Chapter 01: Creating Competitive Advantages
True / False Questions
1. Hewlett-Packard's failure and success under the leadership
first of Carly Fiorina and then of Mark Hurd was said to be a
direct result of the quality of leadership of each of these
CEOs. According to the text, this would be an example of the
"romantic" perspective of leadership.
18. In the Mintzberg model, organizational decisions determined
only by analysis are intended strategy.
19. Strategy analysis is the
environments of the firm.
study
of
the
external
20. Both the internal and external environments of a firm must
be analyzed as well as the goals of the firm before managers
can formulate and implement appropriate strategies.
2. Strategic management consists of the analyses, decisions,
and actions an organization undertakes in order to create and
sustain competitive advantages.
21. Strategy formulation involves decisions made by firms
regarding investments, commitments, and other aspects of
operations that create and sustain competitive advantage.
3. Strategic management is concerned with the analysis of
strategic goals as stated in the vision, mission, and strategic
objectives of a firm.
22. All successful firms compete and outperform their rivals
by developing bases for competitive advantage, which
can be achieved only through cost leadership.
4. The three interrelated and principal activities of strategic
management are: strategy analysis, strategy formulation, and
strategy implementation.
23. Business-level strategy focuses on (1) what businesses
to compete in and (2) the management of the business
portfolio to create synergy among its businesses.
5. Strategic management is not concerned with how to
create competitive advantage in the marketplace.
24. Corporate-level strategy addresses how firms compete
and outperform their rivals as well as achieve and
sustain competitive advantages.
6. Management innovations such as total quality, just-in-time,
benchmarking, business process reengineering, and
outsourcing are important, but not enough for building
sustainable competitive advantage.
7.
25. International strategy involves decisions
appropriate entry strategy and attaining
advantage in international markets.
concerning
competitive
Making trade-off decisions between effectiveness and
efficiency is central to the practice of strategic management.
26. Entrepreneurial activity aimed at new value creation is
not a major engine for economic growth.
8. Only shareholders in a publicly held company are
stakeholders because they are the only group that has a
stake in the success of the organization.
27. Strategy implementation involves actions that carry out the
formulated strategy including proper strategic controls,
organizational designs, and leadership.
9. Strategic management is only concerned with short-term
perspectives.
28. Effective leadership can play a large role in fostering
corporate entrepreneurship. Corporate entrepreneurship can
have a very positive impact on the bottom line of a firm.
10. Focusing on a single stakeholder is a good strategic
principle for managers to follow.
11. According to Peter Senge, a leading strategic management
author, creative tension results from the need to incorporate
both short-term and long-term perspectives in strategic
management.
12. Shareholders expect only short-term value and therefore
good managers should only focus on meeting short-term
performance targets.
13. Focusing on the short term and efficiency is always a bad
management principle.
14. Ambidexterity refers to a manager's challenge to align
resources, without having to take advantage of existing
product markets or to proactively explore new
opportunities.
15. According to a recent study involving 41 business units in 10
multinational companies, one ambidextrous behavior
exhibited by managers is that of being brokers who are
always looking to build internal networks.
16. According to Henry Mintzberg, a management scholar,
most firms realize their original intended strategy.
17. The final realized strategy of a firm is a combination of
deliberate and emergent strategies.
29. Firms must exercise either informational control or
behavioral control in order to assure proper strategy
implementation.
30. Leaders are responsible for creating a learning
organization so that the entire organization can benefit
only from the individual talents.
31. The three primary participants in corporate governance
are: (1) the shareholders, (2) the management (led by the
chief executive officer), and (3) the employees.
32. Decisions by boards of directors are always consistent
with shareholder interests.
33. Ensuring effective corporate governance requires an
effective and engaged board of directors, uninvolved
shareholders, and proper managerial rewards and
incentives.
34. Auditors, banks, and analysts are external control
mechanisms to ensure effective corporate governance.
35. Former Chrysler vice chairman Robert Lutz observed
that companies exist to serve the shareholder and
create shareholder value. He insisted that the only
person who owns the company is the person who paid
good money for it. This is an example of a symbiotic
approach to stakeholder management.
36. Stakeholders make various claims on a company. Their
interests must be taken into account in the strategic
management process.
37. Stockholders in a company are the only individuals with
an interest in the financial performance of the company.
38. Stockholders, employees, and the community-at-large are
among the stakeholders of a firm.
39. Symbiosis is the ability to recognize interdependencies
among the interests of multiple stakeholders within and
outside an organization.
40. Procter and Gamble developed a laundry detergent
compaction technique that appeals to consumers, retailers,
shipping and wholesalers, and environmentalists. This is an
example of stakeholder symbiosis.
41. Partnering with governments, communities, suppliers,
customers, and rivals is a way to manage conflicting
stakeholder interests.
54. Sustainability is being increasingly recognized as a source of
cost efficiencies and revenue growth.
55. The ROIs on sustainability projects are often very difficult to
quantify because the data necessary to calculate ROI
accurately are often not available when it comes to
sustainability projects.
56. Many of the benefits from sustainability projects are
intangible, making it difficult to calculate the ROI.
57. The intangible benefits of sustainability projects, such as
reducing risks, staying ahead of regulations, pleasing
communities, and enhancing employee morale, are
substantial even when they are difficult to quantify.
58. Sustainability projects often require
payback windows than other projects.
shorter-term
59. Sustainability initiatives rarely have difficulty making it
through the conventional approval process within
corporations because managers are not concerned
about their return on investment.
42. The Higgs Index enables companies to compare
environmental performance outcomes in order to improve
their environmental impact and is an example of how rivals
work together to resolve complex problems.
60. The ROI on a sustainability project generally is easy to
quantify.
43. As a stakeholder group, creditors are interested in taxes
and compliance with regulations.
61. Strategic management requires managers at all levels of
the organization to take a segregated view of the
organization.
44. As a stakeholder group, customers are interested in
dividends and capital appreciation.
45. As a stakeholder group, communities are interested in good
citizenship behavior.
46. Social responsibility is the idea that organizations are not
only accountable to stockholders but also to the communityat-large.
47. What constitutes socially responsible behavior changes over
time.
What constitutes socially responsible behavior changes over
time. In the 1970s affirmative action was a high priority;
during the 1990s and up to the present time, the public has
been concerned about environmental quality.
62. The strategic management process should be
addressed only by top-level executives. Mid-level and
low-level employees are best equipped to implement the
strategies of the organization.
63. To develop and mobilize people and other assets, leaders
are needed throughout the organization.
64. In the strategic management process, only local line
leaders and executive leaders are needed.
65. Internal networks have great positional power and
formal authority.
66. Local
line
leaders
responsibility.
have
little
profit-and-loss
48. Shell, NEC, and Procter and Gamble have been measuring
their performance according to what has been called a triple
bottom line. This technique involves an assessment of
financial, social, and environmental performance.
67. Executive leaders champion and guide ideas.
49. Demands for greater
decreasing today.
69. Richard Branson, the founder of the Virgin Group, is well
known for creating an inclusive organizational structure in
which anybody in the organization can be involved in
generating and activating upon new business ideas.
corporate
responsibility
are
50. A key stakeholder group that appears to be particularly
susceptible to corporate social responsibility (CSR) initiatives
is customers.
51. There is a positive influence of CSR on the consumer
evaluation of companies and their purchasing decisions,
according to recent studies.
52. Environmental sustainability is a value embraced by the
most competitive and successful multinational companies.
53. For many successful firms, environmental values are
not central to the company culture and management
processes.
68. Local line leaders are key in setting the tone for the
empowerment of employees.
70. To inculcate a strategic management perspective, managers
must often make a major effort to effect transformational
change.
71. To effect transformational change in an organization,
managers must communicate extensively and provide
incentives, training, and development.
72. Nancy Snyder, corporate vice president of Whirlpool, shifted
the reputation of the firm to that of an innovator by investing
financially
in
capital
spending.
73. others
Successful
executives
do not
reward
honestywhat
and
input
and
do
not
show their
interest
in learning
are
thinking.
74. According to the CEO of IDEO, Tim Brown, spotting and
promoting at any level in the firm is important.
75. There are few benefits to having broad investment
throughout
the
organization
in
the
strategic
management process.
76. Showing interest in learning what others are thinking is
a leadership weakness.
77. The vision of an organization is the top level of its hierarchy
of organizational goals. The vision statement should be
massively inspiring, overarching, and long term.
78. Strategic objectives
statements.
are
more
specific
than
vision
79. According to the text, a mission statement is an
overarching statement that is massively inspiring, long
term, and only discusses the purpose of the company.
80.
A mission statement encompasses both the purpose of the
organization as well as its basis of competition, and the
basis of its competitive advantage.
81.
Strategic objectives should be measurable, specific,
appropriate, and realistic, but not constrained by time
deadlines.
82.
Much research has supported the notion that
individuals work much harder when they are asked to
do their best rather than when they are striving toward
a specific goal.
83.
Objectives in organizations should be clear, stated, and
known by employees throughout the organization.
84.
Strategic management should only include short-term
objectives. Long-term objectives are covered in the
vision statement of the organization.
85.
Organizational goals and objectives should be vague in
order to allow for changes in strategy.
86.
An idealistic vision can arouse employee enthusiasm
and therefore is a good vision.
87.
One of the reasons a vision fails is that too much focus can
lead to missed opportunities.
88.
Visions need to be anchored in reality in order to be
successful.
89. Effective mission statements incorporate the concept of
stakeholder management, suggesting that organizations
must respond to a single constituency.
B.
C.
D.
romantic and internal control.
external control and unromantic.
romantic and external control.
93. A CEO made a lot of mistakes in assessing the market and
the competitive conditions and improperly redesigning the
organization into numerous business units. Such errors led
to significant performance declines. According to the text,
this example illustrates the __________ perspective of
leadership.
A. external control
B. romantic
C. internal mechanism
D. operational
94. According to the external control view of leadership, which of
the following factors would not be considered an external
factor that might positively or negatively affect a firm's
success?
A. economic downturns
B. governmental legislation
C. outbreak of war
D. company employee morale
95. Melvin Alexander, executive director of Principled Solutions
Enterprise, a management consulting firm specializing in
health care, suggests that environmental changes oblige
firms to make strategic changes in order to survive. Which of
the following is one of the strategic changes he foresees will
occur in the next three to five years?
A. changes in the behavior of the health care consumers
B. reduction in the number of available medical doctors
C. increases in the number of locations of health care facilities
D. decreases in information technology investment
96. According to the text, the strategic management process
entails three ongoing processes. They are
A. analyses, actions, and synthesis.
B. analyses, decisions, and actions.
C. analyses, evaluation, and critique.
D. analyses, synthesis, and decisions.
97. Management
innovations
such
as
total
quality,
benchmarking, and business process reengineering cannot
lead to sustainable competitive advantage because
A. companies that have implemented these techniques have
lost money.
B. there is no proof that these techniques work.
C. they cost too much money and effort to implement.
D. every company is trying to implement them.
91. When formulating strategic objectives, managers need to
remember that too many objectives can result in a lack of
focus and diminished results.
98. The organizational versus the individual rationality
perspective suggests that objectives that are
A. good for a functional area are always good for the overall
organization.
B. good for the overall organization are always best for a
functional area.
C. best for a functional area may not be best for the overall
organization.
D. best for one functional area will never be best for all
functional areas.
Multiple Choice Questions
92. The text addresses two perspectives of leadership as well as
their implications. These two perspectives are
A. romantic and unromantic.
99. The four key attributes of strategic management include the
idea that strategy must
A. be directed toward overall organizational goals and
objectives.
90. A good mission statement, by addressing each principal
theme, must communicate why an organization is special
and different.
B.
C.
D.
be focused only on long-term objectives.
be focused on only one specific area of an organization.
focus only on competitor strengths.
