venture refers to where two or more companies agree to pool their resources to create a new business.

Advantages of joint venture: 

Allow companies to share the risk and costs.

Disadvantages of joint venture:    

Require companies to share the profits.

Can create bad working relationships because of unequal effort but the same profits are shared.

Two companies may have different business models or time horizons.

Can lead to unintentional leak of proprietary information across companies.

POINTS: DIFFICULTY: REFERENCES:

1 Moderate 10-6 Entering New Industries: Internal New Ventures 10-7 Entering New Industries: Acquisitions 10-8 Entering New Industries: Joint Ventures QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.10.06 - Discuss the advantages and disadvantages of internal new venturing.

SM.HILL.24.10.07 - Discuss the advantages and disadvantages of acquisitions as a way to enter new industries.

SM.HILL.24.10.08 - Discuss the advantages and disadvantages of joint ventures as a method Copyright Cengage Learning. Powered by Cognero.

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companies use to enter new industries.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:52 PM DATE MODIFIED: 6/5/2023 8:00 PM

Chapter 11 - Corporate Governance, Social Responsibility, and Ethics True / False 1. Phil is an employee at Global Tech Inc. He is considered an external stakeholder. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:40 PM 2. In a stakeholder impact analysis, after stakeholders' interests and concerns are identified it is necessary to identify the resulting strategic challenges. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:45 PM 3. The regulations instituted by the United States governmental organization known as the SEC make sure that managers do not misrepresent financial information and require that the accounts be audited by an independent, accredited accounting firm. These types of regulations are also instituted in most other developed nations. a. True b. False Copyright Cengage Learning. Powered by Cognero.

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ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:45 PM Multiple Choice 4. Which of the following are an example of an external stakeholder in a company? a. Stockholders b. Managers c. Employees d. Customers e. Board members ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:48 PM 5. Which of the following are an example of an internal stakeholder in a company? a. Customers b. Government regulators c. Board members d. Suppliers e. Creditors ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

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6. Arnold is a CEO at Gamma LLC. He has control over the corporate funds of the company. Arnold has often used funds from the company to pay for his travel and hotel expenses. The funds could otherwise have increased stockholder returns.

Which of the following concepts is illustrated in this scenario? a. Corporate governance b. On-the-job consumption c. Greenmail d. Information asymmetry e. Information manipulation ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:50 PM 7. Matthew is a divisional manager at Venus Inc. and reports to the CEO of the company. The CEO delegates resources and authority to Matthew so that he can ensure good performance from the division. Matthew has more employees working for him than required and he has not told the CEO about this, even though there are other departments that need more employees. Which of the following concepts is illustrated here? a. Information asymmetry b. On-the-job consumption c. Greenmail d. Glass-ceiling effect e. Takeover constraint ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

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8. Which of the following statements concerning profitability and profit growth is NOT true? a. Attaining future profit growth may require investments that reduce the current rate of profitability. b. Managers must find the right balance between profitability and profit growth. c. Too much emphasis on current profitability at the expense of profit growth can make an enterprise less attractive to shareholders. d. Satisfying the claims of other key stakeholder groups happens at the risk of decreased profitability and profit growth. e. Too much emphasis on profit growth can reduce profitability and make an enterprise less attractive to shareholders.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:53 PM 9. Which of the following is true of stakeholders? a. Creditors are examples of internal stakeholders. b. Stakeholders do not engage in an exchange relationship with their company. c. Stockholders are internal stakeholders that provide an enterprise with risk capital. d. The goals of different stakeholder groups within a company are the same and, therefore, do not lead to any conflicts. e. It is mandatory for a company to satisfy the claims of all stakeholders.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:55 PM 10. Which of the following statements is true in the context of principal–agent relationships? a. The agency relationship is confined to the top management and does not continue down the hierarchy within the company. b. Agents almost always have more information about the resources they are managing than the principals do.

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c. Information asymmetry can make it easier for principals to measure how well an agent is performing. d. In a principal–agent relationship, the decision-making power rests entirely with the principals. e. The relationship between the company and the suppliers is an example of a principal–agent relationship.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:56 PM 11. Which of the following is NOT an example of ways to monitor agents, evaluate their performance, and take corrective action? a. Board of directors b. Mandatory filing of detailed financial statements c. Internal control systems d. Reduction of information asymmetry e. On-the-job consumption ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:57 PM 12. Gamma Corp. recently bought stocks in an underperforming company that has failed to maximize stockholder wealth.

Gamma Corp. made changes to the top management structure of the company and persuaded the management to pursue strategies that maximize the wealth of stockholders. Gamma Corp. has been able to earn millions by doing so. Which of the following concepts is illustrated in this scenario? a. Greenmail b. Agency theory c. Information asymmetry d. Self-dealing e. On-the-job consumption ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 3:58 PM 13. Which of the following has been a negative effect of the SEC requirement that publicly traded companies in the United States are required to file quarterly and annual reports that are audited by an independent, accredited accounting firm? a. Stockholders can have complete faith that the information contained in financial statements accurately reflects the state of affairs of a company. b. The information can enable a stockholder to calculate the profitability (ROIC) of a company in which he or she invests. c. There have been issues of misrepresentation of the true financial state of companies to investors such as inflating the revenues or earnings to generate higher stock prices to give managers the benefits of stock option grants for personal gain at the expense of stockholders. d. It has encouraged other developed nations to enact similar regulations and requirements. e. It gives consistent, detailed, and accurate information about how efficiently and effectively the agents of stockholders, the managers, are running the company.

ANSWER: c POINTS: 1 DIFFICULTY: Challenging REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:00 PM 14. Venus LLC is a large monopolistic electronic firm. The firm has been putting a lot of pressure on some of the complementor companies, asking them to bundle their products along with the products made by Venus LLC, which will make it mandatory for customers to buy Venus LLC products along with the complementary products, even if they are unrelated. Which of the following is Venus LLC demonstrating? a. Agency strategy b. Dumping strategy c. Price limiting d. Anticompetitive behavior e. On-the-job consumption Copyright Cengage Learning. Powered by Cognero.

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ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:01 PM 15. Which of the following correctly describes the ethical right of each type of stakeholder? a. Stockholders have the right to expect that a firm will not violate the basic expectations that society places on enterprises. b. Customers have the right to be fully informed about the products and services they purchase, including the right to information about how those products might cause them harm. c. Employees have the right to expect that the firm will abide by the rules of competition and not violate the basic principles of antitrust laws. d. Suppliers have the right to safe working conditions, fair compensation for the work they perform, and just treatment by managers. e. Competitors have the right to timely, accurate information about their investments in accounting statements.

ANSWER: b POINTS: 1 DIFFICULTY: Challenging REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:03 PM 16. Which of the following is NOT a responsibility of the board of directors? a. Monitor corporate strategy decisions and ensure that they are consistent with stockholder interests b. Apply sanctions on management when appropriate c. Hire, fire, and compensate the CEO d. Develop targets for divisional managers e. Make sure the audited financial statements present a true picture of the company's financial situation ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:07 PM 17. The internal research department of Libra Inc. has found that the packaging of health supplements produced by the company is faulty and resulting in poor quality. Despite this knowledge, the company has not improved the packaging and instead has advertised to its customers that this packaging is foolproof. Which of the following concepts is illustrated in this scenario? a. Information manipulation b. Anticompetitive behavior c. Agency strategy d. Information symmetry e. On-the-job consumption ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:10 PM 18. Jacob is a senior manager at Aries LLC. He has been earning significant bonuses in addition to his salary. He often misrepresents the financial information about the operations he handles, and he acquires more financial resources than he needs to run operations. Which of the following concepts is illustrated in this scenario? a. Glass-ceiling effect b. Self-dealing c. Agency strategy d. Takeover constraints e. Stock options ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

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United States - BUS PROG: Ethics Bloom's: Apply 4/19/2023 4:53 PM 5/27/2023 4:11 PM

19. Gemini Corp. is a large automobile manufacturer that has contracts with several suppliers. To gain more benefits from an upholstery supplier, Gemini Corp. unilaterally changed the contract and pressurized the supplier to lower its prices.

Which of the following concepts is illustrated in this scenario? a. Opportunistic exploitation b. On-the-job consumption c. Agency strategy d. Greenmail e. Self-dealing ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:12 PM 20. A stock option is a right to purchase a. shares of the company's stock at the stock's current price. b. shares of the company's stock at half the stock's current price. c. shares of the company's stock at a predetermined price at some point in the future. d. bonds issued by the company. e. stock in an underperforming company.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:13 PM 21. To stimulate reduction in its production costs, Delta LLC has moved its manufacturing facilities to an underdeveloped Copyright Cengage Learning. Powered by Cognero.

