busn 489 exam 1 2023 with verified questions and answers

Which of the following is correct about the industrial organization (I/O) model? a. The external environment and industry forces determines firm performance. b. Selecting the most attractive industry in which to compete is a strategic prescription of the I/O model. c. The I/O model assumes that resources are highly mobile across firms. d. All of the above. d. All of the above (True/False) Customers are typically considered a capital market stakeholder group a. True b. False b. False Kathy Ireland (KI), Inc.'s founding mission "Finding solutions for family, especially busy moms" has guided the company to diversify and expand product lines into different product mixes, all of which are centered around the needs of family. Which of the following best describes the role of KI's mission in guiding its product strategy? a. KI's mission declares organizational attitude and belief. b. KI's mission distinguishes KI from other competitors. c. KI's mission is broad enough to allow for creative growth but limited enough to exclude some ventures. d. KI's mission is clear to all stakeholders. c. KI's mission is broad enough to allow for creative growth but limited enough to exclude some ventures When suppliers are likely to be powerful and can impose threats on firms? a. Suppliers have differentiated products. b. Firms have a significant size of purchases. c. There are a number of suppliers in the market. d. Backward integration is firms' feasible option. a. Suppliers have differentiated products Which of the following is the most explicit example of threats of new entrants? a. A number of beer drinkers have shifted their preference toward hard liquors and wines. b. Several airlines have moved toward selling air tickets through their own websites. c. Sony's Walkman has suffered significantly from the emergence of MP3. d. Starbuck Coffee's profitability has eroded due to the emergence of several regional gourmet coffee providers. d. Starbuck Coffee's profitability has eroded due to the emergence of several regional gourmet coffee providers. Being "valuable" is one of the four attributes of resources and capabilities that form the basis of firms' sustainable advantage over competitors. Which of the following best reflects the definition of "valuable resources/capabilities"? a. Not many companies possess such resources and capabilities. b. Such resources and capabilities are useful in helping firms meet customer demands, exploit opportunities, and/or fending off threats. c. It will take a lot of financial commitments from the competitors to replicate such resources and capabilities. d. There are no other forms of alternative resources and capabilities available in the market that enable the firms to perform the same functions/tasks as such resources and capabilities. b. Such resources and capabilities are useful in helping firms meet customer demands, exploit opportunities, and/or fending off threats. In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Increase the bargaining power of suppliers. a. Select b. Do not select b. Do not select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Decrease the rivalry among competing firms. a. Select b. Do not select a. Select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Increase the threat of substitutes. a. Select b. Do not select b. Do not select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Decrease the bargaining power of buyers. a. Select b. Do not select a. Select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Increase the threat of new entrants. a. Select b. Do not select b. Do not select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Decrease the demand in the industry a. Select b. Do not select b. Do not select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Increase overall customer service. a. Select b. Do not select b. Do not select In the past decades, we have witnessed several major U.S. airlines have gone through series of mergers. Through those mergers, the number of major U.S. airlines has come down to three. The industry analysts have made the following eight observations regarding the U.S. airline industry. Select only TWO of them that are most likely to be the consequences of those airline mergers. Decrease the on-time flight operations. a. Select b. Do not select b. Do not select In the mid 1990's, Microsoft, a major software company, had Compaq, a leading PC company, as its major customer with a significant size of software purchase. During that time, Compaq was the number one PC company, and had a significant lead in PC sales/market share over Dell and Gateway, which were much smaller PC companies than Compaq. Although profitability was part of Microsoft's business objective, Microsoft decided to sell its software to Dell and Gateway at much lower prices than the prices Microsoft gave to Compaq and other PC companies. By doing so, Microsoft suffered from lower profit margins from any software sold to Dell and Gateway. However, because of this preferential prices from Microsoft, Dell and Gateway had cost advantage over other competitors in the PC market and could significantly increase their PC market share. If you were Microsoft's business consultant at the time, would you support Microsoft's preferential pricing decision? Why? Your discussion should address whether Microsoft's decision was strategically sound, and should reflect some concepts pertaining to strategic management The bargaining power of suppliers was used in order to increase the market share, develop strategy for organizational growth, and to study forth coming trends in the industry. Microsofts preferential pricing was a smart move by microsoft and was strategically sound. The major reason this was done to dominate the market of PC by making itself a market leader through the bargaining power of suppliers. This brought them cost advantage of other PC markets. Strategic Management the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives Strategic Management Process includes what 3 parts? commitments, decisions, actions The strategic management process is required to achieve what 2 things sustained competitive advantage superior performance what are the 2 alternative models to achieve superior performance Industrial Organization Model Resource Based Model Industrial Organization Model A strategy theory that focuses on identifying the competitive advantage of each organization within its industry Resource Based Model assumes that each organization is a collection of unique resources and capabilities. The uniqueness of its resources and capabilities is the basis of a firm's strategy and its ability to earn above-average returns. What are the pitfalls of strategic management -Delegating to a "planner" vs. involvement of managers -Top management not supportive of the process-Failing to create a collaborative environment -Failing to involve key personnel and to communicate to employees -Intuitive decisions conflicting with formal plan and analysis -Formality that stifles creativity and flexibility -Moving hastily from mission to strategy formulation Vision statement answers what questions What do we want to become? Picture of the future Mission statement answers what questions What is our business? Business intent Vision statement is a longer timeframe, more general, and is a guiding star of where you need to be Mission statement is shorter time frame, more specific, the different mountains to climb to get there To be the world's best quick service restaurant vision statement To be best employer for our people in each community around the world and deliver operational excellence to our customers in our restaurants mission statement a good mission has 3 characteristics passion/vision competence economics/market Mission statements should... declare organizational attitude and belief reflect the anticipations of customers distinguish the firm from others be broad enough to allow for creative growth be limited enough to exclude some ventures serve as framework to evaluate current activities be clear and understood by all stakeholders stakeholders groups that have a stake in the success and outcomes of a business I/O Model of Superior Performance elements external environment attractive industry strategy formulation assets and skills strategy implementation superior performance RBV Model of Superior Performance resources capability competitive advantage attractive industry strategy formulation & implementation superior performance opportunities and threats are both _____ external opportunity a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness threat a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness. what are the 4 parts of the external analysis process? 