100.The four key attributes of strategic management include all of
the following except
A. including multiple stakeholder interests in decision making.
B. incorporating both short-term and long-term perspectives.
C. recognizing the trade-offs between effectiveness and
efficiency.
D. emphasis on the attainment of short-term objectives.
101.Effectiveness is often defined as
A. doing things right.
B. stakeholder satisfaction.
C. doing the right thing.
D. productivity enhancement.
102.In choosing to focus on stakeholders, which of the following
will not lead to success for a manager?
A. shareholders and employees
B. employees and suppliers
C. customers and the community at large
D. customers only
103. In strategic management, both the short-term and long-term
perspectives need to be considered because
A. shareholder value is only measured by short-term returns.
B. shareholders only care about long-term returns.
C. long-term vision precludes the analysis of present operating
needs.
D. the creative tension between the two forces managers to
develop more successful strategy.
104. Strategic management involves the recognition of trade-offs
between effectiveness and
A.
cost.
B.
value.
C.
return on investment.
D.
efficiency.
105. All of the following are ambidextrous behaviors except
A.
taking initiative and being alert to opportunities beyond the
job description.
B.
being cooperative and seeking opportunities to combine
personal efforts with that of others.
C.
intensely focusing on the responsibilities of one
individual and maximizing the output of the department
in the organization in which that individual works.
D.
being brokers, always looking to build internal linkages.
106. Ambidextrous behaviors in individuals illustrate how a dual
capacity for _______ can be woven into the fabric of an
organization at the individual level.
A.
alignment and adaptability
B.
alignment and transparency
C.
alignment and internal linkages
D.
alignment and efficiency
107. According to Henry Mintzberg, the final realized strategy of a
firm is
A.
a combination of deliberate and emergent strategies.
B.
a combination of deliberate and differentiation strategies.
C.
not deliberate.
D.
a result of unrealized intended strategy.
108. _____ may be considered the advance work that must be
done in order to effectively formulate and implement
strategies.
A.
Goal setting
B.
Corporate entrepreneurship
C.
Strategy analysis
D.
Organizational design
109. Strategy analysis is the starting point of the strategic
management process and consists of the
A.
analysis only of the vision, mission, and objectives of the
firm.
B.
analysis of the relevant internal and external environmental
factors only.
C.
analysis of relevant competitors only.
D.
matching of vision, mission, and objectives with the
relevant internal and external environmental factors.
110. Strategy formulation at the business level addresses best
how to compete in a given business:
A.
to attain competitive advantage
B.
to reduce costs
C.
to decrease buyer power
D.
to thwart entry of new rivals
111. Corporate level strategy focuses on what businesses to
compete in and
A.
how business can be managed to achieve synergy.
B.
how business can be managed to reduce synergy.
C.
how the firm can work as a stand-alone entity.
D.
how the firm can create more value by operating alone.
112. Corporate-level strategy looks at how to manage the
______ of its businesses to create synergies.
A.
portfolio
B.
stock prices
C.
competitors
D.
market pricing
113. Entering foreign markets requires firms to ascertain
foremost how they will attain
A.
market share.
B.
low costs.
C.
competitive advantage.
D.
low returns on investment.
114. New value creation is a major engine for economic growth
and is the main focus of ___________ strategy.
A.
portfolio
B.
corporate-level
C.
business-level
D.
entrepreneurial
115. Two types of strategic control that firms must exercise for
good strategy implementation are
A.
informational and confrontational.
B.
confrontational and behavioral.
C.
behavioral and financial.
D.
informational and behavioral.
116. Effective organizational design means that firms must have
________ that are consistent with their strategy.
A.
designs and plans
B.
organizational structures and designs
C.
adopters and designs
D.
adopters and plans
117. Learning organizations permit the entire organization to
benefit from ____________ talents.
A.
internal and external
B.
individual and collective
C.
internal and collective
D.
external and individual
118.
A.
B.
C.
D.
Effective leaders set a direction and develop an
organization so that it is committed to excellence and
_______ behavior.
performant
strategic
ethical
positive
119. Strategies should be formulated that enhance foremost the
____________ capacity of a firm.
A.
innovative
B.
learning
C.
implementation
D.
business-level
120. The three participants in corporate governance are the
shareholders,
A.
board of directors, and employees.
B.
labor unions, and employees.
C.
board of directors, and management.
D.
banks and lending institutions, and management.
121. While working to prioritize and fulfill their responsibilities,
members of the board of directors of an organization should
A.
represent their own interests.
B.
represent the interests of the shareholders.
C.
direct all actions of the CEO.
D.
emphasize the importance of short-term goals.
122.
A.
B.
C.
D.
Members of boards of directors are
appointed by the Securities and Exchange Commission.
elected by the shareholders as their representatives.
elected by the public.
only allowed to serve one term of four years.
123. An organization is responsible to many different entities. In
order to meet the demands of these groups, organizations
must participate in stakeholder management. Stakeholder
management means that
A.
interests of the stockholders are not the only interests
that matter.
B.
stakeholders are second in importance to the stockholders.
C.
stakeholders and managers inevitably work at crosspurposes.
D.
all stakeholders receive financial rewards.
124. Stakeholders are
A.
a new way to describe stockholders.
B.
individuals, groups, and organizations who have a stake
in the success of the organization.
C.
creditors who hold a lien on the assets of the organization.
D.
attorneys and their clients who sue the organization.
125. Procter and Gamble has perfected a technique for
compacting cleaning powder into a liquid concentration.
Consumers, retailers, shipping and wholesalers, and
environmentalists all have benefited from the resulting
change in consumer shopping habits and the revolution in
A.
B.
C.
D.
industry supply-chain economics. According to the text, this
is an example of
zero-sum relationship among stakeholders.
stakeholder symbiosis.
rewarding stakeholders.
emphasizing financial returns.
126. There are several perspectives of competition. One
perspective is zero-sum thinking. Zero-sum thinking means
that
A.
all parts of the organization gain at no loss.
B.
in order for someone to gain others must experience no
gain or benefit.
C.
one can only gain at the expense of someone else.
D.
everyone in the organization shares gains and losses
equally.
127. Managers should do more than focus on short-term
financial performance. One concept that helps managers
do this is stakeholder symbiosis. This means that
A.
stakeholders are dependent on each other for their
success.
B.
stakeholders look out for their individual interests.
C.
one can only gain at the expense of someone else.
D.
all stakeholders want to maximize shareholder returns.
128.
A.
B.
C.
D.
Employee stakeholders are concerned with
taxes, warranties, and regulations.
wages, benefits, and job security.
good citizenship behavior.
dividends.
129. Stockholders as a stakeholder group are interested
primarily by
A.
payment of interest and repayment of principal.
B.
value and warranties.
C.
dividends and capital appreciation.
D.
taxes and compliance with regulations.
130. The Sustainable Apparel Coalition accounts for more than
one-third of the global
A.
apparel and washing product industry.
B.
consumer product industry.
C.
refinery industry.
D.
apparel and footwear industry.
131. Wall Street executives have received excessive bonus pay
in the past. This concerns which of the following
stakeholder groups most directly?
A.
government
B.
suppliers
C.
creditors
D.
stockholders
132.
A.
B.
C.
D.
133.
A.
B.
C.
D.
Supplier stakeholders are concerned with
assurance of a continued relationship with the firm.
employee benefits.
safe working conditions.
capital appreciation.
Community stakeholders are concerned primarily with
product warranties.
corporate citizenship behavior.
capital appreciation.
repayment of principal.
134. Firms must be aware of goals other than short-term profit
maximization. One area of concern should be social
responsibility, which is the
A.
expectation that business will strive to improve the
overall welfare of society.
B.
idea that organizations are solely responsible to local
citizens.
C.
fact that court costs could impact the financial bottom line.
D.
idea that businesses are responsible for maintaining a
healthy social climate for their employees.
135. According to the text, the triple bottom line approach to
corporate accounting includes which three components?
A.
financial, environmental, and customer
B.
financial, organizational, and customer
C.
financial, environmental, and social
D.
financial, organizational, and psychological
136. Demands for greater corporate responsibility
accelerated today. They focus on issues such as
A.
labor standards and environmental sustainability.
B.
taxation.
C.
product benefits.
D.
service benefits.
have
137. A key stakeholder group that is particularly susceptible to
corporate social responsibility (CSR) initiatives is
A.
suppliers.
B.
rivals.
C.
government agencies.
D.
consumers.
A key stakeholder group that appears to be particularly
susceptible to corporate social responsibility (CSR)
initiatives is customers. Surveys indicate a strong positive
relationship between CSR behaviors and consumer reaction
to products and services of a firm.
138. According to the Corporate Citizenship poll conducted by
Cone Communications, most Americans say they would be
likely to switch brands to one associated with a good cause,
if there are similarities between
A.
price and availability.
B.
availability and quality.
C.
price and quality.
D.
price and durability.
A Corporate Citizenship poll conducted by Cone Communications
found that 84 percent of Americans say they would be likely
to switch brands to one associated with a good cause, if
price and quality are similar.
139. According to a CEO survey by Accenture, ____________
are not mutually exclusive corporate goals.
A.
quality and profitability
B.
sustainability and profitability
C.
ROI and quality
D.
availability and ROI
140. The Clorox Green Works line of plant-based cleaning
materials captured 42 percent of the natural cleaning
products market in its first year. This is an example of the
benefit of
A.
sustainability efforts.
B.
cost reduction efforts.
C.
marketing programs.
D.
process management.
141. Northrup Grumman saved $2 million in energy costs at a
single facility by installing reflective roofs and fluorescent
lighting, replacing old equipment, and making minor
temperature and humidity-level adjustments. This is an
example of the benefit of
A.
increasing revenue efforts.
B.
marketing programs.
C.
sustainability efforts.
D.
process management.
142. The Fairmont Royal York in Toronto invested $25,000 in
an energy conservation program to replace leaky steam
traps and fix leaks, which resulted in an annual savings
of over $200,000. This is an example of a sustainability
effort to
A.
increase innovation.
B.
decrease revenue.
C.
lower costs.
D.
increase customers.
143. The ROI on sustainability efforts can be difficult to
quantify because
A.
an excess of necessary data for accurate calculation is
readily available.
B.
benefits from such projects are tangible.
C.
the payback period is on a different time frame.
D.
the payback period is on the same time frame.
144. Sustainability programs often find their success beyond
company boundaries, thus ______ systems and _____
metrics cannot capture all of the relevant numbers.
A.
external; bio
B.
internal; process
C.
external; external
D.
internal; internal
145. Traditional financial models are built around relatively
easy-to-measure, monetized results; whereas, the
benefits of sustainability projects involve
A.
clear tangibles.
B.
clear intangibles.
C.
fuzzy tangibles.
D.
fuzzy intangibles.
146. The case for sustainability projects needs to be made on
the basis of a more holistic and comprehensive
understanding of all the _____________ benefits.
A.
measurable and unmeasurable
B.
financial and physical
C.
tangible and intangible
D.
measurable and physical
147. Some benefits of sustainability projects include
A. reducing risks.
B. lagging behind regulations.
C. displeasing communities.
D. ignoring employee morale.
148. Many organizations have a large number of functional areas
with very diverse and sometimes competing interests. Such
organizations will be most effective if
A.
each functional area focuses on achieving their own goals.
B.
goals are defined at the bottom and implemented at the top.
C.
functional areas work together to attain overall goals.
D.
management and employees have separate goals.
149. Strategy formulation and implementation is a challenging
ongoing process. To be effective, it should not involve
A.
the CEO and the board of directors.
B.
the board of directors, CEO, and CFO.
C.
rivals.
D.
line and staff managers.
150. The text argues that a strategic perspective in an
organization should be emphasized
A.
at the top of the organization.