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country where there are few labor laws. The employees at the manufacturing facilities are children and teenagers, and they receive minimal wages. Which of the following ethical issues is illustrated in this scenario? a. On-the-job consumption b. Opportunistic exploitation c. Self-dealing d. Information manipulation e. Substandard working conditions ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:14 PM 22. Robert has been the CEO at Nikita Incorporated for the last seven years. For the last three years, he has illegally diverted cash and assets to himself and his family members. He has abused corporate perks, such as using a company jet to fly to the Bahamas for a vacation and allowed his family members to use the gym and other amenities at the corporate office for free. He has spent corporate funds on vacation home in Miami, Florida, and threw a lavish New Year’s Eve party for a hundred friends. Which of the following concepts is illustrated in this scenario? a. Stock options b. Self-dealing c. The takeover constraint d. Employee incentives e. Greenmail ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:33 PM 23. Alpha LLC is a large paint manufacturing company. Despite government regulations, the company has been illegally disposing of its chemical wastes in a lake, which is an important habitat for several fish and birds. Which of the following ethical concerns is illustrated in this scenario? a. On-the-job consumption Copyright Cengage Learning. Powered by Cognero.

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b. Opportunistic exploitation c. Environmental degradation d. Self-dealing e. Substandard working conditions ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:18 PM 24. Which of the following statements concerning stock-based compensation schemes for executives is NOT true? a. Under accounting regulations that were enforced until 2005, stock options, like wages and salaries, were expensed. b. Huge stock-option grants can align the interests of management and stockholders. c. Stock-based compensation schemes can dilute the equity of stockholders. d. Huge stock-option grants increase the outstanding number of shares in a company. e. Top managers can earn huge bonuses from stock options that were granted several years prior.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:19 PM 25. A criticism of stock-based compensation plans is that they a. discourage empire building. b. reduce motivation among agents. c. do not align management and stockholder interests. d. dilute stockholders' equity. e. adversely affect the earnings of principals.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:20 PM 26. Which of the following statements is true in the context of unethical behavior? a. Business ethics significantly differ from personal ethics. b. An individual with a strong sense of personal ethics is more likely to engage in self-dealing. c. A personal ethical code will exert a profound influence on the way individuals behave as businesspeople. d. Focusing only on applying straightforward business calculus can eliminate ethical concerns. e. An organizational culture that fosters decision making on purely economic terms eliminates unethical practices.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:21 PM 27. Rebecca works at a company where she has consistently noticed the questionable decisions and unethical behavior of her superiors. She has decided to contact the media and "blow the whistle." Rebecca is exhibiting which kind of ethical principle? a. Organization culture and leadership b. Decision-making processes c. Strong corporate governance d. Moral courage e. Hiring and promotion ANSWER: d POINTS: 1 DIFFICULTY: Challenging REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

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United States - BUS PROG: Ethics Bloom's: Apply 4/19/2023 4:53 PM 5/27/2023 4:23 PM

28. To foster ethical behavior through organizational culture, businesses should a. avoid explicitly articulating values that place a strong emphasis on ethical behavior. b. draft a formal statement of the ethical priorities they will follow. c. encourage self-dealing among managers. d. eliminate the need for a moral compass. e. avoid putting strong governance processes in place.

ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:24 PM 29. Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle? a. Organization culture and leadership b. Decision-making processes c. Strong corporate governance d. Moral courage e. Hiring and promotion ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:25 PM 30. Which of the following types of business law describes the accepted principles of right and wrong when dealing with competitive behavior?

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a. Tort laws b. Antitrust laws c. Intellectual property law d. Securities law e. Contract laws ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:27 PM 31. Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation? a. Information asymmetry b. Utilitarianism c. Self-dealing d. Greenmail e. Corruption ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:28 PM 32. When managers of a firm seek to unilaterally rewrite the terms of contracts with suppliers, buyers, or complement providers in a way that is more favorable to their firm, they are engaging in a. opportunistic exploitation. b. information manipulation. c. downsizing. d. greenmail. e. self-dealing.

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ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:29 PM 33. To make sure that ethical issues are considered in business decisions a. companies should eliminate the principal–agent approach. b. companies should have a no-layoff policy. c. top managers should articulate and model ethical behaviors. d. top managers should generously grant stock options. e. companies should hire and promote employees with a strong focus on economic gains.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:31 PM 34. Who are considered internal stakeholders in a company? a. Employees b. Customers and suppliers c. Governments and unions d. Local communities and the general public e. Creditors and the public ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

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United States - BUS PROG: Reflective Thinking Bloom's: Remember 5/27/2023 5:06 PM 5/27/2023 5:08 PM

35. What is the exchange relationship between stakeholders and a company? a. Stakeholders provide resources and expect inducements in return. b. Stakeholders provide inducements and expect resources in return. c. Stakeholders provide claims and expect satisfaction in return. d. Stakeholders provide satisfaction and expect claims in return. e. Stakeholders provide investments and expect returns in return.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 5:08 PM DATE MODIFIED: 5/27/2023 5:10 PM 36. Which stakeholder group provides a company with rules and regulations? a. Stockholders b. Customers c. Suppliers d. Governments e. Unions ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:10 PM DATE MODIFIED: 5/27/2023 5:12 PM 37. Which stakeholder group expects high-quality, reliable products? a. Stockholders b. Customers c. Suppliers Copyright Cengage Learning. Powered by Cognero.

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d. Governments e. Unions ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:12 PM DATE MODIFIED: 5/27/2023 5:14 PM 38. Which stakeholder group provides companies with local infrastructure? a. Stockholders b. Customers c. Suppliers d. Governments e. Communities where the firm is located ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:14 PM DATE MODIFIED: 5/27/2023 5:16 PM 39. Which stakeholder group provides companies with national infrastructure? a. Stockholders b. Customers c. Suppliers d. Governments e. Local communities ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/27/2023 5:16 PM 5/27/2023 5:18 PM

40. Why is it important for a company to identify the most important stakeholders? a. To prioritize the satisfaction of their needs over others b. To minimize the number of stakeholders in the organization c. To allocate resources evenly among all stakeholders d. To eliminate conflicts among stakeholder groups e. To ensure compliance with legal requirements ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/27/2023 5:18 PM DATE MODIFIED: 5/27/2023 5:20 PM 41. What are the two ways stockholders receive a return on their investment in a company? a. From dividend payments and stock splits b. From stock buybacks and capital appreciation c. From dividends and capital appreciation d. From interest payments and capital gains e. From stock options and bonus payments ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 5:20 PM DATE MODIFIED: 5/27/2023 5:23 PM 42. What is an important measure of the profitability of a company? a. Return on invested capital (ROI) b. Return on assets (ROA) c. Earnings per share (EPS) Copyright Cengage Learning. Powered by Cognero.

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d. Price-earnings ratio (P/E ratio) e. Gross profit margin ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 5:23 PM DATE MODIFIED: 5/27/2023 5:25 PM 43. Which strategy can contribute to profit growth for a company? a. Maintaining margins while participating in a growing market b. Reducing the quality of products and services c. Ignoring customer demands for lower prices d. Avoiding innovation and geographic expansion e. Decreasing market share to cut costs ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:26 PM DATE MODIFIED: 5/27/2023 5:28 PM 44. What is the relationship between current profitability and future profitability and profit growth? a. They are always positively correlated. b. Current profitability has no impact on future profitability. c. Too much emphasis on current profitability can hinder future profitability and profit growth. d. Future profitability is irrelevant if current profitability is high. e. Profit growth is independent of both current and future profitability.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:28 PM DATE MODIFIED: 5/27/2023 5:30 PM 45. How can companies balance profitability and profit growth? a. By prioritizing profit growth at the expense of current profitability b. By prioritizing current profitability at the expense of profit growth c. By finding the right balance between profitability and profit growth d. By eliminating profit growth to focus solely on current profitability e. By disregarding both profitability and profit growth ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:31 PM DATE MODIFIED: 5/27/2023 5:33 PM 46. Which stakeholder group contributes directly to a company's high profitability and profit growth? a. Stockholders b. Employees c. Suppliers d. Creditors e. Local community ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:34 PM DATE MODIFIED: 5/27/2023 5:35 PM Copyright Cengage Learning. Powered by Cognero.

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47. Why are suppliers more comfortable selling goods and services to profitable companies? a. Profitable companies pay higher prices for goods and services. b. Profitable companies guarantee future purchases. c. Profitable companies have higher credit ratings. d. Profitable companies have better after-sales services. e. Profitable companies have stable finances for timely payments.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:36 PM DATE MODIFIED: 5/27/2023 5:38 PM 48. Which stakeholder group is more comfortable selling goods and services to profitable companies? a. Stockholders b. Customers c. Suppliers d. Governments e. Employees ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:38 PM DATE MODIFIED: 5/27/2023 5:40 PM 49. Why do customers prefer purchasing from profitable companies? a. They offer lower prices for their products. b. They provide higher-quality goods and services. c. They have stronger brand recognition. d. They offer better after-sales support. e. They have more loyal employees.

ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:40 PM DATE MODIFIED: 5/27/2023 5:42 PM 50. According to Garcia-Castro and Aguilera, which stakeholder group captures value in the form of taxes? a. Stockholders b. Customers c. Suppliers d. Governments e. Employees ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:42 PM DATE MODIFIED: 5/27/2023 5:44 PM 51. What is the difference between the price customers pay and their willingness-to-pay called? a. Consumer surplus b. Producer surplus c. Market equilibrium d. Price elasticity e. Marginal utility ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-2 Stakeholder Management and Performance QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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DATE CREATED: DATE MODIFIED:

5/27/2023 5:45 PM 5/27/2023 5:47 PM

52. What is the relationship between principal and agent in agency theory? a. Principal delegates decision-making authority to the agent. b. Principal supervises the agent's performance. c. Agent delegates decision-making authority to the principal. d. Agent evaluates the principal's performance. e. Principal and agent have equal decision-making authority.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 5:47 PM DATE MODIFIED: 5/27/2023 5:49 PM 53. According to agency theory, what is the main objective of senior managers as agents of stockholders? a. Maximizing employee satisfaction b. Minimizing corporate risks c. Maximizing long-term profitability and profit growth d. Minimizing costs and expenses e. Maximizing market share and sales revenue ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 5:49 PM DATE MODIFIED: 5/27/2023 5:52 PM 54. Why does an information asymmetry exist between principals and agents in agency relationships? a. Principals have more authority than agents. b. Agents have more knowledge about the resources they manage. c. Principals are involved in day-to-day operations of the company. d. Agents have a higher level of trust in the relationship.

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e. Principals withhold information from agents intentionally.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 5:52 PM DATE MODIFIED: 5/27/2023 5:55 PM 55. How do principals address the challenges of agency problems in governance? a. By controlling all decision-making authority b. By increasing information asymmetry c. By removing agents from their positions d. By reducing the involvement of stakeholders e. By promoting transparency and accountability ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 5:55 PM DATE MODIFIED: 5/27/2023 5:58 PM 56. In a large company, who is considered the agent of the CEO? a. Top managers b. Stockholders c. Business-unit managers d. Lower-level employees e. External stakeholders ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 5:58 PM DATE MODIFIED: 5/27/2023 6:00 PM 57. What is the potential risk of CEOs engaging in empire building? a. Decreased job security for lower-level employees b. Decreased company growth and diversification c. Decreased CEO's authority and control d. Decreased stockholder returns and profitability e. Decreased market share and customer loyalty ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:01 PM DATE MODIFIED: 5/27/2023 6:03 PM 58. How can principals reduce information asymmetry between themselves and agents? a. By limiting decision-making authority of agents b. By increasing the compensation of agents c. By providing agents with more resources d. By implementing monitoring and evaluation mechanisms e. By delegating more authority to agents ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:09 PM DATE MODIFIED: 5/27/2023 6:11 PM 59. What can be a consequence of information distortion by subordinates in an agency relationship?

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a. Increased job security for the principal b. Increased trust between principal and agent c. Unfair allocation of company resources d. Enhanced cooperation and teamwork e. Decreased agent's performance evaluation ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:11 PM DATE MODIFIED: 5/27/2023 6:14 PM 60. Which governance mechanism represents the centerpiece of the corporate governance system and is responsible for monitoring corporate strategy decisions and ensuring they align with stockholder interests? a. Stock-based compensation b. Financial statements c. The board of directors d. Strategic control systems e. The takeover constraint ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:14 PM DATE MODIFIED: 5/27/2023 6:16 PM 61. What is the primary purpose of stock-based compensation, such as stock options and stock grants, in aligning executive and stockholder interests? a. Motivating managers to pursue strategies that maximize short-term profitability b. Minimizing the number of outstanding shares and reducing equity dilution c. Ensuring CEOs hold a large portion of their personal wealth in the company d. Providing managers with opportunities for significant personal financial gain e. Promoting long-term profitability and profit growth by linking pay to equity performance ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:16 PM DATE MODIFIED: 5/27/2023 6:20 PM 62. Which governance mechanism aims to provide consistent, detailed, and accurate information about a company's financial performance and is required by the SEC to be audited by an independent accounting firm? a. The takeover constraint b. Strategic control systems c. Stock-based compensation d. Financial statements e. Incentive systems ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:20 PM DATE MODIFIED: 5/27/2023 6:22 PM 63. What is the purpose of the takeover constraint as a governance mechanism? a. To ensure that managers cannot pursue strategies against stakeholder interests b. To eliminate the agency problem between stockholders and managers entirely c. To motivate employees to work toward maximizing long-term profitability d. To align the interests of stockholders and lower-level managers within a company e. To provide stockholders with the option to sell their shares and exit the company ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

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NATIONAL STANDARDS: KEYWORDS: DATE CREATED: DATE MODIFIED:

United States - BUS PROG: Reflective Thinking Bloom's: Apply 5/27/2023 6:24 PM 5/27/2023 6:27 PM

64. Which of the following is NOT mentioned as a common cause of unethical behavior in businesses? a. Self-dealing b. Information manipulation c. Employee empowerment d. Anticompetitive behavior e. Corruption ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 6:27 PM DATE MODIFIED: 5/27/2023 6:29 PM 65. What is one action managers can take to improve the ethical climate of their organization? a. Implement strict punishment measures for unethical behavior b. Build an organizational culture that values ethical behavior c. Delegate ethical decision making to ethics officers d. Use psychological tests to evaluate employees' ethical predisposition e. Establish a competition committee composed of outside directors ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/27/2023 6:29 PM DATE MODIFIED: 5/27/2023 6:32 PM 66. Which of the following actions can contribute to fostering ethical behavior within an organization? a. Setting up an ethics hotline for anonymous reporting of ethical violations b. Offering monetary rewards for employees who engage in unethical behavior Copyright Cengage Learning. Powered by Cognero.

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c. Allowing employees to engage in self-dealing and information manipulation d. Promoting individuals based solely on their technical skills, regardless of ethics e. Providing psychological tests to assess employees' moral courage ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:32 PM DATE MODIFIED: 5/27/2023 6:34 PM 67. How can managers ensure that ethical considerations are integrated into the decision-making process? a. By relying solely on personal intuition and judgment b. By prioritizing financial gain over ethical implications c. By considering the opinions of family members and friends d. By applying a practical ethical algorithm to evaluate decisions e. By avoiding any communication of decisions to stakeholders ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:35 PM DATE MODIFIED: 5/27/2023 6:37 PM 68. Which factor plays a crucial role in establishing a strong ethical climate within an organization? a. Hiring employees solely based on their technical skills b. Implementing strict punishment measures for ethical violations c. Having an independent board of directors for corporate governance d. Allowing leaders to act inconsistently with ethical rhetoric e. Encouraging employees to hide unethical behavior from public view ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate Copyright Cengage Learning. Powered by Cognero.

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QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:38 PM DATE MODIFIED: 5/27/2023 6:40 PM 69. How can organizations encourage moral courage among employees? a. Punishing employees who exercise moral courage b. Refusing to report ethical breaches to the relevant authorities c. Providing incentives and rewards for unethical behavior d. Establishing an ethics hotline for confidential reporting e. Limiting the authority of ethics officers in decision making ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/27/2023 6:41 PM DATE MODIFIED: 5/27/2023 6:43 PM 70. Evaluate the role of ethics officers in organizations. a. They primarily focus on promoting unethical behavior. b. They have no impact on the decision-making process. c. They are responsible for auditing financial statements. d. They handle confidential inquiries and investigate ethical complaints. e. They act as independent auditors for subcontractors.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/27/2023 6:43 PM DATE MODIFIED: 5/27/2023 6:45 PM Copyright Cengage Learning. Powered by Cognero.

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71. Assess the significance of a board of directors composed of outside directors in promoting ethical behavior. a. It increases the likelihood of self-dealing and information manipulation. b. It diminishes the importance of independent decision making. c. It improves the integrity of the board's decision-making process. d. It limits the scrutiny of financial statements by outsiders. e. It discourages managers from being held accountable for unethical behavior.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/27/2023 6:46 PM DATE MODIFIED: 5/27/2023 6:49 PM 72. According to the text, what is one way managers can improve the ethical climate of their organization? a. Implement strict punishment measures for unethical behavior b. Promote employees based solely on their performance, regardless of ethical behavior c. Establish an organizational culture that values ethical behavior d. Hire employees based on their technical skills, regardless of personal ethics e. Delegate ethical decision making to ethics officers ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/27/2023 6:51 PM DATE MODIFIED: 5/27/2023 6:55 PM Essay 73. Describe the four types of governance mechanisms that principals use to deal with agency problems.

ANSWER: Agency problems in organizations are well documented and well understood. The four main types of governance mechanisms to help address agency problems are discussed below.

