MAN 4720 Midterm Exam | Complete Solutions (Verified Answers)

MAN 4720 Midterm Exam | Complete Solutions (Verified Answers) In the five forces model developed by Michael Porter ----- is not defined narrowly as a firm's closest competitors, but rather more broadly to include other factors industry like the buyers, the suppliers, the potential for new entrants of that of other companies coming in, and the threat of substitutes. a. Stakeholder regulation. b. Competition. c. Barrier to entry. d. Competition. During an interview for a CEO position, a latest digital employer. Ask her. If you get this job, will you focus more on industry effects or firm effects? What should her answer be? A) neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful be B) firm effects. I will be able to have the most impact on those. C) industry effects. They have the most substantial effect on superior firm performance or De. D) Neither. I would focus on business cycle effects. They are the most predictable, so they are worth the most effort. The internet service provider industry in the country of Wakanda is an industry categorized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms. Thus, in the internet service provider industry, the---- A) threat of substitutes is most likely high. B) threat of new entrants is most likely low. C) bargaining power of buyers is most likely low. D) entry barriers are most likely nonexistent. Although you've only been with Asai for three months, you showed great promise as an analyst. As a result, you are asked to take over all the client casework from Jill, an AC analyst who has been promoted to a new position in AC. Jill's client cases is only partially completed. The last thing Jill tells you about this case before she leaves is the following. All you need to do is to complete the external analysis for the client. a. performing a PESTEL analysis and then the value chain analysis. b. applying Porter's Five Forces and then moving on to Weaknesses from SWOT. c. applying a value chain analysis and the SW components of SWOT. d. performing a PESTEL analysis and applying Porter's Five Forces. A client of ASl that manufactures hockey sticks makes an annual assessment of its resources in terms of raw materials, technical expertise and technological knowhow; they also assess the type of competition they face in the sports goods market and scans the environment for potential opportunities that would allow them to expand its business. Which strategy tool would you recommend they use to accomplish this analysis? (Not industry level) a) PESTEL Framework b) Porter's Five Forces c) Value Chain d) SWOT Analysis According to your AS Corporate training session, _____ are best described as unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost. a) strategic strength b) inbound logistics c) core competencies d) absolute advantages In the context of SWOT analysis, which of the following best exemplifies a firm's "weakness? (Internal issue) a) fall in the purchasing power of the firm's customers b) increased competition in the industry where the firm operates c) irregularity in the raw materials supply throughout the industry d) decline in the firm's market share Which of the following accurately summarizes the difference between the resources and capabilities of a firm? a) Resources are tangible; capabilities are tangible and intangible. b) Resources are intangible; capabilities are tangible. c) Resources are tangible and intangible; capabilities are intangible. d) Resources are tangible; capabilities are intangible. Clean Rinse Shampoo has been the leader of hair-cleaning products for about 40 years. However, this company relied too long on its competency without refining or upgrading its product. As a result, other shampoo companies that began to offer organic shampoo gained a competitive advantage over Clean Rinse. This case is an example of a) resource flow. b) dynamic capabilities. c) core rigidity. d) value chain. PESTEL Framework This tool breaks down the macro-environment into six areas: Political, Economic, Socio-cultural, Technological, Environmental, and Legal. By evaluating these areas, businesses can spot opportunities and threats. Porter's Five Forces This framework looks at the industry's competitive environment to understand the dynamics affecting profitability. Strategic Group Mapping This helps businesses figure out where they stand in comparison to competitors and who they are really competing against Structure-Conduct-Performance (SCP) Model This examines the industry from a broader economic standpoint to understand how market structures affect business performance. What is the SCP Framework? The Structure-Conduct-Performance model analyzes how market structure influences firm behavior (conduct), which in turn impacts market outcomes (performance). Developed by Joe S. Bain in 1959, it laid the groundwork for modern competitive strategy—including Porter’s Five Forces. Multidimensional Approach to Measuring Competitive Advantage There are three main dimensions: Economic Value Creation, Accounting Profitability, Shareholder Wealth/Value Strategy The goal-directed actions a firm takes to gain and sustain a competitive advantage. (IMPORTANT) Competitive Advantage A firm's ability to generate above-average returns. VRIO Framework (from AFI model) V: Valuable R: Rare I: Inimitable O: Organized to capture value Professor specifically referenced this as a “very important test.” It may appear as a multiple-choice question or as part of a strategic evaluation scenario. Balanced Scorecard (BSC) A strategy implementation tool (not formulation). Key Questions to Remember: How do customers view us? How do we create value? What core competencies do we need? How do shareholders view us? Business Models vs Strategy Models explain how a firm makes money, not its competitive position Examples likely to show up: Razor-Razorblade (e.g., Gillette) Subscription (e.g., Netflix, Microsoft) Freemium (e.g., LinkedIn, mobile apps) Pay-as-you-go Evolution/disruption of models (e.g., Dollar Shave Club, Uber, Airbnb) Professor says “you will need to know a few of them for your midterm and final”—so memorize the definitions and examples of at least 3–4 models. Competitive Advantage We use the multi-dimensional perspective when trying to measure competitive advantage. Those three metrics are: - economic value creation - opportunity costs - accounting profitability TRUE or FALSE FALSE Billie Jean created a dating App called "Not My Lover." Billie needs a model to help her examine both internal and external metrics that will help her monitor her competitive advantage. You moonwalk your way over to her direction and reply with: - the economic value creation model. - the accounting profitability model. - the shareholder value creation model. - the balanced-scorecard model. (Internal and external, main metrics and not specific but alerts to a problem) What is the triple-bottom-line framework? A business concept that focuses on social, environmental, and economic impacts. What is a unique feature of the ice cream store in Oviedo In the Park? It incorporates solar power to generate enough energy to power the entire operation. What is one way to maximize profits in an ice cream business targeting eco-conscious customers? Offer premium-priced organic ice cream. What is a sustainable practice for sourcing ingredients in a business? Source ingredients locally. What is a recommended practice to minimize waste in a business? Minimize waste. How can a business engage with the community to promote sustainability? Engage with the community to promote sustainable practices. What is a strategy that does not align with the triple-bottom-line philosophy? Focus solely on minimizing costs by using disposable plastic cups and utensils. What is the working definition of strategy used in the course? A. A mission statement describing the company's long-term purpose B. A set of goal-oriented actions in order to achieve competitive advantage C. The company's plan to expand into new markets D. A vision for increasing shareholder value Cafe UP ALL KNIGHT manufacturers commercial quality Specialty Coffee machines that produce "lit" Style Cappuccino. Cafe UP ALL KNIGHT sell's the machine at an extremely low price, (practically at a break even point). However, they make their money by charging their client pricey espresso pods that have to be purchased in order to operate the machine. Which of the following business models does this best illustrate? a. razor-razor-blade b. subscription-based c. freemium b. pay-as-you-go What is the most widely accepted metric for measuring competitive advantage in strategic management? A. Market Share B. Net Profit Margin C. Return on Invested Capital (ROIC) D. Revenue Growth Market share is NOT a reliable metric for competitive advantage because: A. It reflects customer satisfaction, not profits B. It only shows revenue, not profitability C. It measures long-term capital investment D. It tracks competition, not core competencies Which of the following is not an external analysis tool? A. PESTEL B. Strategic Group Mapping C. Value Chain Analysis D. Porter's Five Forces VRIO stands for: A. Value, Risk, Income, Operations B. Value, Rarity, Imitability, Organization C. Vision, Resources, Input, Optimization D. Value, Rarity, Industry, Opportunity What two elements create a firm's core competencies? A. Competitive advantage and strategic fit B. Capabilities and strategy C. Resources and capabilities D. SWOT and value chain Which business model offers a product at a low price but sells required consumables at a premium? A. Subscription B. Pay-as-you-go C. Razor-Razorblade D. Bundling Freemium business models: A. Require a large up-front payment B. Offer basic services for free and charge for premium features C. Combine subscriptions with licensing fees D. Bundle multiple services into one price Which four business models must you know for the midterm? A. Subscription, Crowdsourcing, Freemium, Bait-and-Switch B. Razor-Razorblade, Freemium, Pay-as-you-go, Subscription C. Licensing, Bundling, Crowdsourcing, Reverse Razor D. Low-Touch, Platform, Auction, Franchise What are the five generic business strategies? A. Cost leadership, differentiation, branding, integration, product innovation B. Cost leadership, focused cost leadership, differentiation, focused differentiation, integration C. Broad cost, niche cost, product expansion, service excellence, hybrid D. SWOT, PESTEL, Value Chain, VRIO, Balanced Scorecard A company that fails to fully commit to either cost leadership or differentiation is: A. Experiencing economies of scale B. A niche competitor C. Stuck in the middle D. A price leader Which company was given as an example of integration/best-cost strategy? A. Dollar General B. Apple C. Target D. JCPenney Which of the following is not a value driver? A. Product features B. Economies of scale C. Customer service D. Customization A company that reduces per-unit cost by producing at scale is using: A. Customization B. Value innovation C. Economies of scale D. Customer intimacy The balanced scorecard is best