B.
at the middle of the organization.
C.
throughout the organization.
D.
from the bottom up.
158.
A.
B.
C.
D.
Transformational change involves
extensive communication.
little training.
no employee development.
few incentives.
159.
Whirlpool's transformation under corporate vice president
Nancy Snyder included financial investments in
shareholder dividends.
capital spending.
community development.
paying down borrowed debt.
A.
B.
C.
D.
160.
151. Peter Senge, of MIT, recognized three types of leaders.
__________ are individuals that, although having little
positional power and formal authority, generate their power
through the conviction and clarity of their ideas.
A.
Local line leaders
B.
Executive leaders
C.
Internal networkers
D.
Shop floor leaders
152. Peter Senge, of MIT, recognized three types of leaders.
These individuals champion and guide ideas, create a
learning infrastructure, and establish a domain for taking
action.
A.
local line leaders
B.
executive leaders
C.
internal networkers
D.
shop floor leaders
153. Leadership is a necessary (but not sufficient) condition for
organizational success. Leaders should emerge at which
level(s) of an organization?
A.
only at the top
B.
in the middle
C.
throughout the organization
D.
only during times of change
154.
A.
B.
C.
D.
their
power
through
B.
C.
D.
161.
A.
B.
C.
D.
162.
A.
B.
C.
D.
163.
Local line leaders have __________ responsibility.
local
executive
profit-and-loss
no
155. Internal networks generate
_________ of their ideas.
A.
validity and correctness
B.
conviction and clarity
C.
validation and recognition
D.
approval and awareness
A.
the
156. Executive leaders champion and guide ideas by
A.
reinforcing ideas that did not work.
B.
creating a learning infrastructure.
C.
validating their formal authority.
D.
increasing their personal power.
157. Richard Branson, founder of the Virgin Group, empowers
his companies through a(n) _______ structure in which
anyone can bring forth new ideas.
A.
formal
B.
hierarchal
C.
multi-level
D.
informal
Methods by which successful executives show their
interest in learning what others are thinking include
holding town hall meetings and consulting employees
on what they would do if in charge.
holding town hall meetings and consulting bankers on
what they would do if in charge.
holding retreats and consulting rivals on what they would
do if in charge.
consulting rivals and consulting investment bankers.
Tim Brown, CEO of IDEO, believes that the ________ of a
person should not dictate the level of influence their ideas
should be accorded.
age
seniority
position
education
The hierarchy of organizational goals is in this order (least
specific to most specific):
vision statements, strategic objectives, mission statements
mission statements, strategic objectives, vision statements
vision statements, mission statements, strategic
objectives
mission statements, vision statements, strategic objectives
A.
B.
C.
D.
Vision statements are used to create a better
understanding of the overall purpose and direction of the
organization. Vision statements
are very specific.
provide specific objectives.
set organizational structure.
evoke powerful and compelling mental images.
164.
A.
B.
C.
D.
Effective vision statements include
all strategic directions of the organization.
a brief statement of the company's direction.
strategic posturing and future objectives.
financial objectives and projected figures.
165.
A.
B.
C.
D.
WellPoint Health Network states: WellPoint will redefine
our industry: through a new generation of consumerfriendly products that put individuals back in control of their
future. This is an example of a
strategic objective.
vision statement.
vague statement of direction.
line manager's individual goal.
166. Although such visions cannot be accurately measured by a
specific indicator of how well they are being achieved, they
A.
B.
C.
D.
do provide a fundamental statement of the __________ of
an organization.
values, aspirations, and goals
expected returns and limitations
outstanding debt
credibility
A.
B.
C.
D.
overall company goals. Proper _______ can help to resolve
conflicts when they arise.
mission statements
vision statements
organization structure
objectives
167. In contrast to the vision of an organization, its mission
should
A.
be shorter in length.
B.
encompass both the purpose of the company as well
as the basis of competition.
C.
encompass all the major rules and regulations of the
corporate work force.
D.
be less detailed.
Chapter 02: Analyzing the External Environment of the Firm
True / False Questions
168. TThe vision and mission statements of a company set the
overall direction of the organization. Strategic objectives
serve what role?
A.
operationalize the mission statement
B.
modify the mission statement
C.
are a shorter version of the mission statement
D.
are only clarified by the board of directors
3. Ted Turner saw the potential of 24-hour news before anyone
else. This is an example of perceptual acuity.
169. Successful organizations are effective in motivating people.
Employees work best when
A.
they are asked to do their best.
B.
work requirements are vague and unclear.
C.
they are striving toward specific goals.
D.
they are guided by an abstract mission statement.
170. Fortune Brands states they will cut corporate overhead
costs by $30 million a year. This is an example of a
A.
nonfinancial strategic objective.
B.
financial strategic objective.
C.
vision statement.
D.
mission statement.
171.We want to be the top-ranked supplier to our customers.
(PPG) This is an example of a
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.
172.In large organizations, conflicts can arise between functional
areas. In order to resolve these conflicts, strategic objectives
A. put financial objectives above human considerations.
B. align departments toward departmental goals.
C. help resolve conflicts through their common purpose.
D. cause debate and increase conflict.
173.Which of the following is not an example of a financial
strategic objective?
A. Increase sales growth 6 percent to 8 percent and accelerate
core net earnings growth from 13 percent to15 percent per
share in each of the next 5 years. (Procter & Gamble)
B. Reduce volatile air emissions 15 percent by 2015 from
2010 base year, indexed to net sales. (3M)
C. Generate Internet-related revenue of $1.5 billion.
(AutoNation)
D. Cut corporate overhead costs by $30 million per year.
(Fortune Brands)
174.In large organizations, the potential exists for different parts
of an organization to pursue its own goals rather than the
1. Environmental scanning and competitor intelligence provide
important inputs for forecasting activities.
2. Perceptual acuity, according to Ram Charan, is the
ability to know for certain what will happen in the future.
4. Perceptual acuity can be improved by sitting alone and
not consulting others.
5. One CEO gets together with his critical people for half a
day every eight weeks to discuss what's new and what's
going on in the world. The setting is informal, and
outsiders often attend. This is an example of how not to
improve perceptual acuity.
6. A CEO meets four times a year with about four other CEOS
of large, but noncompeting, diverse global companies. This
is an example of how to improve perceptual acuity.
7. Two companies ask outsiders to critique strategy during their
board's strategy sessions. Such input typically leads to
spirited discussions that provide valued input on the hinge
assumptions and options that are under consideration. This
is an example of how to improve perceptual acuity.
8. Scenario planning is useful for anticipating major future
changes in the external environment.
9. Environmental monitoring is not an input to forecasting.
10. When management assumptions, premises, or beliefs are
incorrect or when internal inconsistencies among them
render the overall theory of the business invalid, the strategy
of the firm needs to be updated.
11. Consider the example of Salemi Industries and the
launch of its product, Cell Zone, in 2005. Although it
tried to carefully analyze its potential market, it misread
the market demand for the product and paid a steep
price for its mistake. This is an example of internal
forecasting.
12. If companies miscalculate the market, opportunities will be
lost.
13. Blockbuster, Borders, Circuit City, and Radio Shack are
examples of firms that did not have good perceptual acuity.
14. Environmental monitoring deals with tracking changes in
environmental trends that are often uncovered during the
environmental scanning process.
15. Competitor Intelligence (CI) is a tool that can provide
management with early warnings about both threats and
opportunities.
16. Competitive intelligence generally does not benefit very
much from gathering information on competitors from
sources in the public domain.
17. Even with all of the advances in recent years,
forecasting is typically considered more of an art than a
science and it is of little use in generating accurate
predictions.
18. Environmental scanning involves surveillance of the
internal environment of a firm to predict environmental
changes and detect changes already under way.
33. The SWOT analysis framework leads to a conceptually
simple approach to identifying the important factors that
constrain strategic choices without sacrificing analytical rigor.
34. Steve Jobs, the former chairman of Apple, used intuition and
judgment to forecast the future.
35. Scenario analysis is a form of environmental forecasting.
36. Scenario analysis
historical trends.
relies
on
the
extrapolation
of
19. Scenario analysis is a superficial approach to
forecasting that seeks to explore possible developments
that many only be connected to the past.
37. An industry is composed of a set of firms that produce
similar products or services, sell to similar customers, and
use similar methods of production.
20. SWOT analysis is useful in part because it obliges the firm to
act proactively by putting an emphasis on identifying
opportunities and threats that constrain the action choices a
firm might make as a result of its internal and external
environmental scan.
38. Only one scenario is considered in a scenario analysis
in order to envision possible future outcomes.
21. In the SWOT framework, the Strengths and Weaknesses
are external environmental factors to consider.
39. Although changes in the general environment may often
adversely or favorably impact a firm, they seldom alter
an entire industry.
40. The impact of a demographic trend varies across industries.
22. In the SWOT framework, Opportunities and Threats are
environmental conditions internal to the firm.
41. A major sociocultural trend in the United States is the
increased educational attainment by women.
23. A Motel 6 executive indicates that he regularly reviews
the number of rooms in the budget segment of the
industry in the United States and the difference between
the average daily room rate and the consumer price
index (CPI). This is an example of Competitive
Intelligence.
42. Technological innovations can create entirely new industries
and alter the boundaries of industries.
24. Keeping track of competitors has become more difficult
today with the amount of information that is available on
the Internet.
44. The Internet is a leading component in the rising emergence
of digital technology.
25. Code of Ethics guidelines can assist companies in avoiding
aggressive competitive intelligence gathering that results
from illegal behaviors.
45. Globalization provides opportunities to access larger
potential markets and a narrow base of production
factors such as raw materials, labor, skilled managers,
and technical professionals.
26. Even with all of the advances in recent years,
forecasting is typically considered more of an art than a
science and it is of little use in generating accurate
predictions.
46. A demographic trend in the United States, the aging of the
population, has important implications for the economic
segment (in terms of tax policies to provide benefits to
increasing numbers of older citizens).
27. Scenario planning is usually concerned with short-term
forecasts.
47. Crowdsourcing is used by companies to develop products.
28. The strengths and weaknesses of a SWOT analysis refer
to the external conditions of the firm.
29. The opportunities and threats of a SWOT analysis refer
to the internal conditions of the firm.
30. To understand the business environment of a particular firm,
you need to analyze both the general environment and the
firm industry and competitive environment..
31. Underestimating uncertainty can lead to strategies that
neither defend against threats nor take advantage of
opportunities.
32. PPG Industries has developed four alternative futures
based on differing assumptions about two key
variables: the cost of energy and the extent of
opportunity for growth in emerging markets. This is
called demand monitoring.
43. There is generally a weak relationship between equity
markets (e.g., New York Stock Exchange) and economic
indicators.
48. By inviting customers to write online reviews, Amazon used
crowdsourcing to build value to its offer.
49. Research shows that many immigrants to the United States
are prodigious job creators. This supports legislative battles
to increase the number of H-1B visas for foreign workers.
50. It is not important to consider the potential impact of
government
regulation
when
developing
new
innovations.
51. Developments in technology and other innovations can
create new industries and alter the boundaries of existing
industries.
52. The competitive environment consists of many factors that
are particularly relevant to company strategy. This includes
competitors, customers, and suppliers.
53. The Porter five-forces model is designed to help us
understand how social attitudes and cultural values
impact U.S. businesses.
54. The five-forces model helps to determine both the nature of
competition in an industry and the profit potential for the
industry.
55. In some industries, high switching costs can act as an
important barrier to entry.
56. Industries characterized by high economies of scale typically
attract fewer new entrants.
57. The power of a buyer group is increased if the buyer
group has less concentration than the supplier group.
58. Buyer power tends to be higher if suppliers provide
undifferentiated or standard products.