The board of directors is the first governance mechanism. Board members are elected by shareholders and have specific statutory responsibility for representing the interests of Copyright Cengage Learning. Powered by Cognero.

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stockholders in the company and ensuring that management actions align with stockholder interests. This mechanism may break down primarily because of the structure of the board.

First, boards are often dominated by insiders who often have position authority and access to information that outside directors do not have. In addition, many boards are chaired by the CEO, the ultimate insider. In recent years, there has been pressure to separate the roles of chairman and CEO to limit the CEO's control over the board. While boards of directors are improving, there is a need for other mechanisms to align the interests of stockholders and managers.

A second governance mechanism is stock-based compensation. The idea behind this mechanism is that it helps align the financial interests of shareholders and managers. When share price rises, both benefit; when it falls, they both suffer. A problem with stock-based compensation is that many companies have used stock options that distort their real cost and dilute the value of shareholders' holdings. Moreover, requiring senior management to hold large numbers of shares in the company may lead to excessively risk-averse behavior or overdiversification.

A third mechanism is financial statements and auditors. Good governance relies on accurate and timely information about company performance. Transparency is the cornerstone of financial reporting. Unfortunately, high-profile examples of companies (Enron, Computer Associates) that have falsified reports to present an inaccurate picture of company performance indicate that this mechanism has problems.

A final governance mechanism is the takeover constraint. The threat of takeover is a constraint on management actions and can limit the worst excesses of the agency problem.

When companies are mismanaged and not creating the value that they should, the possibility of an outside party coming in, taking over control (through a hostile raid), replacing existing management, and then turning the company around may be the ultimate management punishment for poor performance. A problem with this mechanism is that many companies (and states) have put in place takeover defenses that make it much more difficult to take over a company. Once excesses are worked out of the stock market and off corporate balance sheets, the takeover constraint is likely to reassert itself. It should be remembered that the takeover constraint is often invoked only when other governance mechanisms have failed.

POINTS: 1 DIFFICULTY: Easy REFERENCES: 11-4 Governance Mechanisms QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.11.04 - Describe the various governance mechanisms that are used to align the interests of stockholders and managers and why they do not always work.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:34 PM 74. Consider a national chain of company-owned fast-food restaurants. For this firm, list the important stakeholders. Then describe how each stakeholder group can affect the firm's profitability.

ANSWER: Internal stakeholders of a national chain of fast-food restaurants would include the managers and employees of the firm and the firm's stockholders. External stakeholders would include customers, who are probably young adults and young families; suppliers, such as wholesalers of food and paper products; and banks and other creditors. Local governments regulate issues about food safety and handling at food service establishments, and the federal, state, and Copyright Cengage Learning. Powered by Cognero.

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local governments regulate a wide variety of issues, from hiring practices to tax collection, to accessible restaurant design. Unions may be a stakeholder if the restaurant workers are unionized. Local communities and society are also external stakeholders.

Each of these groups can have a positive or a negative impact on profitability. Here is just one example. If customers are satisfied that they are receiving value for their money, they will purchase the firm's products, increasing the firm's profitability. But if the customers are not satisfied, they will refrain from purchasing and may even give the firm bad word-ofmouth advertising, which will reduce sales and profitability.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-1 Organization Stakeholders 11-2 Stakeholder Management and Performance QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.11.01 - Identify the multiple stakeholders in an organization.

SM.HILL.24.11.02 - Describe the relationship between stakeholder management and corporate performance.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:39 PM 75. Explain the principles of agency theory, including the issues it addresses. What are some effective ways to deal with agency problems, as implied or stated by agency theory?

ANSWER: Agency theory addresses situations where one individual or group (the principals) relies on another individual or group (the agents) to make decisions and take actions on their behalf. In many of these situations, there are opportunities for mutual gain, but there are also opportunities for the agents to act in their own best interests, to the detriment of the principals. Opportunities for exploitation exist because agents have more access to information about the situation and to other resources than do the principals. Therefore, the principals cannot fully monitor the actions of the agents and must trust the agents to some extent.

One way to manage agency problems is to align the two parties' goals, that is, to create opportunities for mutual gain and reduce opportunities for one-sided gain. For example, if corporate managers are compensated based on stock price, then they are more likely to work toward increasing stock returns, which would also benefit stockholders. If managers are compensated based on the size of the firm, then they will work toward increasing the size of the firm, which may not be beneficial for stockholders. Another tactic is to reduce information asymmetry to the extent possible by overseeing or monitoring the principals' actions closely. However, there will always be a need for the principal to trust the agent to some extent.

More generally, agency theory provides a framework for understanding the potential conflicts of interest that can arise in agency relationships, as well as the mechanisms that can be used to manage these conflicts and align the interests of agents with those of principals.

Broadly speaking, effective ways to deal with agency problems include creating incentives for agents to act in the best interests of principals, establishing effective monitoring mechanisms, managing information asymmetry, and maintaining the threat of disciplinary action.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-3 Agency Theory QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.11.03 - Explain agency theory and its impact on management decisions/corporate performance.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:42 PM 76. Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople.

Identify and discuss the common examples of unethical decisions that businesspeople have made.

ANSWER: Unethical behavior often occurs when people decide to put their own interests ahead of those of the firm and its stakeholders. Common examples of unethical behavior include:       

Self-dealing: Managers using company funds for their own personal consumption.

Information manipulation: When managers use their control over corporate data to distort or hide information to enhance their own financial situation or the competitive position of the firm.

Anticompetitive behavior: A range of actions aimed at harming actual or potential competitors, most often by using monopoly power, and thereby enhancing the longrun prospects of the firm.

Opportunistic exploitation: Unethical behavior sometimes used by managers to unilaterally rewrite the terms of a contract with suppliers, buyers, or complement providers in a way that favors the firm.

Substandard working conditions: Arise when managers underinvest in working conditions, or pay employees below-market rates, in order to reduce their production costs.

Environmental degradation: Occurs when a company's actions directly or indirectly result in pollution or other forms of environmental harm.

Corruption: Paying bribes to gain access to lucrative contracts or personal gain.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 11-5 Ethical Issues and Behavior QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.11.05 - Summarize the main ethical issues that arise in businesses, including common causes of unethical behavior.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:46 PM 77. What is the best way for managers to ensure that ethical considerations are taken into account? List five out of the Copyright Cengage Learning. Powered by Cognero.

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seven things managers can and should do to ensure that basic ethical principles are adhered to, and that ethical issues are routinely considered when making business decisions. Describe at least one way to accomplish each of these tasks.

ANSWER: Managers can and should do at least seven things to ensure that basic ethical principles are adhered to, and that ethical issues are routinely considered when making business decisions. They can (1) favor hiring and promoting people with a well-grounded sense of personal ethics, (2) build an organizational culture that places a high value on ethical behavior, (3) make sure that leaders within the business not only articulate the rhetoric of ethical behavior but also act in a manner that is consistent with that rhetoric, (4) put decisionmaking processes in place that require people to consider the ethical dimension of business decisions, (5) use ethics officers, (6) put strong governance processes in place, and (7) act with moral courage.

It seems obvious that businesses should strive to hire people who have a strong sense of personal ethics and would not engage in unethical or illegal behavior. Businesses can give potential employees psychological tests to try to discern their ethical predisposition, and they can check with prior employees regarding someone's reputation, such as by asking for letters of reference and talking to people who have worked with the prospective employee.

To foster ethical behavior, organizations must build a culture that places high value on ethical behavior. Three actions are particularly important. First, businesses must explicitly articulate values that place a strong emphasis on ethical behavior. Many companies now do this by drafting a code of ethics, a formal statement of the ethical priorities to which a business adheres. Having articulated values in a code of ethics or some other document, it is important that business leaders give life and meaning to those words by repeatedly emphasizing their importance and then acting on them. This means that managers should use every relevant opportunity to stress the importance of business ethics and make sure that key business decisions both make good economic sense and are also ethical. Finally, building an organization culture that places a high value on ethical behavior requires incentive and reward systems, including promotional systems that reward people who engage in ethical behavior and sanction those who do not.

In addition to establishing the right kind of ethical culture in an organization, businesspeople must be able to think through the ethical implications of decisions in a systematic way. To do this, they need a moral compass, and beliefs about what determines individual rights and justice. Some experts on ethics have proposed a straightforward practical guide, or ethical algorithm, in order to determine whether a decision is ethical.

To make sure that a business behaves in an ethical manner, a number of firms now have ethics officers. These individuals are responsible for making sure that all employees are trained to be ethically aware; that ethical considerations enter the business decision-making process; and that employees adhere to the company's code of ethics. Ethics officers may also be responsible for auditing decisions to ensure that they are consistent with this code. In many businesses, ethics officers act as an internal ombudsperson with responsibility for handling confidential inquiries from employees, investigating complaints from employees or others, reporting findings, and making recommendations for change.

