PRACTICE TEST FOR EXAM 2
STRATEGIC MANAGEMENT 4490
These questions and the key are intended as a study aid for 4490 Exam 2.
.
1.
TT3 The fact that both Rolex and Timex have a competitive advantage selling wristwatches is
(p. 142)
an indication that:
A. Following
a different generic business strategy within the same industry can lead to a
competitive advantage for more than one organization.
B.
Following the same generic business strategy can allow for two firms competing in the
same industry to have a competitive advantage at the same time.
C.
In order to evaluate whether Rolex has a sustained competitive advantage it is useful to
compare it to Timex from a cost perspective.
D.
In order to evaluate whether Timex has a sustained competitive advantage, it is useful to
compare it to Rolex from a differentiation perspective.
.
1
,
2.
Interface is a leader in sustainable and innovative carpeting, as evidenced by its Cool Carpet
(p. 143-
product, the world's first carbon-neutral floor covering. Its product is unique and has appealing
144)
customer attributes. If Interface raw material costs increased by 12% this year, what would be
the likely outcome?
A.
Interface would lower profit margins to absorb this cost increase.
B.
The company would launch an all-out effort to reduce other costs by 12%.
C. Interface
would pass a major portion of this increase along as a price increase to its
customers.
D.
Interface would seek to find other materials with lower costs, even if it meant losing the
carbon-neutral label on the product.
2
,
3.
The Wright Brothers creating the airplane is a(n) ̲̲̲̲̲̲̲̲̲̲̲̲̲̲; Boeing commercializing the
(p. 172)
airplane is a(n) ̲̲̲̲̲̲̲̲̲̲̲̲̲.
A.
Breakthrough; invention
B. Invention;
innovation
C.
Innovation; invention
D.
Product; process
4.
When a firm successfully commercializes a new product or service, it is able to extract
(p. 172)
temporary ̲̲̲̲̲̲̲̲̲̲̲̲̲̲ but must continue to innovate to sustain competitive advantage(s).
A. Monopoly
profits
B.
Industry acknowledgements
C.
Lower costs of capital
D.
Competitive parity
5.
After the Internet was introduced, its value increased exponentially as the number of users
(p. 174)
increased. This is the positive effect of a(n):
A.
Adopter force.
B. Network
effect.
C.
User effect.
D.
Internet force.
3
,
6.
Generally, as the level of ̲̲̲̲̲̲̲̲̲ innovation declines, the level of ̲̲̲̲̲̲̲̲̲ innovation
(p. 176)
increases.
A. Product;
process
B.
Process; procedural
C.
Incremental; drastic
D.
Efficient; inefficient
.
7.
IBM still offers typewriters even though it does not invest much in future innovations of its
(p. 179)
typewriter line. Instead, it has chosen a ̲̲̲̲̲̲̲̲̲ strategy to maximize cash flow from the
remaining demand for typewriters.
A. Harvest
B.
Divest
C.
Exit
D.
Consolidate
.
8.
When an existing firm uses the tools and concepts learned from strategic management in
(p. 181)
order to pursue innovation, it is said to be engaging in:
A. Strategic
entrepreneurship.
B.
Strategic invention.
C.
A strategic venture.
D.
A short-term strategy.
4
STRATEGIC MANAGEMENT 4490
These questions and the key are intended as a study aid for 4490 Exam 2.
.
1.
TT3 The fact that both Rolex and Timex have a competitive advantage selling wristwatches is
(p. 142)
an indication that:
A. Following
a different generic business strategy within the same industry can lead to a
competitive advantage for more than one organization.
B.
Following the same generic business strategy can allow for two firms competing in the
same industry to have a competitive advantage at the same time.
C.
In order to evaluate whether Rolex has a sustained competitive advantage it is useful to
compare it to Timex from a cost perspective.
D.
In order to evaluate whether Timex has a sustained competitive advantage, it is useful to
compare it to Rolex from a differentiation perspective.
.
1
,
2.
Interface is a leader in sustainable and innovative carpeting, as evidenced by its Cool Carpet
(p. 143-
product, the world's first carbon-neutral floor covering. Its product is unique and has appealing
144)
customer attributes. If Interface raw material costs increased by 12% this year, what would be
the likely outcome?
A.
Interface would lower profit margins to absorb this cost increase.
B.
The company would launch an all-out effort to reduce other costs by 12%.
C. Interface
would pass a major portion of this increase along as a price increase to its
customers.
D.
Interface would seek to find other materials with lower costs, even if it meant losing the
carbon-neutral label on the product.
2
,
3.
The Wright Brothers creating the airplane is a(n) ̲̲̲̲̲̲̲̲̲̲̲̲̲̲; Boeing commercializing the
(p. 172)
airplane is a(n) ̲̲̲̲̲̲̲̲̲̲̲̲̲.
A.
Breakthrough; invention
B. Invention;
innovation
C.
Innovation; invention
D.
Product; process
4.
When a firm successfully commercializes a new product or service, it is able to extract
(p. 172)
temporary ̲̲̲̲̲̲̲̲̲̲̲̲̲̲ but must continue to innovate to sustain competitive advantage(s).
A. Monopoly
profits
B.
Industry acknowledgements
C.
Lower costs of capital
D.
Competitive parity
5.
After the Internet was introduced, its value increased exponentially as the number of users
(p. 174)
increased. This is the positive effect of a(n):
A.
Adopter force.
B. Network
effect.
C.
User effect.
D.
Internet force.
3
,
6.
Generally, as the level of ̲̲̲̲̲̲̲̲̲ innovation declines, the level of ̲̲̲̲̲̲̲̲̲ innovation
(p. 176)
increases.
A. Product;
process
B.
Process; procedural
C.
Incremental; drastic
D.
Efficient; inefficient
.
7.
IBM still offers typewriters even though it does not invest much in future innovations of its
(p. 179)
typewriter line. Instead, it has chosen a ̲̲̲̲̲̲̲̲̲ strategy to maximize cash flow from the
remaining demand for typewriters.
A. Harvest
B.
Divest
C.
Exit
D.
Consolidate
.
8.
When an existing firm uses the tools and concepts learned from strategic management in
(p. 181)
order to pursue innovation, it is said to be engaging in:
A. Strategic
entrepreneurship.
B.
Strategic invention.
C.
A strategic venture.
D.
A short-term strategy.
4