59. Supplier power tends to be highest in industries where
products are vital to buyers, where switching from one
supplier to another is very costly, and where there are
many suppliers.
60. The power of suppliers will be enhanced if they are able to
maintain a credible threat of forward integration.
complementors, such as the licensee rights given to outside
firms to develop games using the Nintendo game console.
75. Apple used complementors to gain market share in the
digital music business.
76. Establishing long-term mutually beneficial relationships with
suppliers improves the company ability to implement just-intime (JIT) inventory systems, which let it manage inventories
better and respond quickly to market demands.
77. In conducting a good industry analysis that will yield an
improved understanding of the root causes of
profitability, rigorous quantification of the five forces is
not necessary.
78. Competition tends to be more intense among firms within a
strategic group than between strategic groups.
79. The same environmental trend or event may have a very
different impact on different strategic groups within the same
industry.
80. The use of the strategic group concept is generally not
helpful in charting the future directions of the strategies
of a firm.
61. The more attractive the price/performance ratio of substitute
products, the tighter it constrains the ability of an industry to
charge high prices.
81. Strategic groupings help a firm identify barriers to mobility
that protect a group from attacks by other groups.
62. Rivalry is most intense when there are high exit barriers
and high industry growth.
82. Another value of strategic grouping is that it helps a firm
identify groups whose competitive position may be marginal
or tenuous.
63. Rivalry will be most intense when there is a lack of
differentiation or switching costs.
64. Rivalry is not always cutthroat; sometimes, it can be
gentlemanly.
65. In most industries, new entrants will not be a threat
because the Internet lowers entry barriers.
66. The Internet and digital technologies suppress the
bargaining power of buyers by providing them with
more information to make buying decisions.
67. Switching costs for an end user are likely to be much
higher because of the Internet.
68. Because of the Internet and digital technologies, it is
very difficult for suppliers to create purchasing
techniques that lower switching costs.
69. Reintermediation is responsible for an overall reduction
in business opportunities.
70. The Internet heightens the threat of substitutes because it
creates new ways to accomplish the same task.
71. Five-forces analysis implicitly assumes a zero-sum game, a
perspective that can be short-sighted.
72. Michael Porter's five-forces Analysis is a dynamic tool
for analyzing industry attractiveness.
73. Complement products typically have no impact on the
value of products and services of the firm.
74. The Nintendo success story in the early 1990s was a result
of its ability to manage its relationship with its
83. Strategic groupings are of no assistance in charting the
future direction of company strategy.
84. Strategic groups are helpful in thinking through the
implications of each industry trend for the strategic group as
a whole.
85. A sharp increase in interest rates, for example, tends to
have more impact on providers of higher-priced goods
(e.g., Porsches) than on providers of lower-priced goods
(e.g., Chevrolet Cobalt), whose customer base is much
more price-sensitive.
86. If all strategic groups are moving in a similar direction, this
could indicate a high degree of future volatility and intensity
of competition.
87. The strategic groups concept is valuable for determining
mobility barriers across groups, identifying groups with
marginal competitive positions, charting the future directions
of firm strategies, and assessing the implications of industry
trends for the strategic group as a whole.
88. The concept of strategic groups is also important to the
external environment of a firm.
89. The strategic groups concept is valuable for identifying
groups with marginal competitive positions.
Multiple Choice Questions
96. Two of the key inputs to developing forecasts discussed in
the text are
A.
environmental scanning and stakeholder identification.
B.
assessing internal strengths and environmental scanning.
C.
environmental scanning and competitive intelligence.
D.
environmental scanning and a SWOT analysis.
97.
A.
B.
C.
D.
98.
A.
B.
C.
D.
99.
A.
B.
C.
D.
Salemi Industries launched Cell Zone unsuccessfully in
2005 because it did not understand the market demand for
its new product. This is an example of
vision statement evaluation.
environmental scanning.
assessing internal strengths.
mission statement evaluation.
Environmental analysis requires continual questioning of
all of these assumptions except
a priori ideas about the structure of the relevant industry.
biases about how to make money in the industry.
presuppositions about who is and is not a competitor.
continual updating of environmental knowledge.
Firms that were successful in the past can fail today
because
they keep pace with changes in the nature of competition.
their financial situation is resilient.
the company strategy is outdated.
management monitors the relevant environmental factors
regularly.
100. Examples of how to improve perceptual acuity include:
A.
A CEO meets with other CEOs of non-competing
companies to examine the world from multiple
perspectives and then shares the results with his own
management team.
B.
A CEO meets with the company management team
regularly to analyze current world events and their
potential impact on the company.
C.
A CEO meets with direct competitors to analyze
current industry trends. The CEOs share their
conclusions with their respective companies.
D.
Outsiders are brought in to the board meeting to critique
the company strategy, which considers the new
information in its potential revamping of the strategy.
101. Perceptual acuity requires all of the following except
A.
an ability to sense what is coming.
B.
the ability to detect early warning signals of environmental
changes.
C.
a compulsive fixation on external environmental
monitoring.
D.
a refusal to consult with others.
102. Two non-competing global firms meet quarterly to discuss
multiple perspectives on world trends. This is an example
of how to improve
A.
stakeholder management.
B.
perceptual acuity.
C.
internal scanning.
D.
financial returns.
103. Which of the following is not an input to develop
forecasts?
A. environmental scanning
B. competitor intelligence
C. environmental monitoring
D. stakeholder management
104. Boards of directors use outsiders to critique their strategy.
This is necessary to improve mostly
A.
financial returns.
B.
organizational hierarchy.
C.
D.
perceptual acuity.
employee relations.
105. When the management frame of reference gets out of
touch with the realities of the actual business situation,
what can happen to the firm?
A.
The company business strategy no longer works.
B.
Management gets across-the-board raises.
C.
Management perceptual acuity improves.
D.
It becomes easier to maintain competitive advantage.
106. Corporate retreats do not
A.
permit companies to discuss larger marketplace trends.
B.
guarantee positive consumer response to new
products.
C.
give companies an opportunity to look beyond their own
industries.
D.
oblige management to automatically change strategy.
107. Why must successful managers recognize opportunities
and threats in their company external environment?
A.
If they miscalculate the market, opportunities will be
lost.
B.
If they misread the market, they are likely to become rich.
C.
If they identify all of the environmental threats, they are
guaranteed to acquire large market share.
D.
If they identify all of the environmental opportunities, they
are guaranteed to acquire large market share.
108. __________ tracks the evolution of environmental trends,
sequences of events, or streams of activities.
A.
Environmental scanning
B.
Environmental monitoring
C.
Environmental surveying
D.
Competitive intelligence
109. Taking advantage of the increasing penetration of personal
computers in American homes, the Mayo Clinic
transformed itself as a provider of health-related
knowledge and expertise. It took advantage of the ______
trends of the _______ in the prices of PCs and the
____________ presence of PCs in virtually every home in
the United States.
A.
soft; increase; increasing
B.
soft; decrease; decreasing
C.
hard; decrease; decreasing
D.
hard; decrease; increasing
110. Scanning the general environment would
information on
A.
substitute goods.
B.
the aging population and ethnic shifts.
C.
customer and firm bargaining power.
D.
competitive rivalry.
identify
111. Which of the following is not an example of corporate
competitive analysis?
A.
banks tracking home loans
B.
airlines changing hundreds of fares daily in response to
competitor tactics
C.
car manufacturers offering sales incentives based on rival
offers
D.
consumers comparing product offers online
112. Gathering competitive intelligence
A.
is good business practice.
B.
is illegal.
C.
D.
is considered unethical.
minimizes the need to obtain information in the public
domain.
A.
113. Environmental forecasting does not involve plausible
projections about the ________ of environmental change.
A.
direction
B.
scope
C.
speed
D.
lack of intensity
C.
114. Which of the following websites is not an example of one
used routinely for corporate competitive intelligence
gathering?
A.
Slideshare
B.
Quora
C.
Duolingo
D.
YouTube
115. Executives must be careful to avoid spending so much
time and effort tracking the actions of ____ that they
ignore _______.
A.
competitors; customers
B.
customers; competitors
C.
existing customers; existing competitors
D.
traditional competitors; new competitors
116. Banks and airlines are examples of two industries that
track competitor offers continually. This is called the
process of gathering
A.
consumer responses.
B.
competitive intelligence.
C.
past decisions.
D.
mainline information.
117. Which of the following would not lead a manager to
believe that an ethical concern exists?
A.
Have I done anything that coerced somebody to share this
information?
B.
Is the contemplated technique for gathering
information relevant?
C.
Have I done something to circumvent a system intended
to secure or protect information?
D.
Have I misled anybody in order to gain access?
118. In 1977, Kenneth H. Olsen, then president of Digital
Equipment Corp., announced that there was no reason for
individuals to have a computer in their home. Long since
disproven, this is an example of
A.
overestimation of uncertainty.
B.
excellent forecasting.
C.
underestimation of uncertainty.
D.
good prediction skills.
119. It is important to question the reliability of forecasts
because
A.
if predictions are too low, a company like Motel 6
might build too many units and thus have a surplus of
capacity.
B.
uncertainty is black and white and therefore the gray areas
are unimportant.
C.
underestimating uncertainty can lead to good competitive
strategies.
D.
the growth new industries, such as that of
telecommunications, cannot be predicted.
120. A danger of forecasting discussed in the text is that
B.
D.
in most cases, the expense of collecting the necessary
data exceeds the benefit.
the retrospective nature of forecasting provides little
information about the future.
managers may view uncertainty as black and white
while ignoring important gray areas.
it can create legal problems for the firm if regulators
discover the company is making forecasts.
121. PPG Industries, the Pittsburgh-based manufacturer of
paints, coatings, optical products, specialty materials,
chemicals, glass, and fiber glass suffered serious failures
in 1986 and 1987 when it attempted to diversify its offers.
It used a technique to help it identify possible future
strategies. What was it?
A.
crowdsourcing
B.
scenario analysis
C.
competitive intelligence
D.
monitoring
122. SWOT analysis is a framework for analyzing the internal
and external environment of a company. It consists of
strengths, weaknesses, opportunities, and threats.
According to a SWOT analysis, which of the following is
not an aspect that the strategy of the firm must follow?
A.
build on its weaknesses
B.
remedy the weaknesses or work around them
C.
take advantage of the opportunities presented by the
environment
D.
protect the firm from the threats
123. Scenario planning is a useful technique for firms
competing in industries characterized by ____ and _____.
A.
predictability; stability
B.
low profit margins; stability
C.
unpredictability; change
D.
high profit margins; stability
124. Scenario analysis draws on a range of disciplines and
interests. It is a more _______ approach to forecasting.
A.
basic
B.
fundamental
C.
in-depth
D.
superficial
125. In the SWOT framework, ______________ are the same
for all firms in the same competitive environment.
A.
strengths and weaknesses
B.
strengths and opportunities
C.
weaknesses and threats
D.
opportunities and threats
126. In the SWOT framework, ______________ are internal
factors that are specific to the company.
A.
strengths and opportunities
B.
strengths and threats
C.
threats and weaknesses
D.
strengths and weaknesses
127. Heightened concern with fitness might be a threat to some
companies and an opportunity to others. In the SWOT
framework, these are
A.
internal environmental factors.
B.
external environmental factors.
C.
both internal and external environmental factors.
D.
not relevant external environmental factors.
128. By emphasizing the importance of identifying opportunities
and threats, the SWOT framework makes firms act
________ rather than ___________.
A.
quickly; slowly
B.
immediately; eventually
C.
proactively; reactively
D.
intelligently; uninformed
129. SWOT analysis raises awareness about the role of
strategy in creating a match between the environmental
conditions and ______________ of the firm.
