WPC 480: Quizzes 2023 with verified questions and answers

Mainline Ltd. is a landline telephone manufacturer whose average return on invested capital is approximately 2 percent. Because demand for landline telephones has declined significantly, the industry average return on invested capital has been negative (-5 percent) for the last few years. In this scenario, Mainline Ltd. has a competitive advantage. A positive relationship between vision statements and firm performance is more likely to exist when organizational structures are aligned with the firm's vision statement. Visionary companies are able to outperform their competitors because they provide more aspirational visions. Managers use the AFI strategy framework to explain and predict differences in firm performance. When do employees fail to adopt the organizational values of a firm? when the top managers in the firm are merely paying lip service to the firm's stated values Strategic leadership pertains to the use of power and influence by ________ to direct the activities of others when pursuing an organization's goals. corporate executives The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, CW Paints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures xylene-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is CW Paints Corp. primarily compromising in this scenario? economic responsibilities toward its shareholders The distribution department at Golden Grains Wheat Company has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its bags of wheat. Which of the following strategies does this scenario best illustrate? functional strategy A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this? The company's organizational structure and systems will be designed to support bottom-up strategic initiatives. As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to how to implement business strategy. Which of the following factors most contributes to the U.S. automotive industry being characterized by high entry barriers? Car manufacturers require large-scale production in order to be cost-competitive. Given the structure of the automobile industry, entering the auto manufacturing industry seemed risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche? economies of scale Which of the following features about a buyer indicates that the buyer has high bargaining power? when the buyer operates in an industry where products are undifferentiated Pure Carat Inc. is a company that sells 24-carat gold biscuits to companies that manufacture jewelry. Since the company operates in an industry where many other suppliers sell standardized products, it can most likely only achieve competitive parity. Zoom Zoom Car Rental follows a cost-leadership strategy. Which of the following firms will most likely be its direct competitor? Reliable Rental Cars, which follows a low-cost strategy How does causal ambiguity act as an isolating mechanism for organizations? It makes it difficult for the competitors to understand why a company has been so successful. Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of causal ambiguity. Smooth Fusion Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage? the expertise acquired by the employees in the company Which of the following statements accurately describes a firm's resource stock? Resource stocks are a firm's current level of intangible resources. According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were easy to imitate. The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data? The firm's number of outstanding shares is 25 million. Which of the following is an external performance metric? total return to shareholders Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance? In economic value perspective, analysts not only consider historical costs, but also opportunity costs. When SW International declared a dividend of $20,000,000, its market value increased from $8 billion to $8.5 billion. However, it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million. Thus, this $200 million is referred to as SW International's opportunity cost. By selling a laptop at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the economic value created. Which of the following best describes a strategic trade-off? the tension between value creation and the pressure to keep costs in check When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as stuck in the middle. Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-art treatments in a luxurious setting. Since there are very few spas that offer the same unique services, customers are willing to pay a premium price for its products and services. In this scenario, Swan Song is following a focused differentiation strategy. Unicorn Toys faces stiff competition from Playtime Inc., a rival firm with which Unicorn Toys has achieved differentiation parity. Both firms have invested in state-of-the art production facilities and have similar learning curves of 85 percent. Assuming neither firm can reduce the cost of its input factors, how can Unicorn Toys achieve a competitive advantage as a cost leader? Have a cumulative output that is greater than Playtime Inc.'s. Value drivers contribute to a firm's competitive advantage only if the increase in value creation exceeds the increase in costs. Which of the following business models in the landscaping industry is likely to scale most efficiently? a company that allows users of its website to schedule appointments with landscapers who specialize in the exact service required Sunshine Technologies introduced a tablet that could run completely on solar energy and was less expensive than competitors' tablets. On the downside, it required more frequent charging than the competition's tablets. However, the technology of the Sunshine tablet improved rapidly, thereby improving its recharge frequency. This example describes incremental innovation. Lillypad Toys is a manufacturer of educational toys for children. Six months ago, the company's research and development division came up with an idea for a unique touchscreen device that can be used to introduce children to a number of foreign languages. Three months ago, the company produced a working prototype, and last month the company successfully launched its new device on the commercial market. What should Lillypad's managers prepare for next? increased competition from imitators When does a firm fall into the large competitive chasm between early adopters and early majority? when it fails to successfully launch a mass-market version of its product As a research scholar, Denise had built a helicam as part of her project. The helicam could capture aerial images. Realizing the potential use of this product in movie production and military and rescue operations, she started a new venture where she could customize these helicams to fit the specific needs of the buyers and sell them. Denise can be best described as a(n) entrepreneur. Revolution Watches, a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of developing nations. Which of the following types of diversification strategies is the firm pursuing? geographic diversification strategy Anita has been named CEO of a popular sports apparel company. As CEO, she is tasked with setting the firm's corporate strategy. Which of the following decisions is Anita most likely to make? what range of products the firm should offer A primary advantage of organizing economic activity within firms is the ability to coordinate highly complex tasks to allow for specialized division of labor. Which of the following best illustrates forward vertical integration? A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. ________ is best described as a situation in which one party is more informed than another, because of the possession of private information. Information asymmetry Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing differentiation. Why did Quaker Oats Company's acquisition of Snapple fail? managerial hubris RHC Pharmaceuticals Inc., Lawrence Pharma Inc., and Quincy Pharma Inc. are three rival firms who have set up an alliance to conduct research and find a cure for cancer. They have made almost equal contributions to the research, and they also share their expertise with one another. However, the three firms will continue to behave as competitors in markets for other drugs and vaccines. What is this arrangement best referred to as? co-opetition A candy company called Hearts Aflame Inc. forms an agreement with another candy company called Dreamcatcher Inc. Through this agreement, Hearts Aflame owns 30 percent of Dreamcatcher. However, Dreamcatcher does not own any part of Hearts Aflame. This type of agreement is called a(n) equity alliance. Which of the following is an ineffective practice in alliance management? focusing on developing an alliance-management capability in isolation Which of the following could be used as an example of why a stakeholder strategy approach to business has shortcomings? the nonsustainable debt levels incurred by sovereign governments to fund social programs Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events. At Agile Ltd., a cross-functional team is formed to work on a project for a new client. The team consists of Charles and four other members. At most of the team's presentations to senior management, Charles takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Charles is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Charles did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Agile Ltd. is a typical consequence of adverse selection. Jaronda founded Diamond Communications Inc. in 1993. Ten years later, the company went public. Despite Jaronda's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify? legal personality According to Michael Porter, which of the following is a problem with many publicly traded companies? They have defined value creation too narrowly in terms of financial performance. Maddox Bauxite Extraction Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will give it strong control over all its business activities. Which of these foreign entry modes will Maddox most likely choose? greenfield operation The transnational strategy is similar to a(n) ________ strategy because they both focus on product differentiation and low costs. blue ocean Screaming Eagle, a luxury motorcycle company, sells the same motorcycles and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Screaming Eagle most likely pursue? an international strategy Which of the following is a feature of the Globalization 2.0 stage? Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries. Vassar Systems Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though that may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Vassar Systems? acquisition Two leading home appliance companies, Redwood Inc. and Boxer Technologies, are in competition for market share. In their quest for exciting new products, Redwood employs an open innovation model, while Boxer pursues a closed innovation model. Which of the following statements is most likely true? Boxer will protect its intellectual property with patents and trade secrets. Harvey's, a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Harvey's use? multidivisional Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos? Their culture reflects complex relationships with their employees, customers, and suppliers. Employees learn about an organization's culture through the process of socialization. A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a ________ structure. global matrix