Strong corporate governance procedures are needed to ensure that managers adhere to ethical norms—in particular, that senior managers do not engage in self-dealing or information manipulation. Strong corporate governance procedures require an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide.

It is important to recognize that sometimes managers and others need significant moral courage. Moral courage enables managers to walk away from a decision that is profitable but unethical, gives employees the strength to say no to superiors who instruct them to behave Copyright Cengage Learning. Powered by Cognero.

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unethically, and gives employees the integrity to contact the media and "blow the whistle" on persistent unethical behavior in a company. Moral courage does not come easily; there are well-known cases where individuals have lost their jobs because they were whistleblowers on unethical corporate behaviors.

POINTS: 1 DIFFICULTY: Challenging REFERENCES: 11-6 Improving the Ethical Climate QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.11.06 - Identify what managers can do to improve the ethical climate of their organization.

NATIONAL STANDARDS: United States - BUS PROG: Ethics KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 4:54 PM

Chapter 12 - Implementing Strategy Through Organization

True / False 1. One of the reasons that IBM almost failed and went bankrupt in the 1990s was due to its outdated corporate culture of consensus-based decision making which, while effective in the 1970s, did not allow it to be competitive in the rapid decision making and entrepreneurial risk-taking culture of the 1990s. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:35 PM 2. Bradley is a new employee in the sales department at a local car dealership. In his first few months on the job, he will be learning the norms and values of the organization. This refers to organizational culture. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 12-4 Organizational Culture QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:16 PM 3. In a typical control system, after performance is compared to established goals and standards, next actions are different depending on whether the performance meets the goals and standards or there is variance between performance and established goals and standards. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 11:59 AM Multiple Choice 4. Which of the following is NOT an element of organizational architecture? a. Location b. Culture c. Processes d. Structure e. People ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM Copyright Cengage Learning. Powered by Cognero.

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DATE MODIFIED:

5/25/2023 3:20 PM

5. Company Zeta is a company that hires employees based on their ability to fit into the ten core values of the company.

There is a team dedicated to setting up fun events, lunches and programs. Employee team building is stimulated through the group cleaning of communal spaces and random group lunches with employees from different teams within the company. These strategies are an example of addressing organizational a. architecture. b. structure. c. processes. d. culture. e. controls.

ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:36 PM 6. The purpose of which of the following is to provide managers with incentives for motivating employees as well as feedback on how the company performs? a. Control system b. Adaptive culture c. Organizational design d. Span of control e. Hierarchy of authority ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:36 PM 7. Tom leads a team at Empire Holdings. The team's responsibilities are to develop courses of action that decide how to allocate resources within a firm, how new products are developed, and how the performance of managers will be evaluated and given feedback. Tom's team is responsible for organizational a. architecture.

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b. structure. c. processes. d. culture. e. controls.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:37 PM 8. Organizational culture is the a. norms and value systems that are shared among the employees of an organization. b. means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers. c. process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully. d. clear and unambiguous chain of command that defines each manager's relative authority from the CEO down through top, to middle, to first-line managers. e. principle that a company should design its hierarchy with the fewest levels of authority necessary to use organizational resources effectively.

ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:51 PM 9. Control through organizational culture is so powerful because it a. eliminates the need for managers in large companies. b. enables employees to follow organizational values, after they've internalized them, without thinking about them. c. results in maximum decentralization and the elimination of bureaucracy. d. achieves increased performance through the alignment of organizational goals with external societal expectations. e. achieves external control through motivated coworkers.

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ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:39 PM 10. Which of the following is responsible for the establishment and maintenance of organizational culture? a. The culture of an enterprise can be shaped by landmark events in its history b. Formal and informal socialization mechanisms c. Founders or important leaders can have a profound impact on organizational culture d. Informal rules of behavior that employees are expected to adopt if they want to fit in and succeed within the organization e. All of these are responsible for the establishment and maintenance of organizational culture.

ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:38 PM 11. Which form of control would you MOST likely find in a voluntary or charity organization? a. Bureaucratic control through rules and procedures b. Control through norms and values c. Financial control through accurate financial statements d. Output control, since it is the cheapest e. Incentive systems to motivate employees ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is Copyright Cengage Learning. Powered by Cognero.

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important for strategy implementation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:41 PM 12. Companies that are innovative and able to deal with environmental change with new strategies and structures probably have a. weak cultures. b. strong functional cultures. c. adaptive cultures. d. prescriptive cultures. e. cost-conscious culture.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:43 PM 13. Susan works at a high-technology firm. As a manager, she is a member of the manufacturing function and a product development team. Susan’s firm is likely to be operating under which of the following structural forms? a. Functional structure b. Multidivisional structure c. Matrix structure d. Integration structure e. Organizational structure ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/27/2023 11:58 AM Copyright Cengage Learning. Powered by Cognero.

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14. How decisions are made and work is performed within the organization is referred to as a. uniformity of output. b. conformity. c. organizational processes. d. maximization of effort. e. behavioral control.

ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:51 PM 15. In a typical control system, which of the following actions is taken after variances are discovered between performance and established goals and standards? a. Establishment of goals and standards b. Measurement of performance c. Administration of corrective action and delivery of feedback d. Provision of reinforcement and delivery of feedback e. Performance meets and exceeds goals and standards ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:54 PM 16. In any organization, for-profit or not-for-profit, span of control refers to the a. number of managers at the highest levels in the organization. b. CEO and the management team. c. number of direct reports that a manager has. d. number of supervisors in a specific segment of a manufacturing activity. e. number of members elected or appointed to be on the board of directors.

ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:38 PM 17. Which of the following decisions would most likely be decentralized in a firm’s strategy? a. Local adaptation b. Realization of economies of scale c. Major financial expenditures d. Manufacturing decisions e. Legal issues ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:57 PM 18. Organizations strive to control employees' behavior by linking which of the following systems to their control systems? a. Disciplinary b. Disincentive c. Reporting d. Administrative e. Incentive ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 3:58 PM 19. At LittleHippo, an online retail company, the work environment is playful. Employees often get their pictures taken wearing silly wigs and masks. This atmosphere is part of the company's a. organizational density. b. organizational structure. c. organizational culture. d. strategic control systems. e. competitive environment.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:00 PM 20. Natalie and Shay are both employees at RightTool, Inc. The marketing manager often meets with Shay, the production manager, to solve specific mutual problems. This is an example of a. organizational culture. b. liaison roles. c. direct contact. d. diverging mechanisms. e. strategic control.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:01 PM Copyright Cengage Learning. Powered by Cognero.

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21. At FastFries, a fast-food restaurant, rules are published in all employee areas, explaining expectations regarding arrival time, lunch breaks, when to take shorter breaks, and when to socialize. This is an example of a. output control. b. personal control. c. bureaucratic control. d. conversion activities. e. strategic competencies.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:11 PM 22. To reduce costs, companies pursuing a cost leadership strategy prefer to use which of the following to closely monitor and evaluate functional performance? a. Output controls b. Personal controls c. Behavioral controls d. Cultural controls e. Input controls ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:12 PM 23. Which of the following would be favored by firms in a rapidly changing and high-technology environment that need a high degree or coordination and more complex integration mechanisms? a. Liaison roles b. Direct contact c. Centralization Copyright Cengage Learning. Powered by Cognero.

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d. Teams e. Knowledge networks ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:13 PM 24. If a firm's leaders are using a functional structure but feel it is becoming too complex as the company experiences growth, the leaders can turn to a. a simple structure. b. downsizing. c. reengineering. d. restructuring. e. a multidivisional structure.

ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:14 PM 25. Company Delta is a single-line business having a production function, an R&D function, a marketing function, and a sales function. Sasha, the CEO, oversees each of these functions. Which of the following organizational structures does this represent? a. Functional structure b. Multidivisional structure c. Matrix structure d. Knowledge networks e. Decentralized ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:39 PM 26. All employees participate in a project team within which of the following structures? a. Functional b. Geographic c. Market d. Matrix e. Product ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:40 PM 27. The growth of distributed computer and telecommunications information systems such as e-mail, video-conferencing, intranets, and web-based search engines have made which of the following informal integrating mechanisms possible? a. Functional structure b. Multidivisional structure c. Matrix structure d. Knowledge networks e. Decentralized ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:40 PM 28. A matrix structure would be the most appropriate for which of the following types of firms? a. A company in which each employee is required to have only one boss b. A company operating in the maturity stage of the industry life cycle c. A company that is dependent on rapid mobilization of resources for competitive success d. A company with a high level of vertical differentiation e. A company in which the speed of product development is not crucial ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:41 PM 29. Which of the following actions is involved in delayering? a. Eliminating business units b. Rethinking business processes c. Creating more business units d. Flattening the organizational hierarchy e. Broadening the span of control ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM Copyright Cengage Learning. Powered by Cognero.