A.
internal opportunities and threats
B.
internal strengths and weaknesses
C.
internal strengths and opportunities
D.
internal weaknesses and opportunities
130. Steve Jobs, former chairman of Apple, demonstrated that
___________ also are important in forecasting.
A.
character and ability
B.
intuition and judgment
C.
training and experience
D.
imagination and training
131. Which of the following is not a correct usage of the SWOT
framework?
A.
build on its strengths
B.
remedy the weaknesses or work around them
C.
take advantage of the opportunities presented by the
environment
D.
protect the firm from environmental weaknesses
132. The aging of the population, changes in
composition, and effects of the baby boom are
__________ changes.
A.
macroeconomic
B.
demographic
C.
global
D.
sociocultural
ethnic
133. Larger numbers of women entering the work force since
the early 1970s is an example of
A.
demographic changes.
B.
political and legal environmental changes.
C.
sociocultural changes.
D.
technological developments.
134. Emerging sociocultural changes in the environment
include
A.
changes in the ethnic composition.
B.
the increasing educational attainment of women in the
past decade.
C.
progressively less disposable income by consumers.
D.
changes in the geographic distribution of the population.
135. All of the following are important elements of the political
and legal segment of the general environment except
A.
the deregulation of utilities.
B.
the Americans with Disabilities Act (ADA).
C.
the increased use of Internet technology.
D.
increases in the federally mandated minimum wage.
136. Which of the following would be considered part of the
general environment of a firm?
A.
decreased entry barriers
B.
higher unemployment rates
C.
D.
increased bargaining power of the firm's suppliers
increased competitive intensity
137. Interest-rate increases have a ________ impact on the
residential home construction industry and a ________
effect on industries that produce consumer necessities
such as prescription drugs or basic grocery items.
A.
positive; negligible
B.
negative; negligible
C.
negative; positive
D.
positive; negative
138. In the general environment, many relationships exist
among the various elements. General environmental
trends can have positive and negative impacts on various
industries. For example, the aging population might have a
_____ impact on the health care industry and a ______
impact on the baby product industry. These are called
_________ impacts.
A.
negative; positive; demographic
B.
positive; negative; technological
C.
negative; positive; sociocultural
D.
positive; negative; demographic
139. In the general environment, which of the following is not a
demographic trend?
A.
aging population
B.
greater disparities in income levels
C.
more women in the workforce
D.
changes in ethnic composition
140. Lowes has found that women prefer to do larger homeimprovement projects with a man, whether a boyfriend,
husband, or neighbor. As a result, in addition to its recipe
card classes (that explain various projects that take only
one weekend), Lowes offers co-ed store clinics for
projects like sink installation. This is an example of which
segment of the general environment?
A.
economic
B.
sociocultural
C.
political and legal
D.
demographic
141. Doctors and other health professionals say it is becoming
harder to stay on the right side of the rules as billing
requirements grow more convoluted. This is an example of
which segment of the general environment?
A.
economic
B.
sociocultural
C.
demographic
D.
political and legal
142. Crowdsourcing is one form of technology that affects
multiple segments of the general environment. Which of
the following is not an example of crowdsourcing?
A.
The Linus open-source operating system
B.
Yelp online customer comments
C.
Wikipedia
D.
The New York Times online
143. Using the Cuusoo System, Lego develops ideas that are
generated by the many children and adults who create a
model, take photos, write project descriptions, and submit
their idea on the Lego website. This is an example of
using __________ to develop new products.
A.
sociocultural data
B.
demographic data
C.
D.
technological data
crowdsourcing
144.
A.
B.
C.
D.
Which is considered a force in the five-forces model?
increased deregulation in an industry
the threat of government intervention
recent technological innovation
rivalry among competing firms
145. Which of the following firms would likely pose the least
competitive threat?
A.
a firm in the same industry and in the same strategic
group
B.
a competitor to your product where a high switching
cost exists
C.
a firm that produces substitute goods to your product line
D.
a firm in the same industry and in the nearest strategic
group looking to join your group
146.
A.
B.
C.
D.
The threat of new entrants is high when there are
high capital requirements.
low economies of scale.
high switching costs.
high differentiation among competitor’s products and
services.
147. Product differentiation by incumbents act as an entry
barrier because
A.
new entrants cannot differentiate their products.
B.
incumbents will take legal action if new entrants do not
differentiate their products.
C.
it helps a firm to derive greater economies of scale.
D.
new entrants will have to spend heavily to overcome
existing customer loyalties.
148.
A.
B.
C.
D.
Which of the following would be an entry barrier?
easy access to raw materials
low switching costs
large economies of scale
low capital requirements
149. An automobile manufacturer acquires a rental car
company. This is an example of
A.
backward integration.
B.
forward integration.
C.
economies of scale.
D.
product differentiation.
150. The bargaining power of the buyer is greater than that of
the supplier when
A.
volume of purchase is low.
B.
the buyer profit margin is low.
C.
cost savings from the supplier's product are minimal.
D.
threat of backward integration by buyers is low.
151. Buyer power will be greater when
A.
the products purchased are highly differentiated.
B.
it is concentrated or when a buyer group purchases
large volumes relative to seller sales.
C.
the industry product is very important to the quality of the
buyer end products or services.
D.
there are high switching costs.
152. The bargaining power of suppliers increases as
A.
threat of forward integration by suppliers increases.
B.
C.
D.
importance of buyers to supplier group increases.
switching costs for buyers decrease.
more suppliers enter the market.
153. New communication technology can impact seemingly
unrelated industries such as the airline industry. This
would be an example of a
A.
threat of entry.
B.
backward integration.
C.
threat of substitute products.
D.
forward integration.
154. The bargaining power of suppliers is enhanced under the
following market condition:
A.
no threat of forward integration.
B.
low differentiation of the supplier products.
C.
greater availability of substitute products.
D.
dominance by a few suppliers.
155. In the Five-Forces model, conditions under which a
supplier group can be powerful include all of the following
except
A.
lack of importance of the buyer to the supplier group.
B.
high differentiation by the supplier.
C.
readily available substitute products.
D.
dominance by a few suppliers.
156. Because the Internet lowers barriers to entry in most
industries, it
A.
decreases the threat of new entrants.
B.
increases supplier power.
C.
makes it easier to build customer loyalty.
D.
increases the threat of new entrants.
157.
A.
B.
C.
D.
End users are not
the final consumers in a distribution channel.
the first customers in a distribution channel.
likely to have greater bargaining power because of the
Internet.
usually the C in B2C.
158. Incumbent firms may enjoy increased bargaining power
because the Internet
A.
focuses marketing efforts on end users.
B.
has reduced the number of wholesalers and distributors.
C.
increases channel conflict.
D.
diminishes the power of many distribution channel
intermediaries.
159. Supplier power has increased because of the Internet for
all of the following reasons except
A.
the growth of new Web-based businesses has created
more outlets for suppliers to sell to.
B.
software that links buyers to a supplier's website has
created rapid, low-cost order capabilities.
C.
the process of disintermediation makes it possible for
some suppliers to reach end users directly.
D.
some suppliers have created Web-based purchasing
systems that encourage switching.
160. In general, the threat of substitutes is heightened because
the Internet
A.
lowers switching costs.
B.
lowers barriers to entry.
C.
introduces new ways to accomplish the same task.
D.
increases output per unit of cost.
161. How do infomediaries and consumer information websites
increase the intensity of competitive rivalry?
A.
by shifting customers away from issues of price
B.
by consolidating the marketing message that
consumers use to make a purchase decision
C.
by making competitors in cyberspace seem less equally
balanced
D.
by highlighting unique selling advantages of a firm
162. The value net is a game-theoretic approach that
A.
extends the value chain analysis.
B.
uses network analysis to understand the relationships
among different companies.
C.
helps us to understand the evolution of the five forces over
time.
D.
is a way to analyze how the interactions of all the
players in a game affect the firm.
163. In the value net analysis, complementors are
A.
firms that produce substitute products.
B.
firms that produce products that have a positive
impact on company product value.
C.
customers who compliment the company for their good
products and services.
D.
firms that supply critical inputs to a company.
164. Complements are products or services that have a
potential impact on the _________ of the products or
services of that company.
A.
cost
B.
availability
C.
value
D.
substitutability
165. Nintendo built a security chip into its game console
hardware and then licensed the right to develop games to
outside firms. These firms paid a royalty to Nintendo for
each copy of the game sold. This is an example of
Nintendo using _________ products.
A.
substitute
B.
complement
C.
unrelated
D.
differentiated
166. The Apple iPod was enormously successful due in large
part to the company strategy of using
A.
substitute products.
B.
technical savvy.
C.
complementors.
D.
sophisticated software.
167. Elements of the five forces can be quantified. This is
important for analyzing industry structure. Which of the
following is not an example of an element that can be
quantified?
A.
the percentage of the buyer total cost accounted for by the
industry product
B.
the percentage of industry sales required to fill a plant or
operate a logistical network to efficient scale
C.
the buyer switching cost
D.
the governmental regulatory policy
168.
A.
B.
C.
Strategic groups consist of a group of
top executives that makes strategies for a company.
firms within an industry that follows similar strategies.
executives drawn from different companies within an
industry that makes decisions on industry standards.
D.
firms within an industry that decides to collude rather than
compete with each other so that they can increase their
profits.
169. Which of the following statements about strategic groups
is false?
A.
Two assumptions are made: (1) no two firms are totally
different, (2) no two firms are exactly the same.
B.
Strategic groupings are of little help to a firm in
assessing mobility barriers that protect a group from
attacks by other groups.
C.
Strategic groups help chart the future directions of firm
strategies.
D.
Strategic groups are helpful in thinking through the
implications of each industry trend for the group as a
whole.
170. Strategic groups consist of firms that are more _____ to
each other than firms that are not.
A.
familiar
B.
similar
C.
friendly
D.
useful
171. Strategic groups are clusters of firms that share
__________ strategies.
A.
differing
B.
the same
C.
similar
D.
new
172. Classifying an industry into strategic groups involves
judgment. If it is useful as an analytical tool, we must
exercise caution in deciding what dimensions to use to
map these firms. Dimensions include
A.
breadth of product and geographic scope.
B.
price and quality.
C.
degree of vertical integration.
D.
management team.
173. Referring to the textbook Exhibit 2.7 The World Automobile
Industry: Strategic Groups, which strategic group is the
largest in terms of breadth of product line?
A.
Ferrari, Lamborghini, Porsche
B.
Toyota, Ford, General Motors, Chrysler, Honda, Nissan
C.
Chery, Geely, Tata Motors
D.
Mercedes, BMW
174. Referring to the textbook Exhibit 2.7 The World Automobile
Industry: Strategic Groups, which strategic group is the
smallest in terms of breadth of product line?
A.
Ferrari, Lamborghini, Porsche
B.
Toyota, Ford, General Motors, Chrysler, Honda, Nissan
C.
Chery, Geely, Tata Motors
D.
Mercedes, BMW
175. Referring to the textbook Exhibit 2.7 The World Automobile
Industry: Strategic Groups, which strategic group consists
of firms high in product pricing/quality and average in their
product-line breadth?
A.
Ferrari, Lamborghini, Porsche
B.
Toyota, Ford, General Motors, Chrysler, Honda, Nissan
C.
Chery, Geely, Tata Motors
D.
Mercedes, BMW
170. In 2014, Audi introduced the Q3 SUV at a base price of
only $32,500. And BMW, with its 1-series, is another wellknown example. Such cars, priced in the low $30,000s,
compete more directly with products from broad-line
manufacturers like Ford, General Motors, and Toyota. This
suggests that members of a strategic group can overcome
_____ barriers and migrate to other groups that they find
attractive if they are willing to commit time and resources.
A.
mobility
B.
competitive
C.
pricing
D.
cost
171. The strategic groups concept is valuable for identifying
groups with _______ competitive positions.