1. scanning 2. monitoring 3. forecasting 4. assessing scanning Identifying early signals of environmental changes and trends monitoring Detecting meaning through ongoing observations of environmental changes and trends forecasting Developing projections of anticipated outcomes based on monitored changes and trends assessing Determining the timing and importance of environmental changes and trends for firms' strategies and their management what does the pest model stand for political economic social technological political Governmental and legal variables economic Economic and global variables social Demographic and sociocultural variables technological Demographic and sociocultural variables what are the 7 segments that can influence business? 1. demographic 2. economic 3. political/legal 4. sociocultural 5. technological 6. global 7. Sustainable Physical Environment demographic segment population size, age structure, geographic distribution economic segment Inflation rates, Interest rates political/legal segment taxation laws, antitrust laws sociocultural segment Workforce diversity, Attitudes about quality of worklife , Concerns about environment, Shifts in work and career preferences, Shifts in product and service preferences, Women in the workplace technological segment Product innovations Applications of knowledge Focus of private and government-supported R&D expenditures New communication technologies global segment Important political events, critical global markets, newly industrialized countries, different cultural and institutional attributes sustainable physical environment segment Energy consumption Practices used to develop energy sources Renewable energy efforts Minimizing a firm's environmental footprint Availability of water as a resource Producing environmentally friendly products Reacting to natural or man-made disasters What are the 5 factors in the five forces model threat of new entrants rivalry among competing firms threat of substitute products bargaining power of buyers bargaining power of suppliers strategic group A set of firms emphasizing similar strategic dimensions and using a similar strategy what does strategic group mapping do reveals the different competitive positions of industry rivals what does competitive analysis do reveals the different competitive positions of industry rivals In 1978, the U.S. government deregulated the commercial airline industry by removing the federal government control over different areas, such as fares, routes, and market entry of new airlines, and bringing a free market to the industry. Which of the following was NOT a likely outcome of this deregulation? a. The industry became less attractive as the overall demand for the airline services significantly declined. b. The rivalry among airlines was more intense with more competitors and price competition. c. The industry became less attractive as buyer power increased. d. The industry became less attractive as the number of new entrants increased. a. The industry became less attractive as the overall demand for the airline services significantly declined. Which of the following is typically NOT considered a capital market stakeholder group? a. banks b. shareholders c. customers d. Creditors c. customers Which of the following is considered a general environmental trend? a.Industry growth rate is increasing rapidly. b. Competitors are rapidly increasing in number. c. Buyers are rapidly declining in number. d. Technology is changing rapidly. d. technology is changing rapidly Five forces: suppliers political, legal, and governmental Five forces: substitutes technological Five forces: buyers economic and global Five forces: new entrants social, cultural, demographic Rivarly among competing firms: What intensifies the rivalry slow industry growth numerous or equally balanced competitors over capacity/excess capacity high fixed costs/storage costs lack of differentiation/ standardized products/low switching costs high corporate stakes/aggressive initiates high exit barriers: specialized assets, exit costs, government/social restriction, etc. Bargaining power of suppliers: threats of powerful suppliers raising prices forcing high volume orders and or lower quality shifting inventory costs and other costs to producer firms Bargaining power of suppliers: what makes suppliers powerful few suppliers suppliers products have few substitutes suppliers products is differentiated; high switching costs if you change suppliers suppliers product is key input your firm is not an important customer of suppliers suppliers threat of forward integration Bargaining power of buyers: what are the threats of powerful buyers playing producer firms off against each other bargaining down prices forcing higher quality/higher expectations Bargaining power of buyers: what makes buyers powerful few buyers your product has many substitutes your products are undifferentiated; low switching costs if buyers change your product is not a key input buyer purchases large % of your output buyer threat of backward integration Threat of New Entrants: Barriers to Entry economies of scale and it's cost disadvantage disadvantages from know-how and learning curves large capital requirements product differentiation, brand loyalty, and switching costs limited access to suppliers or distribution strict government policy fear of established firms' retaliation threat of substitute products: when substitute products become credible threats comparable or better (performance) substitutes are readily available (or emerging) attractive price user's low switching cost user's comfort Strategic Myopia the willingness to reject unfamiliar as well as negative information sustainable advantage Those advantages that allow for an organization to stay ahead of competitors over the long term. Four Criteria of Sustainable Advantages valuable, rare, costly to imitate, nonsubstitutable Value Chain Analysis help to identify which resources, capabilities and activities can add value Value chain: outsourcing strategic choice to purchase some activities from outside suppliers competitive profile matrix identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position competitive profile matrix: offensive actions pit firms strengths against rival's weaknesses competitive profile matrix: defensive actions make firms weaknesses irrelevant, correct firms weaknesses organizational culture pattern of behavior, developed by an organization as it learns to cope with its problem (successfully in the past), is considered valid and taught to new members organizational culture (cont'd) resistant to change may represent a strength or weakness of the firm can be reinforced or shaped by organizational leaders