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30. Which of the following is NOT a strategy required for a company with a need for high integration? a. Business-level strategy involves differentiation through the introduction of new and/or improved product offerings. b. Different functions will be assigned different output targets, depending on their specific tasks. c. Temporary teams are formed to oversee the coordination, development, and introduction of a new product. d. Informal knowledge networks are fostered. e. There is an ongoing need to coordinate the R&D, production, and marketing functions of the firm to ensure that new products are developed in a timely manner.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:42 PM 31. A typical matrix organizational structure a. groups employees in two ways simultaneously to maximize the rate at which different kinds of products can be developed. b. breaks up a company's growing product line into smaller, more manageable subunits. c. groups people according to their common expertise and experience or because they use the same resources. d. is a way of grouping employees into separate customer groups so that each group can focus on satisfying the needs of a particular customer group. e. is a way of grouping employees to best satisfy the needs of customers within different regions.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:26 PM 32. Which of the following is NOT true about organizational processes? a. They are only found at the top hierarchy levels within an organization.

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b. A firm's core competencies or valuable, knowledge-based resources are embedded in its processes. c. Effective processes can lower the costs of value creation and add additional value to a product. d. Processes cut across functions, or divisions, and require cooperation between individuals in different subunits. e. Valuable new processes that might lead to a competitive advantage can be developed anywhere within the organization's network of operations.

ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:28 PM 33. Which of the following is an example where a low integration control system would work best? a. A high-tech firm that needs to change to meet customer demands b. A chemical company looking to diversify its existing product line with products that are similar c. A construction company looking to diversify its existing service line with services that are unrelated d. An apparel company pursuing a differentiation strategy e. A manufacturing company looking to expand into other markets ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:29 PM 34. Essentially, centralization or decentralization are concepts that refer to the a. levels where decisions are made in the hierarchy of an organization. b. number of hierarchical levels existing in an organization. c. tools that allow an organization to monitor and evaluate whether its strategies and structure are working as intended. d. business models designed to help a company expand nationally and manage a wide range of products. e. strategies implemented by an organization to create, market, and distribute its products.

ANSWER: a POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:31 PM 35. Which component of organizational architecture refers to the formal division of an organization into subunits? a. Organizational structure b. Control systems c. Incentive systems d. Organizational processes e. Organizational culture ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:46 PM DATE MODIFIED: 5/25/2023 6:52 PM 36. Evaluate the relationship between organizational culture and performance. a. Organizational culture has no impact on a firm's performance. b. Organizational culture is independent of other components of architecture. c. Organizational culture can significantly influence a firm's performance. d. Performance metrics are unrelated to organizational culture. e. Organizational culture is shaped by control systems and incentives.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze Copyright Cengage Learning. Powered by Cognero.

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37. Which element of organizational architecture is responsible for measuring the performance of subunits? a. Organizational structure b. Control systems c. Incentive systems d. Organizational processes e. People ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:52 PM DATE MODIFIED: 5/25/2023 6:54 PM 38. How do organizational processes differ from decision-making responsibilities within an organization? a. Organizational processes involve resource allocation, while decision-making responsibilities do not. b. Organizational processes include performance evaluation, while decision-making responsibilities do not. c. Organizational processes focus on soliciting ideas from lower-level managers, while decision-making responsibilities do not. d. Decision-making responsibilities are centralized, while organizational processes are decentralized. e. Decision-making responsibilities involve establishing integrating mechanisms, while organizational processes do not.

ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 6:54 PM DATE MODIFIED: 5/25/2023 6:58 PM 39. Explain the significance of human capital within organizational architecture. a. Human capital is solely based on individual skills and capabilities. b. Human capital has no impact on achieving extraordinary results within an organization. c. Human capital depends on the combination of individual skills and organizational architecture. d. Human capital is unrelated to the strategy and functional activities of an enterprise.

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e. Human capital can be achieved by working as independent contractors.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 6:58 PM DATE MODIFIED: 5/25/2023 7:01 PM 40. Which element is NOT part of a typical control system? a. Establishing goals and standards b. Measuring performance c. Comparing performance against goals and standards d. Taking corrective action e. Providing reinforcement ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organizational Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:01 PM DATE MODIFIED: 6/1/2023 2:43 PM 41. Which type of control relies on contact and direct supervision of subordinates? a. Personal controls b. Bureaucratic controls c. Output controls d. Incentive controls e. Market controls ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organizational Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a Copyright Cengage Learning. Powered by Cognero.

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company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:03 PM DATE MODIFIED: 5/25/2023 7:06 PM 42. Which control method involves the use of formal systems and written rules? a. Personal controls b. Bureaucratic controls c. Output controls d. Incentive controls e. Market controls ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 7:40 AM DATE MODIFIED: 5/26/2023 7:42 AM 43. What is the purpose of output controls? a. To establish personal contact with subordinates b. To regulate behavior through formal rules and procedures c. To allocate capital resources based on internal competition d. To encourage and reward employee behavior through incentives e. To measure performance against goals and standards ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organizational Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:06 PM DATE MODIFIED: 5/25/2023 7:09 PM 44. Which control method relies on creating an internal market for valuable resources? a. Personal controls Copyright Cengage Learning. Powered by Cognero.

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b. Bureaucratic controls c. Output controls d. Incentive controls e. Market controls ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:11 PM DATE MODIFIED: 5/25/2023 7:13 PM 45. What is a limitation of control through incentives? a. It requires extensive monitoring. b. It is not suitable for organizations in dynamic environments. c. It leads to a lack of cooperation between divisions. d. It discourages self-control among employees. e. It is costly and time-consuming for managers.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-3 Organization Controls and Incentives QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 7:13 PM DATE MODIFIED: 5/25/2023 7:15 PM 46. What refers to the shared assumptions about how things ought to be within an organization? a. Values b. Norms c. Assumptions d. Behaviors e. Guidelines ANSWER: a POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero.

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REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:16 PM DATE MODIFIED: 5/25/2023 7:18 PM 47. Which factor can shape the culture of an organization? a. Founders or important leaders b. Competitors in the industry c. Customers' preferences d. Government regulations e. Economic conditions ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:20 PM DATE MODIFIED: 5/25/2023 7:21 PM 48. Working as an HR manager, which of the following is NOT one of the formal or informal mechanisms through which culture is maintained and transmitted over time in your organization? a. Hiring practices b. Pay and promotions procedures c. Informal rules of behavior d. Industry norms e. Procedures regarding rewards ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply Copyright Cengage Learning. Powered by Cognero.

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49. What type of culture reduces the need for bureaucratic and personal controls? a. Consensus-based culture b. Competitive culture c. Adaptive culture d. Collaborative culture e. Normative culture ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:24 PM DATE MODIFIED: 5/25/2023 7:26 PM 50. How can cultural controls have dysfunctional aspects? a. They reduce monitoring costs. b. They shape behavior and reduce the need for other controls. c. They can discourage risk-taking and innovation. d. They align with the demands of the competitive environment. e. They are universally beneficial for all organizations.

ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 7:26 PM DATE MODIFIED: 5/25/2023 7:29 PM 51. Which example illustrates the impact of culture on strategy execution? a. Microsoft's emphasis on technical brilliance and competition under Bill Gates b. IBM's consensus-based decision making in the 1980s c. Lincoln Electric's focus on low-cost productivity d. Microsoft's shift from competition to collaboration under Satya Nadella Copyright Cengage Learning. Powered by Cognero.

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e. McDonald's introducing the Big Mac ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 7:38 PM DATE MODIFIED: 5/25/2023 7:41 PM 52. Why is it important for managers to align the culture of the firm with its strategy and the competitive environment? a. To reduce monitoring costs b. To foster innovation and risk-taking c. To enhance consensus-based decision making d. To maintain strong but adaptive cultures e. To improve employee productivity ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/25/2023 7:41 PM DATE MODIFIED: 5/25/2023 7:44 PM 53. What are processes within an organization? a. Core competencies b. Resource allocations c. Decision-making methods d. Customer inquiries e. Employee evaluations ANSWER: c POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/25/2023 7:44 PM DATE MODIFIED: 5/25/2023 7:46 PM 54. Which is a place within an organization where valuable new processes that lead to a competitive advantage will NOT be developed within an organization? a. R&D department b. Marketing division c. Foreign subsidiary d. An all-hands meeting e. A specific product team ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/25/2023 7:46 PM DATE MODIFIED: 5/25/2023 7:48 PM 55. Which is NOT a reason why efficient and effective processes are important for a firm? a. They reduce operational costs. b. They increase customer satisfaction. c. They add value to products. d. They systematically work to raise wages of employees. e. They integrate knowledge networks.

ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/25/2023 7:49 PM DATE MODIFIED: 5/25/2023 7:51 PM Copyright Cengage Learning. Powered by Cognero.