A.
marginal
B.
exceptional
C.
healthy
D.
poor
172. The strategic groups concept is valuable for charting the
______ directions of firm strategies.
A.
historical
B.
past
C.
present
D.
future
173. The strategic groups concept is valuable for assessing the
implications of industry ________ for the strategic group
as a whole.
A.
trends
B.
positions
C.
experience
D.
wealth
Chapter 03 Assessing the Internal Environment of the Firm
True / False Questions
1.
One advantage of SWOT analysis is that it helps
managers to identify strengths that are almost always
sources of sustainable competitive advantages.
2.
The SWOT analysis can show managers how to achieve
a competitive advantage.
3.
The strengths and capabilities of a firm are enough to
enable it to achieve a competitive advantage in the
marketplace.
4.
5.
Toyota paid a heavy price for its excessive emphasis on cost
control. By focusing on one strength exclusively, it suffered
severe losses. This is an example of the limitations of a
SWOT analysis
In conducting a SWOT analysis, a risk for strategists is that
they rely on traditional definitions of their industry and
competitive environment and therefore focus too narrowly on
current competitors.
6.
The SWOT framework is sufficient as the primary basis
for evaluating the external opportunities and threat of
the company.
7.
The SWOT framework is not sufficient as the primary basis
for evaluating the internal strengths and weaknesses of a
company.
8.
Top managers have learned not to rely on SWOT to
stimulate self-reflection and group discussions about
how to improve their firm and position for success.
9.
Company strengths and weaknesses are tied to its stated
goals and objectives.
10. If a firm builds its strategy on a capability that cannot, by
itself, create or sustain competitive advantage, it is wasting
its time and resources.
11. Focusing too narrowly on current customers, technologies
and competitors can lead a company to overlook periphery
industry boundaries and a new set of competitive
relationships.
12. Encyclopedia Britannica lost competitive positioning due to a
misunderstanding of the change in competitors, when the
CD-based encyclopedia became popular for home
computers.
13. The static nature of the SWOT assessment is a positive
advantage for it as an evaluation framework.
14. Value-chain analysis assumes that the basic economic
purpose of a firm is to create value and it is a useful
framework for analyzing the strengths and weaknesses of
the firm.
15. In value-chain analysis, value is measured by the market
value of the total stock outstanding of the company.
16. Primary activities contribute to the physical creation of a
product or service, its sale and transfer to the buyer, and its
service after the sale.
17. The value-chain concept assumes that both primary and
support activities are capable of producing value for
customers.
18. Inbound logistics include all activities associated with
transforming inputs into the final product form such as
machining, packaging, assembly, equipment, testing,
printing, and facility operations.
19. Support activities provide support for primary activities,
but not each other.
20. Establishing a customer service hotline to handle customer
complaints would be considered a primary activity in valuechain analysis.
21. Technology development is a much broader concept than
research and development.
22. In value-chain analysis, finance and accounting are
considered part of the general administration of a firm.
23. Frito-Lay uses crowdsourcing to make its Super Bowl ads.
This is an example of a primary activity in the value chain.
24. Campbell Soup uses an electronic network to facilitate
its continuous-replenishment program with its most
progressive retailers. This is known as an operations
primary activity in the value chain.
25. Technip has developed intelligent pipes that can monitor
and regulate the temperature throughout an oil pipeline.
This is an example of a procurement support activity in
the value chain.
40. The resource-based view of the firm focuses solely on
the internal analysis of the operations of the firm.
26. At Sephora.com, a customer service representative
taking a phone call from a repeat customer has instant
access to what shade of lipstick she likes best. This is
an example of a procurement support activity in the
value chain.
41. Tangible resources are assets that are relatively easy to
identify such as financial and physical assets.
27. Managers
should
focus
their
attention
on
interrelationships among value-chain activities within
the firm, not on relationships among activities within the
firm and other organizations (such as suppliers and
customers).
28. Some leading edge companies are applying the
prosumer concept. Here, firms team up with their
suppliers and alliance partners to satisfy their customer
needs.
29. Value-chain analysis can
manufacturing operations.
only
be
applied
to
30. Information technology (IT) can also play a key role in
enhancing the value that a company can provide its
customers and, in turn, increasing its own revenues and
profits. IT is an activity within the support activities of general
administration.
31. Campbell Soup uses electronic networks in order to
improve the efficiency of outbound logistics. This is an
example of relationships among activities within the firm
and with other stakeholders that are part of the
company expanded value chain.
32. Some firms find great value by not incorporating their
customers into the value creation process.
33. Crowdsourcing has many benefits, including the
example in which McDonalds set up a Twitter campaign
to promote positive word of mouth which became a
platform for people looking to bash the chain.
34. Strong brands are typically built through consistent, effective
marketing, and companies need to weigh the potential for
misbehaving customers to thwart their careful efforts.
42. Intangible resources of a firm refer to its capacity to
deploy tangible resources over time and leverage those
resources effectively.
43. Financial resources such as cash and cash equivalents
are intangible resources.
44. Effective strategic planning processes are intangible
resources.
45. Company reputation with customers, suppliers and other
stakeholders is an intangible resource.
46. Examples of organizational capabilities are outstanding
customer
service,
excellent
product
development
capabilities, superb innovation processes, and flexibility in
manufacturing processes.
47. Harley-Davidson sells accessories, clothing, toys and
motorcycles. They have a brand image in common
which is a tangible resource.
48. Comcast gets a bad review on Yelp. This is an example
of harm to a tangible resource.
49. FedEx employees take computer-based job competency
tests every 6 to 12 months in order to identify areas of
individual weakness and provide input to a computer
database of employee skills. This is an example of a tangible
resource.
50. Trade secrets are intangible resources.
51. Modern plant and facilities as well as
manufacturing locations are tangible resources.
favorable
52. Patents, copyrights, and trademarks are intangible
resources.
35. Porsche received a lot of negative feedback when it
announced plans to release an SUV, but it went ahead
anyway, and the Porsche Cayenne was a great success.
This is an example of a peril of making decisions based on
crowdsourcing.
53. Products and services that are difficult to imitate help firms
sustain their profitability.
36. At times, the difference between manufacturing and service
is in providing a customized solution rather than mass
production, as is common in manufacturing.
55. Capabilities that exhibit causal ambiguity are difficult to
imitate.
37. A travel agent does not add value by creating an
itinerary that includes transportation, accommodations,
and activities that are customized to your budget and
travel dates.
38. A law firm renders services that are specific to client needs
and circumstances. This is an example of the transformation
process of a service organization.
39. The activities that may provide support only to one company
may be critical to the primary value-adding activity of another
firm.
54. Path dependency has no impact on the inimitability of
resources.
56. For a resource to provide a firm with potential
sustainable advantages it must satisfy only two criteria:
rareness and difficulty in substitution.
57. Firms that are successful in creating competitive
advantages that are sustainable for a period of time do
not have to be concerned about profits being retained
by employees or managers.
58. Employee exit cost is a factor that can increase
employee bargaining power and help him or her
appropriate profits of the firm.
59. Amazon Prime is an example of a difficult to imitate
capability that gives it competitive advantage over its rivals.
78. When evaluating the financial performance of a firm, it is
important to compare the results with industry norms.
60. Dell lost its competitive advantage by 2009 in part because it
placed its efforts on operational excellence to the exclusion
of reinvention.
79. A primary benefit of the balanced scorecard is that it
complements financial indicators with operational measures
of customer satisfaction, internal processes, and the
innovation and improvement activities of the organization.
61. The corporate culture at Southwest airlines is an example of
causal ambiguity.
62. People want to partner with you because they have
heard you are a credible company built through a
culture of trust. In a sense, being a great company to
work for also makes you a great company to work with.
This is an example of causal ambiguity.
80. The balanced scorecard enables managers to evaluate
their business from only two perspectives: customer
and financial.
81. An important implication of the balanced scorecard is that
managers need not look at their job as primarily balancing
stakeholder demands.
63. Two valuable firm resources (or two bundles of resources)
are strategically equivalent when each one can be exploited
separately to implement the same strategies.
82. A strength of the balanced scorecard is that it is very
easy to implement and that there is little need for
executive sponsorship.
64. Though two teams could have different ages, functional
backgrounds, experience, and so on, they could be
strategically equivalent and thus substitutes for one another.
83. In considering the business from the innovation and learning
perspective using the balanced scorecard, the ability of the
firm to do well is more dependent on its intangible and
tangible assets.
65. Several pharmaceutical firms have seen the value of patent
protection erode in the face of new drugs that are based on
different production processes and act in different ways, but
can be used in similar treatment regimes. This example
illustrates the lack of sustainable competitive advantage
being offered by the product.
66. Financial analysis provides an accurate way to assess
the relative strengths of firms and can be used as a
complete guide to study companies.
67. Leverage ratios provide measures of the capacity of a firm to
meet its long-term financial obligations.
68. Historical comparisons are most appropriate during
periods of recession or economic boom.
69. When using industry norms as a standard of
comparison, managers must be sure that the firms used
in the comparisons are representative of all sizes and
strategies within the industry.
70. The current ratio is used to measure long-term solvency.
71. The price-earnings ratio is used to measure profitability.
72. The total debt ratio is used to measure profitability.
73. Inventory turnover is a measure of asset utilization.
74. The profit margin ratio is used to measure long-term
solvency.
75. The return on assets ratio is used to measure short-term
solvency of the firm.
76. A meaningful ratio analysis need only include how ratios
change over time.
77. When using industry norms as a standard of
comparison, managers must be sure that the firms used
in the comparisons are representative of all sizes and
strategies within the industry.
84. In considering the business from the customer perspective
using the balanced scorecard, company performance is
essential.
85. In considering the business from the internal business
perspective using the balanced scorecard, customer-based
measures must be translated into indicators of what the firm
must do internally to meet customer expectations.
86. In considering the business from the internal business
perspective using the balanced scorecard, periodic financial
statements are used to indicate the consequences of
improved quality, response time, productivity, and innovative
products. These consequences include improved sales.
87. For the balanced scorecard to work, managers must
articulate goals for five categories of customer
concerns: time, quality, performance and service, cost,
and design.
88. Excellent
customer
performance
results
from
processes, decisions, and actions that occur only in the
marketing efforts of the firm.
89. To survive and prosper, managers must not make
frequent changes to existing products and services,
because it will confuse the customer.
90. The ability of a firm to do well from an innovation and
learning perspective is most dependent on its tangible
assets.
91. For the balanced scorecard implementation to be effective, a
set of rules for employees that address continuous process
improvement and the personal improvement of individual
employees needs to be established so that employees buyin to the change.
Multiple Choice Questions
104. Which of the following is not a limitation of SWOT
(Strengths, Weaknesses, Opportunities, and Threats)
analysis?
A.
Organizational strengths may not lead to competitive
advantage.
B.
The SWOT focus on the external environment is too
broad and integrative.
C.
D.
SWOT gives a one-shot view of a moving target.
SWOT overemphasizes a single dimension of strategy.
105. Which of the following is a limitation of SWOT (Strengths,
Weaknesses, Opportunities, and Threats) analysis?
A.
Organizational strengths may not lead to competitive
advantage.
B.
The SWOT focus on internal environment is too broad and
integrative.
C.
SWOT gives a multi-shot view of a moving target.
D.
SWOT overemphasizes a multiple dimensions of strategy.
106. A key __________ of SWOT is that it is primarily a static
assessment.
A.
strength
B.
threat
C.
opportunity
D.
weakness
107. Strategists who rely on traditional definitions of their
industry and competitive environment often focus their
sights too ___________ on current customers,
technologies, and competitors.
A.
broadly
B.
narrowly
C.
aggressively
D.
widely
108. Company __________, no matter how unique or
impressive, may not enable it to achieve a competitive
advantage in the marketplace.