described as: A. A quarterly financial report B. A diagnostic dashboard using internal/external metrics C. A SWOT analysis focused on weaknesses D. A company’s strategic objective hierarchy The triple bottom line includes all of the following EXCEPT: A. Planet B. People C. Profit D. Price Which video is guaranteed to have 8 midterm questions pulled directly from it? A. Session 2 Guest Speaker B. Panopto Jeopardy Game C. CFO Paul Gregg's Financial Analysis Video D. Royal Caribbean Team Strategy Call What's the best way to describe the difference between cost leadership and price leadership? A. Cost leader sets market prices B. Cost leader produces at lower cost; price leader sells at lowest price C. They are always the same D. Cost leader focuses on quality; price leader on value What does a positive Net Present Value (NPV) indicate? A. The project is too expensive B. The internal rate of return is below the hurdle rate C. The internal rate of return exceeds the hurdle rate D. The project’s cash flows are uncertain The internal rate of return (IRR) is defined as: A. The return on equity of a firm B. The interest rate that makes NPV equal zero C. The average cash flow divided by total assets D. The breakeven point in project financing Why did Paul Gregg adjust Starbucks sales by 50% in the Target example? A. To reflect inflation B. To reflect weaker demand in afternoon retail traffic C. To apply a currency conversion D. To include international sales Which data source did Paul Gregg use to calculate sales and costs? A. Internal Target operations data B. Starbucks' 10-K Annual Report C. Financial Times global industry report D. Federal Reserve Business Outlook Why did Paul Gregg exclude lease expenses from Starbucks' cost of sales? A. Starbucks did not lease any properties B. Lease expenses were immaterial C. Target already pays for store space D. It was already deducted in revenue When calculating startup equipment costs, what did Gregg assume for Starbucks at Target? A. $749,000 gross equipment cost per store B. $100,000 for coffee machines only C. $314,000 including building costs D. $25,000 plus depreciation only Which two assumptions had the most impact on the project's IRR? A. Sales percentage and royalty rate B. Equipment depreciation and tax rate C. Square footage and wages D. Marketing budget and training What happened to the IRR when sales dropped from 50% to 40%? A. It rose sharply B. It became negative C. It dropped significantly to 6.2% What major mistake did Team A make in their financial analysis? A. Ignored the licensing fee B. Used international Starbucks data C. Failed to consider incremental cash flows D. Used non-GAAP accounting rules What did Team B add that strengthened their analysis and won them first place? A. More accurate lease data B. Evaluation of Starbucks global expansion C. Subtraction of lost popcorn revenue and cash flows D. Use of MACRS depreciation instead of straight-line You have taken a job with Exxon-Mobil and have identified a major threat in the external environment that you believe the executives may not be aware of. Upon approaching your boss about this he tells you that since the executives have already set the strategy for the year, you should wait until they begin the analysis/scanning phase again before bringing this to their attention. This response is... Implausible, the strategic management process can be thought of as a linear process, but in reality is more messy - with multiple feedback loops/ iterations throughout the process, so this information might be part of a feedback loop that causes them to return to the analysis/scanning phase The Disney company has embarked upon a strategy to be more responsible to stakeholders of the organization beyond their shareholders. They hired you to come up with high-level organizational goals aligned with this strategy. The goals you identified were: Reduce the firm’s carbon footprint by 5% in 3 years, reduce paper waste by 10% in 5 years, Open the Disney Center for the Advancement of Early-Childhood Education within 7 years, and improve profit margins on video sales by 3% each year for 5 years. Which of the following frameworks was most likely to have led you to identify these goals? A. Corporate Social Responsibility B. Balanced Scorecard C. Financial Ratio Analysis D.Triple Bottom Line Walmart is considering implementing an Enterprise Resource Planning system (ERP) across the entire organization, but will roll it out one functional area at a time. Walmart’s roll-out strategy is to implement first in a non-mission-critical functional area (one that doesn’t interface with the product/service or customers directly) to mitigate the losses if the ERP implementation fails. As a consultant attached to Walmart, use Value Chain Analysis logic to make an appropriate recommendation of a good first functional area for the implementation. A. Don’t implement at all, close up shop and liquidate all assets B. Store Operations because it is a primary activity C. Human Resources because it is a primary activity D. Sales and Marketing because it is a support activity E. Technology development because it is a support activity Prada has asked you to evaluate how they have bundled their resources to create sustainable advantages. In your analysis you find that their resources would create value for the company and customers. , these resources are not possessed by any of their competitors., they do not have other desirable characteristics of resources. Resource-based view of the firm, what should your report to Prada management say?