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56. Which process is an example of improving product quality and operating efficiency? a. Total quality management b. Six Sigma process c. Just-in-time inventory system d. Digitalization of business e. Idea generation process ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:51 PM DATE MODIFIED: 5/25/2023 7:54 PM 57. Which type of processes require cooperation between different subunits within an organization? a. Resource allocation processes b. Customer inquiry processes c. Product development processes d. Employee evaluation processes e. Idea generation processes ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:54 PM DATE MODIFIED: 5/25/2023 7:56 PM 58. What formal and informal mechanisms are important for leveraging valuable processes within an organization? a. Knowledge networks b. Integrating mechanisms c. Cross-unit cooperation incentives d. Corporate strategies e. Quality improvement through digitization ANSWER: d POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

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DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 7:57 PM DATE MODIFIED: 5/25/2023 7:59 PM 59. How can processes contribute to lowering the costs of value creation? a. By automating activities b. By improving product quality c. By streamlining decision making d. By promoting cross-unit cooperation e. By allocating resources efficiently ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/25/2023 8:00 PM DATE MODIFIED: 5/25/2023 8:02 PM 60. Why is it important for processes to cut across functions or divisions within an organization? a. To increase employee collaboration b. To reduce operational costs c. To ensure market needs are met d. To improve customer satisfaction e. To ensure employee satisfaction ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze Copyright Cengage Learning. Powered by Cognero.

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61. How can valuable new processes developed within an organization be leveraged for competitive advantage? a. Through knowledge networks b. Through cross-unit cooperation c. Through formal integrating mechanisms d. By sharing them across the organization e. Through selective sharing of information ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Analyze DATE CREATED: 5/26/2023 6:32 AM DATE MODIFIED: 5/26/2023 6:36 AM 62. Which process focuses on using corporate intranets and the Internet to automate activities and reduce operating costs? a. Total quality management b. Six Sigma process c. Just-in-time inventory system d. Digitalization of business e. Idea generation process ANSWER: d POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-5 Organization Processes QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.05 - Explain the importance of organizational processes for strategy implementation.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 6:36 AM DATE MODIFIED: 5/26/2023 6:39 AM 63. Which is NOT one of the different levels of integration between functions within an organization? a. Basic integrating mechanisms b. Formal integrating mechanisms c. Informal knowledge networks d. Direct contact and liaison roles Copyright Cengage Learning. Powered by Cognero.

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e. Corporate incentives ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/26/2023 6:39 AM DATE MODIFIED: 5/26/2023 6:42 AM 64. In which type of environment is the need for integration between functions greater? a. Stable environment b. Dynamic environment c. Uncertain environment d. Changing environment e. Fixed environment ANSWER: b POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Remember DATE CREATED: 5/26/2023 6:42 AM DATE MODIFIED: 5/26/2023 6:45 AM 65. Which is NOT a reason that coordination between R&D, production, and marketing is important for firms competing through product development and innovation? a. To reduce operational costs b. To ensure efficient production and delivery c. To meet consumer demands d. To increase employee salary and satisfaction e. To positively affect the financial well-being of the firm ANSWER: d POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

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LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/26/2023 6:49 AM DATE MODIFIED: 6/1/2023 2:44 PM 66. Which is NOT one of the integrating mechanisms commonly used to achieve coordination between functions within an organization? a. Cross-functional teams b. Temporary teams c. Permanent teams d. Knowledge networks e. HR programming ANSWER: e POINTS: 1 DIFFICULTY: Easy REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Understand DATE CREATED: 5/26/2023 6:57 AM DATE MODIFIED: 5/26/2023 6:59 AM 67. Which control system is commonly used in organizations with low integration between functions? a. Bureaucratic controls b. Output controls c. Incentive controls d. Market controls e. Personal controls ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 6:53 AM DATE MODIFIED: 5/26/2023 6:56 AM Copyright Cengage Learning. Powered by Cognero.

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68. Which type of control system is particularly complex in diversified firms pursuing a strategy of related diversification? a. Bureaucratic controls b. Output controls c. Incentive controls d. Market controls e. Personal controls ANSWER: b POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 7:00 AM DATE MODIFIED: 5/26/2023 7:03 AM 69. What control mechanism induces divisions to cooperate with each other for mutual gain in a diversified firm with high integration? a. Bureaucratic controls b. Output controls c. Incentive controls d. Market controls e. Cultural controls ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 7:03 AM DATE MODIFIED: 5/26/2023 7:07 AM 70. How can strong cultural controls help in achieving cooperation between divisions in a diversified firm? a. By establishing shared values and norms b. By enforcing strict rules and regulations c. By implementing cross-functional teams d. By utilizing personal controls e. By letting teams pick the moral code for their specific teams Copyright Cengage Learning. Powered by Cognero.

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ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 7:29 AM DATE MODIFIED: 5/26/2023 7:32 AM 71. What control problem arises in diversified firms with high integration between divisions? a. Performance ambiguity b. Lack of coordination c. Excessive bureaucracy d. Low employee motivation e. Extreme transparency ANSWER: a POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUS PROG: Reflective Thinking KEYWORDS: Bloom's: Apply DATE CREATED: 5/26/2023 7:32 AM DATE MODIFIED: 5/26/2023 7:35 AM Essay 72. Identify and discuss the three components of organizational structure.

ANSWER: The organizational structure has three components: the location of decision-making responsibilities in the firm, the formal division of the organization into subunits, and the establishment of integrating mechanisms to coordinate the activities of subunits. Controls, incentive, organizational processes, and organizational culture are the key elements of organizational structure. Controls are metrics used to measure the performance of subunits, incentives are devices used to encourage desired employee behavior, organizational processes refer to the way decisions are made and work is performed, and organizational culture refers to the norms and value systems that are shared among employees. Finally, people refer not just to the employees of the organization but also to the strategy used to recruit, compensate, motivate, and retain those individuals, as well as the type of people that they are in terms of their skills, values, and orientation. All these components are interdependent, and an enterprise must pay close attention to achieving internal consistency between the various components of its architecture, and the architecture must support the Copyright Cengage Learning. Powered by Cognero.

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strategy and functional activities of the enterprise.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Structure QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:37 PM 73. What is the difference between organizational structure, processes and culture? How does human capital fit into organizational architecture? Do these run independently of each other or rely on each other to create a firm's organizational architecture?

ANSWER: By organizational structure, we mean three things: First, the location of decisionmaking responsibilities in the firm (e.g., centralized or decentralized); second, the formal division of the organization into subunits such as functions, product divisions, and national operations; and third, the establishment of integrating mechanisms to coordinate the activities of subunits.

Organizational processes refer to the manner in which decisions are made and work is performed within the organization. Examples include the processes for formulating strategy, for deciding how to allocate resources within a firm, for developing new products, and for evaluating the performance of managers and giving feedback.

Organizational culture refers to the norms and value systems that are shared among the employees of an organization. Just as societies have cultures, so do organizations. Organizations are societies of individuals who come together to perform collective tasks. They have their own distinctive patterns of culture and subculture.

Collectively, the people within an organization, the employees, constitute the human capital of an enterprise. The value of an organization's human capital is more than the sum of each individual employee's skills and capabilities. Much of the value is contextual in the sense that employees can achieve things within an organization that would not be possible if they were working as independent contractors.

The various components of organization architecture are not independent of each other. Each component shapes, and is shaped by, other components of architecture. Again, an obvious example is the strategy regarding people. Human resources can proactively hire individuals whose internal values are consistent with those that the firm emphasizes in its organizational culture. The people component of architecture can be used to reinforce the prevailing culture of the organization. A business enterprise endeavoring to attain a competitive advantage and maximize its performance must pay close attention to achieving internal consistency between the various components of its architecture, and the architecture must support the strategy and functional activities of the enterprise.

In terms of creating a firm's organizational architecture, all these elements should align with the company's strategy and goals. A misalignment, such as an innovative culture in a rigid hierarchical structure, can lead to confusion, inefficiency, and lower morale. Therefore, a holistic approach to designing and adjusting these components is crucial for organizational Copyright Cengage Learning. Powered by Cognero.

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success.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-1 Organizational Architecture QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.01 - Explain the concept of organizational architecture.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:41 PM 74. A firm’s vertical differentiation determines where in its hierarchy decision-making power is concentrated. Compare the arguments for decentralization and centralization. Must a business choose one or the other?

ANSWER: There are four main arguments for centralization. First, it can facilitate coordination.

Second, centralization can help ensure that decisions are consistent with organizational objectives. Third, centralization can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization. Fourth, by concentrating power and authority in one individual or a management team, centralization can give top-level managers the means to bring about needed major organizational changes.

There are five main arguments for decentralization. First, top management can become overburdened when decision-making authority is centralized. Second, motivational research favors decentralization. Third, decentralization permits greater flexibility—more rapid response to environmental changes. Fourth, decentralization can result in better decisions. Fifth, decentralization can increase control and be used to establish relatively autonomous, self-contained subunits within an organization.