A.
strengths and opportunities
B.
strengths and threats
C.
opportunities
D.
strengths and capabilities
109. Sometimes firms become preoccupied with _________ or a
key feature of the product or service they are offering and
ignore other factors needed for competitive success.
A.
multiple strengths
B.
multiple opportunities
C.
a single strength
D.
a single opportunity
110.
A.
B.
C.
D.
__________ among organizations is played out over time.
Negotiation
Sustainability
Competition
Learning
111. Focusing too narrowly on current customers, technologies,
and competitors can lead to a failure to notice important
changes on the periphery of their environment that may
trigger the need to redefine industry boundaries and identify
a whole new set of competitive relationships. This is a
result of relying
A.
on traditional definitions of all industries and competitive
environments.
B.
on traditional definitions of the relevant industry and
competitive environment.
C.
solely on intuition.
D.
on a superficial evaluation of the relevant industry and
competitive environment.
112. Toyota, the giant automaker, paid a heavy price for its
___________ emphasis on cost control. The resulting
A.
B.
C.
D.
problems with quality and the negative publicity led to
severe financial losses and an erosion of its reputation in
many markets.
minimal
superficial
low-budget
excessive
113. Competition among organizations is played out over time.
As circumstances, capabilities, and strategies change,
_________ techniques do not reveal the dynamics of the
competitive environment.
A.
transactional analysis
B.
variable analysis
C.
static analysis
D.
continuous
114. A SWOT analysis alone __________ helps a firm develop
competitive advantages that it can sustain over time.
A.
usually
B.
often
C.
rarely
D.
regularly
115.
A.
B.
C.
D.
Inbound logistics include
machining and packaging.
repair and parts supply.
promotion and packaging.
warehousing and inventory control.
116.
A.
B.
C.
D.
In assessing its primary activities, an airline would examine
employee training programs.
baggage handling.
criteria for lease versus purchase decisions.
the effectiveness of its lobbying activities.
117. Advertising is a __________ activity. Supply of replacement
parts is a __________ activity.
A.
support; primary
B.
primary; primary
C.
primary; support
D.
support; secondary
118. Which of the following examples demonstrates how
successful organizations manage their primary activities?
A.
Motorola has revised its compensation system to reward
employees who learn a variety of skills.
B.
Wal-Mart implemented a sophisticated information system
that resulted in reduced inventory carrying costs and
shortened customer response times.
C.
National Steel improved its efficiency by reducing the
number of job classifications.
D.
Hewlett Packard has cut lead time from five days to one
by employing JIT inventory management.
119. Which of the following is not an advantage of Just-In-Time
inventory systems?
A.
reduced raw material storage costs
B.
minimized idle production facilities and workers
C.
reduced work-in-process inventories
D.
reduced dependence on suppliers
120. XYZ Corp. is focusing on the objective of low-cost, high
quality, on-time production by minimizing idle productive
facilities and workers. The XYZ Corp. is taking advantage
of a __________ system.
A.
B.
C.
D.
Last In, First Out (LIFO)
Highly mechanized
First In, First Out (FIFO)
Just-In-Time (JIT)
121. ___________ is/are associated with collecting, storing, and
distributing the product or service to buyers. They consist of
warehousing, material handling, delivery operation, order
processing, and scheduling.
A.
Services
B.
Inbound logistics
C.
Outbound logistics
D.
Operations
122.
A.
B.
C.
D.
Customer service includes
product promotion.
procurement of critical supplies.
product distribution.
parts supply.
123.
A.
B.
C.
D.
Which of the following is a support activity?
inbound logistics
customer service
technology development
operations
124. Which of the following lists consists of support activities?
A.
human resource management, technology development,
customer service, and procurement
B.
human resource management, customer service, marketing
and sales, and operations
C.
customer service, information systems, technology
development, and procurement
D.
human
resource
management,
technology
development, procurement, and general administration
125. Human resource management consists of activities
involved in the recruiting, hiring, training, development, and
compensation of all types of personnel. It supports
A.
only individual primary activities.
B.
mostly support activities but does have some impact on
primary activities.
C.
only individual support activities.
D.
both individual primary and support activities and the
entire value chain.
126. According to value-chain analysis, which of the following
would be considered part of the general administration in a
firm?
A.
information systems
B.
technology development
C.
human resource management
D.
procurement
127. A marketing department that promises delivery faster than
the ability of the production department to produce is an
example of a lack of understanding of the
A.
interrelationships among functional areas and firm
strategies organizational culture and leadership.
B.
organizational culture and leadership.
C.
need to maintain the reputation of the company.
D.
synergy of the business units.
128. In a retail service industry, which of the following is not a
primary value-chain activity?
A.
purchasing goods
B.
C.
D.
human resource management
partnering with vendors
operating stores
129. In terms of value chain analysis, a telephone operating
company would find that negotiating and maintaining
ongoing relations with regulatory bodies are important
activities for achieving
A.
returns on investment.
B.
customer awareness.
C.
competitive advantage.
D.
better employees.
130. General administration is sometimes viewed as only
_______ but can be a powerful source of competitive
advantage.
A.
income
B.
value
C.
overhead
D.
unimportant
131. German truck and trailer manufacturer, Schmitz Cargobull,
mainly serves customers that are operators of truck or
trailer fleets. What sets the company apart is its expertise in
telematics
(the
integrated
application
of
telecommunications data) to monitor the current state of
any Schmitz Cargobull-produced trailer. This is an example
of using ________ to enhance customer value and
increase _______ position.
A.
sales; competitive
B.
operations; marketing
C.
information technology; competitive
D.
human resources; marketing
132. In an interview with Lise Saari, former director of global
workforce research at IBM, she notes that HR must be a
true partner of the business, with a deep and up-to-date
understanding of business realities and objectives, and
must ensure HR initiatives fully support them at all points of
the value chain. This is an example of
A.
relationships among activities within the firm and with other
stakeholders.
B.
relationships between firms.
C.
interrelationships among activities within the firm.
D.
interrelationships among firms.
133. Regarding the value-chain concept, the most important
interrelationship is between the organization and its
A.
board of directors.
B.
employees.
C.
management.
D.
customers.
134. In contrast to _______ interactions, which allow the firm to
gain insights on the needs of a particular customer,
_________ offers the opportunity to leverage the wisdom of
a larger crowd.
A.
consumer; sourcing
B.
prosumer; outsourcing
C.
prosumer; crowdsourcing
D.
marketing; crowdsourcing
135. In using crowdsourcing as a means to integrate the
customer into the value chain, there are some perils to
consider. Which of the following is not related to
crowdsourcing perils?
Giving customers the opportunity to tarnish the company
brand.
Asking for consumer input when demand is highly
uncertain.
Repeatedly getting feedback from the same customer.
Asking for consumer input when demand is certain.
142. _____ are typically embedded in unique routines and
practices that have evolved and accumulated over time
such as effective work teams.
A.
Tangible resources
B.
Intangible resources
C.
Reputational resources
D.
Organizational capabilities
136. Accounting is a sort of transformation process that converts
daily records of individual transactions into monthly
financial reports. The ____ are the inputs, accounting is the
operation that adds value, and ____ are the outputs.
A.
transaction records; financial statements
B.
financial statements; transaction records
C.
employee records; transaction records
D.
health records; transaction statements
143. Apple combines and packages proven technology in new
and innovative ways. This is an example of its use of
A.
tangible resources.
B.
intangible resources.
C.
organizational capabilities.
D.
strong primary activities.
A.
B.
C.
D.
137. A travel agent adds value by creating an itinerary that
includes transportation, accommodations, and activities that
are customized to your budget and travel dates. In terms of
the value chain analysis, this is an example of a
____________ organization.
A.
retail
B.
service
C.
manufacturing
D.
travel
138. For an engineering services firm, _____ provides inputs,
the transformation process is the engineering itself, and
innovative designs and practical solutions are the outputs.
A.
experimentation
B.
customer support
C.
research and development
D.
human resource management
139. The resource-based view (RBV) of the firm combines the
following two perspectives:
A.
the primary and support activities of the firm.
B.
the interrelationships among the primary activities of the
firm and corporate management.
C.
the internal analysis of the firm and the external
analysis of the industry and competitive environment.
D.
the industry and the competitive environment.
140. The three key types of resources that are central to the
resource-based view of the firm are
A.
tangible resources, intangible resources, and organizational
structure.
B.
culture, tangible resources, intangible resources.
C.
tangible
resources,
intangible
resources,
and
organizational capabilities.
D.
tangible resources, intangible resources, and top
management.
141. In the resource-based view of the firm, examples of tangible
resources include
A.
financial resources, human resources, and firm
competencies.
B.
financial
resources,
physical
resources,
and
technological resources.
C.
financial resources, physical resources, and the capacity to
combine intangible resources.
D.
outstanding customer service, innovativeness of products,
and reputation.
144. __________ are the competencies or skills that a firm
employs to transform inputs into outputs.
A.
Tangible resources
B.
Reputational resources
C.
Organizational capabilities
D.
Intangible resources
145. Which of the following is not an example of organizational
capabilities?
A.
outstanding customer service
B.
reputation with customers for quality and reliability
C.
innovativeness of products and services
D.
ability to hire, motivate, and retain human capital
146. The ability to hire, motivate, and retain human capital is an
example of ________ capabilities in the resource-based
view of the firm.
A.
tangible
B.
organizational
C.
management
D.
design
147. In order to be considered strategic resources that contribute
competitive advantage, they must have several
characteristics. Which of the following is not one of these?
A.
rare
B.
valuable
C.
inexpensive to imitate
D.
costly to substitute
148.
A.
B.
C.
D.
Which of the following is not a tangible resource?
technical and scientific skills
trade secrets, patents, copyrights
state-of-the art machinery
company borrowing capacity
149. Intangible resources are typically embedded in ________
routines and practices that have evolved and accumulated
over time.
A.
rare
B.
standard
C.
unique
D.
obvious
150. The culture of a firm also may be a resource that provides
competitive advantage. Which of these companies might be
a good example of this intangible resource?
A.
Google
B.
Kmart
C.
Costco
D.
Walmart
151. For a resource to provide a firm with the potential for a
sustainable competitive advantage, it must have four
attributes. Which of the following is not one of these
attributes?
A.
rare
B.
valuable
C.
easy for competitors to substitute
D.
difficult for competitors to imitate
152. A competitive advantage based on inimitability can be
sustained for at least some time, if it has the following
characteristics:
A.
psychographic uniqueness, path dependency, causal
ambiguity, and substitutability.
B.
physical uniqueness, path dependency, causal
ambiguity, and social complexity.
C.
rarity, path dependency, causal ambiguity, and social
substitutability.
D.
geographic uniqueness, cause dependency, social
ambiguity, and path complexity.
153. A crash R&D program by one firm cannot replicate a
successful technology developed by another firm, when
research findings cumulate. This is an example of
A.
social complexity.
B.
physical uniqueness.
C.
path dependency.
D.
causal ambiguity.
154. A variety of firm resources include interpersonal relations
among managers in the firm, its culture, and its reputation
with its suppliers and customers. Such competitive
advantages are based upon
A.
path dependency.
B.
social complexity.
C.
physical uniqueness.
D.
tangible resources.
155. All of the following are examples of socially complex
organizational phenomena except
A.
a firm's culture.
B.
complex physical technology.
C.
interpersonal relations among a firm's managers.
D.
leadership and trust.
156. A resource is valuable and rare but neither difficult to
imitate nor without substitutes. This should enable the firm
to attain
A.
no competitive advantage.
B.
a temporary competitive advantage.
C.
competitive parity.
D.
a sustainable competitive advantage.
157. Employees will be able to obtain a proportionately high
level of profits they generate (relative to the firm) if
A.
suppliers are loyal to the firm.