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The choice between centralization and decentralization is not absolute. Frequently, it makes sense to centralize some decisions and decentralize others, depending on the type of decision and the firm’s strategy. Although the choice between centralization and decentralization depends upon the circumstances being considered, a few important generalizations can be made. First, decisions regarding overall firm strategy, major financial expenditures, financial objectives, and legal issues are centralized at the senior-management level in most organizations. Functional decisions relating to production, marketing, R&D, and human resource management may or may not be centralized depending on the firm’s strategy and environmental conditions. Second, when the realization of economies of scale is an important factor, there tends to be greater centralization. Purchasing and manufacturing decisions are often centralized in an attempt to eliminate duplication and realize scale economies. In contrast, sales decisions tend to be more decentralized because economies of scale are less of a consideration here. Third, when local adaptation is important, decentralization is typically favored. When there are substantial differences between conditions in local markets, marketing and sales decisions will often be decentralized to local marketing and sales managers.

1 Moderate 12-2 Organizational Structure Essay False

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STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:45 PM 75. List and describe three ways of achieving control within an organization.

ANSWER: There are several main ways of achieving control within an organization including personal controls, bureaucratic controls, output controls, incentive controls, market controls, and control through culture.

Personal control is control by personal contact with and direct supervision of subordinates. It consists of making sure, through personal inspection and direct supervision, that individuals and units behave in a way that is consistent with the goals of the organization. Personal control can be very subjective, with the manager assessing how well subordinates are performing by observing and interpreting their behavior.

Bureaucratic control is defined as control through a formal system of written rules and procedures. As a strategy for control, bureaucratic control methods rely on prescribing what individuals and units can and cannot do; that is, on establishing bureaucratic standards.

When complete tasks can be identified, output controls involve setting goals for units or individuals, and monitoring performance against those goals. The performance of unit managers is then judged by their ability to achieve the goals. If goals are met or exceeded, unit managers will be rewarded (an act of reinforcement). If goals are not met, senior management will normally intervene to find out why and take corrective action. Thus, as in a classic control system, control is achieved by comparing actual performance against targets, providing reinforcement, and intervening selectively to take corrective action.

Market controls involve regulating the behavior of individuals and units within an enterprise by setting up an internal market for valuable resources such as capital. Market controls are usually found within diversified enterprises organized into product divisions, where the head office might act as an internal investment bank, allocating capital funds between the competing claims of the different product divisions based upon an assessment of their likely future performance.

Incentives are the devices used to encourage and reward appropriate employee behavior.

Many employees receive incentives in the form of annual bonus pay. Incentives are usually closely tied to the performance metrics used for output controls. The idea is that giving employees incentives to work productively reduces the need for other control mechanisms.

Control through incentives is designed to facilitate self-control. Employees regulate their own behavior in a manner consistent with organizational goals in order to maximize their chance of earning incentive-based pay.

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Peer control occurs when employees pressure others within their team or work group to perform up to or in excess of the expectations of the organization.

1 Moderate 12-3 Organization Controls and Incentives Essay

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HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.03 - Discuss the various control systems and incentive mechanisms that a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 5/25/2023 4:45 PM 76. Describe the roles that organizational structure, strategic control systems, and organizational culture play in strategy implementation.

ANSWER: Structure helps organizations implement their strategies because structure determines the processes by which information is communicated within the organization and by which decisions are made. Structure also has important implications for organizational flexibility and learning. It has an important effect on the organization’s ability to achieve low costs or differentiation. Finally, structure is the primary mechanism for integration, which is crucial for strategy implementation, particularly in larger organizations.

Strategic control systems enable organizations to monitor achievement of strategic goals, to evaluate performance, and to take corrective actions if needed. In addition, strategic control systems can focus on the future, working to ensure that the firm is well positioned to achieve its future strategic goals as well as today’s goals.

Organizational culture is another very strong determinant of the behavior of employees and thus helps to determine the organization’s performance. Culture provides guidelines for behaviors that are internalized and thus can be very powerful motivators.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-4 Organizational Culture QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.04 - Review the concept of organization culture, and explain why it is important for strategy implementation.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Understand DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:47 PM 77. Explain the benefits of the multidivisional structure for managing a firm that competes in several industries.

ANSWER: The multidivisional structure has the following advantages:     

Each division of the firm operates separately and can develop its own resources, strategies, and structure.

Separation also makes control easier because each division’s contribution to corporate profits is clear.

Divisional managers can focus single-mindedly on the performance of their division, and corporate staff is freed to focus on the performance of the corporation as a whole.

Separate divisions also motivate divisional managers, who realize that corporate managers can effectively oversee their performance.

The structure enables learning and sharing across divisions, and it allows the firm to

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overcome the information and efficiency drawbacks associated with large size.

Overall, the multidivisional structure can help firms that compete in several industries to achieve greater strategic focus, accountability, economies of scale, flexibility, and resource allocation.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-2 Organizational Structure QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.02 - Discuss the different dimensions of a company’s organizational structure, including centralization and decentralization, integrating mechanisms, and the various structural forms a company can use.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:48 PM 78. Discuss the differences in the strategies and organization for a firm with a need for high integration versus a firm with a low integration.

ANSWER: In general, the need for integration between functions is greater for firms that are competing through product development and innovation. This is typically the case when an organization’s business-level strategy involves differentiation through the introduction of new and/or improved product offerings. In such organizations there is an ongoing need to coordinate the R&D, production, and marketing functions of the firm to ensure that (1) new products are developed in a timely manner, (2) that they can be efficiently produced and delivered, and (3) that they match consumer demands. We saw that a matrix structure is one way of achieving such coordination. Another, more common, solution is to form temporary teams to oversee the development and introduction of a new product. Once the new product has been introduced, the team is disbanded and employees return to their functions or move to another team. Firms that face an uncertain, highly turbulent, competitive environment, where rapid adaptation to changing market conditions is required, need coordination in order to survive. Environmental change, such as that which occurs when an industry is disrupted by radical innovations, may require a change in product, process, business model, and strategy.

In such cases, it is critical to make sure that the different functions of the firm all pull in the same direction, so that the firm’s response to a changing environment is coherent and organization wide. Temporary teams are often used to affect such coordination. In addition to using formal integrating mechanisms, such as cross-functional teams, firms with a crucial need for coordination between subunits—for instance, those based in turbulent, high-tech environments—would do well to foster informal knowledge networks, for they too can facilitate coordination between subunits.

In contrast, if the firm is based in a stable environment characterized by little or no change, and if developing new products is not a central aspect of the firm’s business strategy, the need for coordination between functions may be less. In such cases, a firm may be able to function with basic integrating mechanisms such as direct contact or simple liaison roles.

These mechanisms, coupled with a strong culture that encourages employees to pursue the same goals, and to cooperate with each other for the benefit of the entire organization, may be all that is required to achieve coordination between functions.

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between functions beyond direct contact and simple liaison roles. The environment facing the firm is stable, so the need for integration is minimal. Within such a firm, bureaucratic controls in the form of budgets are used to allocate financial resources to each function and control spending by the functions. Output controls will then be used to assess how well a function is performing. Different functions will be assigned different output targets, depending on their specific tasks. The procurement function might be assigned an output target based on procurement costs as a percentage of sales; a manufacturing function might be given productivity and product quality targets such as output per employee and defects per thousand products; the logistics function might be given an inventory turnover target; the marketing and sales function might be given sales-growth and market-share goals; and the success of the service function might be measured by the time it takes to resolve a customer problem. To the extent that each function hits these targets, the overall performance of the firm will improve, and its profitability will increase.

A functional structure where the strategy and/or environment requires a high degree of integration presents managers with a complex control problem. The problem is particularly severe if the firm adopts a matrix structure.

In conclusion, the level of integration required between functions in a firm largely depends on the business-level strategy and the competitive environment that it operates in. Firms that focus on product development and innovation require a high level of coordination between R&D, production, and marketing functions. On the other hand, in a stable environment, firms may require only basic integrating mechanisms such as direct contact and simple liaison roles. Bureaucratic and output controls can be used to allocate resources and assess performance. Overall, managers must carefully consider the level of integration required for their firm to achieve its strategic objectives and adapt to the competitive environment.

POINTS: 1 DIFFICULTY: Moderate REFERENCES: 12-6 Implementing Strategy Through Organizational Architecture QUESTION TYPE: Essay HAS VARIABLES: False STUDENT ENTRY MODE: Basic LEARNING OBJECTIVES: SM.HILL.24.12.06 - Discuss how the appropriate organization design enables a company to better implement its business and corporate-level strategies.

NATIONAL STANDARDS: United States - BUSPROG: Analytic | Technology - BUSPROG: Analytic KEYWORDS: Bloom's: Analyze DATE CREATED: 4/19/2023 4:53 PM DATE MODIFIED: 6/1/2023 2:50 PM

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