B.
their expertise is firm-specific.
C.
the cost to the firm of replacing them is high.
D.
the firm's resources are path dependent.
158. Which of the following is not a factor that helps to explain
the extent to which employees and managers will be able to
obtain a proportionately high level of the profits that they
generate?
A.
Employees have high bargaining power.
B.
The cost of employee replacement is high.
C.
The cost of exit is high for an employee.
D.
Managers have low bargaining power.
159. Amazon Prime is credited for helping to increase the
Amazon stock price by nearly 300 percent from 2008 to
2010. This competitive advantage is known as
A.
causal ambiguity.
B.
product rarity.
C.
service validity.
D.
substitutability.
160. Four factors help explain the extent to which employees
and managers will be able to obtain a proportionately high
level of the profits that they generate. Which is not one of
these factors?
A.
employee bargaining power
B.
employee replacement cost
C.
employee exit costs
D.
competitor bargaining power
161. Which of the following groups generally is charged with
creating value through the process of organizing,
coordinating, and leveraging employees as well as other
forms of capital such as plant, equipment, and financial
capital?
A.
unions
B.
boards of directors
C.
managers
D.
stakeholders
162. Raymond Ozzie, the software designer who was critical in
the development of Lotus Notes, was able to dictate the
terms under which IBM acquired Lotus. This illustrates that
he had ______ bargaining power based on the ________
cost required by the firm to replace him.
A.
low; low
B.
low; high
C.
high; low
D.
high; high
163. Historical comparisons provide information to managers
about changes in the competitive position of a firm.
Historical comparisons often are misleading
A.
if the overall strategy of the firm is the same.
B.
if the firm shows constant growth.
C.
in periods of recession or economic boom.
D.
if the firm's stock is publicly traded.
164. The best measure of company ability to meet imminent
financial obligations is known as the
A.
debt ratio.
B.
profit margin.
C.
total asset turnover.
D.
current ratio.
165.
A.
B.
C.
D.
Which of the following would be most difficult to assess?
the liquidity position of a firm
market share growth
the legitimacy and reputation of a firm
the efficiency with which a firm utilizes its assets
166. Which of these categories of financial ratios is used to
measure the ability of a firm to meet its short-term financial
obligations?
A.
liquidity ratios
B.
profitability ratios
C.
activity ratios
D.
leverage ratios
167. Ratios that reflect whether or not a firm is efficiently using
its resources are known as
A.
turnover ratios.
B.
leverage ratios.
C.
liquidity ratios.
D.
profitability ratios.
168.
A.
B.
C.
D.
Which of the following is a profitability ratio?
current ratio
total debt ratio
total asset turnover
return on equity
169. Financial ratio analysis measures the performance of the
firm based on all but which of the following?
A.
balance sheet
B.
market valuation
C.
income statement
D.
industry comparison
170. Comparing your firm with all other firms in your industry
assesses _________ performance.
A.
excessive
B.
consistent
C.
relative
D.
non-comparable
171. Making comparisons between a firm and its most direct
rivals is useful because firms within the same strategic
industry group have _______ strategies.
A.
different
B.
the same
C.
similar
D.
relative
172. In making the decision to enter the pharmaceutical industry,
a company would not need to consider which of the
following?
A.
historical comparisons
B.
comparisons with industry norms
C.
comparisons with key competitors
D.
comparisons with non-competitors
173. A firm that takes on too much long-term debt to finance
operations will see an immediate impact on its indicators of
_______ financial leverage.
A.
short-term
B.
long-term
C.
relative
D.
comparable
174. Apple Inc. reported revenues of 171 billion USD and net
income of 37 billion USD in 2012. These figures represent a
stunning annual growth in revenue and net income of 57
percent and 43 percent, respectively, for the 2011 to 2013
time period. This information indicates the importance of
using ______ to evaluate company financial performance.
A.
financial ratios
B.
industry norms
C.
historical comparisons
D.
competitor analysis
175. The balanced scorecard provides top managers with a
__________ view of the business.
A.
detailed and complex
B.
C.
D.
simple and routine
fast but comprehensive
long-term financial
176. The balanced scorecard, developed by Kaplan and Norton,
helps to integrate
A.
financial analysis and the reputation of a firm.
B.
intangible resources and operational measures.
C.
financial analysis and stakeholder perspectives.
D.
short-term perspectives and strategic positioning.
171. The balanced scorecard enables managers to consider
their business from all of the following perspectives except
A.
customer perspective.
B.
internal perspective.
C.
innovation and learning perspective.
D.
ethical perspective.
172. An important implication of the balanced scorecard
approach is that
A.
managers need to recognize that satisfaction of stockholder
demands is their primary job.
B.
the emphasis on customer satisfaction and financial goals
are only a means to that end.
C.
managers should not look at their job as primarily
balancing stakeholder demands.
D.
gains in financial performance must come at a cost of
employee satisfaction.
173. The financial perspective of the balanced scorecard
answers which of the following questions?
A.
How do customers see us?
B.
What must we excel at?
C.
How do we look to shareholders?
D.
Can we continue to improve and create value?
174. The innovation and learning perspective of the balanced
scorecard answers which of the following questions?
A.
How do customers see us?
B.
What must we excel at?
C.
How do we look to shareholders?
D.
Can we continue to improve and create value?
169. The customer perspective of the balanced scorecard
answers which of the following questions?
A.
How do customers see us?
B.
What must we excel at?
C.
How do we look to shareholders?
D.
Can we continue to improve and create value?
170. The internal business perspective of the balanced
scorecard answers which of the following questions?
A.
How do customers see us?
B.
What must we excel at?
C.
How do we look to shareholders?
D.
Can we continue to improve and create value?
171. The internal measures should reflect business processes
that have ______ impact on customer satisfaction. These
include factors that affect cycle time, quality, employee
skills, and productivity.
A.
the least
B.
variable
C.
the most
D.
potential
172. From the innovation and learning perspective, survival is
dependent upon managers making _________
changes to existing products and services as well as introduce
entirely new products with expanded capabilities.
A.
few
B.
no
C.
frequent
D.
rare
173. If managers do not recognize from the beginning that the
balanced scorecard is not a _________ and fail to commit
to it long term, the organization will be disappointed.
A.
panacea
B.
quick fix
C.
marketing ploy
D.
cheap solution
174. With the total performance indicators in place at Sears, it
can evaluate if a single store improves its employee attitude
by 5 percent and therefore predict with confidence that if
the revenue growth in the district as a whole is 5 percent,
the revenue growth in this particular store would be 5.5
percent. This is an example of the _______ perspective of
the balanced scorecard.
A.
customer
B.
internal business
C.
financial
D.
innovation and learning
Chapter 4 Recognizing a Firm’s Intellectual Assets: Moving
Beyond a Firm’s Tangible Resources
True/False Questions
1. According to the text, Xerox is well known for its excellent
use of human capital.
2. The importance of human capital has decreased in recent
years. For this reason, many firms have placed greater
attention on attracting but not on developing or retaining
talent.
3. The more reliance a firm has on intellectual capital the
closer its book value will be to its market value.
4. The difference between the market value and book value
of a firm is its social capital.
5. Firm's such as E-Bay, Oracle, and Microsoft will tend to have a
higher ratio of market value to book value than “industrial
companies” such as General Motors and Nucor Steel.
6. Creation of new knowledge typically involves the continual
interaction of explicit and tacit knowledge.
7. Knowledge workers are more loyal to their companies
than traditional workers.
8. Attracting top talent is a challenge of many organizations. In
today's economy, knowledge workers typically have multiple
possible employment opportunities.
9. The focus on the importance of allocating labor and
capital has remained constant over the past decade.
10. In today's economy, reliance on the three traditional
financial statements: income statement, balance sheet, and
statement of cash flow, has increased.
11. Technical skills are a necessary and sufficient condition
for hiring an employee.
12. One of the most important elements in a good employee is
his or her attitude. Firms should follow the adage “hire for
attitude, train for skill.”
13. Companies have found that referrals from their own
employees are generally an ineffective approach to
recruiting top talent.
14. Many leading companies look for creativity and flexibility
in problem solving during the interview process. This helps
a firm assess a potential employee's social capital.
15. The “cascade approach” described in the text is one of the
important ways of developing human capital.
16. In most effective evaluation and reward systems
employees only receive evaluation and feedback from their
immediate supervisor.
17. 360-degree evaluation and feedback systems address many
of the limitations of traditional approaches of evaluating human
capital.
18. 360-degree evaluation systems are not useful due to the
need to integrate large amounts of feedback.
19. The most effective method of improving a firm's
retention of top talent is to intensify its hiring efforts.
20. An internal labor market is one means of increasing
employee retention.
21. The text suggests that talented professionals are
typically most concerned about financial rewards. Money is
the top reason why such employees take and leave jobs.
22. Rather than focus solely on financial considerations, many
firms offer attractive benefits to entice employees to stay. These
may include on-site daycare, on-site gyms, and on-site stores.
23. Microsoft has mainly focused on using its inbound
logistics and production processes to gain strategic
competitive advantage.
24. Social capital is based on the network of relationships within
a firm, not in the skills and abilities of an individual employee.
25. Social capital is found in the knowledge, skills, and
abilities of individual employees.
26. Developing social capital is risky for an organization
because social capital is specific to individuals and remains
with the employee if he or she leaves the organization.
27. One possible outcome of building social capital in an
organization is “groupthink.” This means everyone in the
group thinks on their own and comes up with new ideas.
28. Once a knowledge asset (e.g., software) is developed and
paid for it can be used many times at very low cost as long as it
doesn't have to be substantially modified each time.
29. The role of technology in the recruitment of human
capital has lowered individuals' reliance on the use social
networks.
30. The use of email can be detracting to employees. Some
firms limit the time that employees spend using email on a given
day.
31. Many firms attempt to codify the tacit knowledge of
employees in an effort to retain that knowledge after the
employee leaves the firm.
32. Explicit knowledge is generally known to everyone in
the firm and is not a critical concern of management.
Multiple Choice Questions
33. Xerox is a company that is known for its inability to leverage
human capital. One example of this is the relatively short tenure
of CEO Rich Thoman. One of the main reasons he was fired is
that
A) he did not have inside connections like other board
members and executives had.
B) he did not have the skills required for the job.
C) Xerox became known for being too “loosely” organized.
D) Xerox diversified into too many unrelated businesses.
34. As the competitive environment changes, strategic
management must focus on different aspects of the organization.
Recently strategic management has moved from focusing on
A) intangible resources to tangible resources.
B) tangible resources to intangible resources.
C) working capital to fixed capital.
D) fixed capital to working capital.
35. Changes in our economy have forced firms to be more
concerned with protecting their
A) knowledge workers.
B) social capital.
C) intellectual capital.
D) all of the above.
36. The makeup of goods and services in the Gross Domestic
Products of developed countries has changed over the last
decade. More than 50% of the value of GDP of developed
countries is based on
A) clothing and apparel.
B) capital accumulation.
C) financial management.
D) knowledge.
37. In the knowledge economy, if a large portion of a firm's value
is in intellectual and human assets, the difference between the
company's market value and book value should ___________ a
company with mostly physical and financial assets.
A) be equal to
B) be smaller than
C) be larger than
D) not be correlated with
38. When firms invest in individual employee's abilities and skills,
they are developing ____________ within the firm.
A) physical capital
B) human capital
C) trust
D) social capital
39. Human capital includes
A) an individual's capabilities, knowledge, and skills.
B) the relationships between people.
C) the output from assembly line employees.
D) an improved product.
40. ____________ includes creativity and problem solving ability.
A) Physical capital
B) Human capital
C) Social capital
D) Emotional capital
41. _______________ can be defined as the “network of
relationships that individuals have throughout the organization.”
A) Human capital
B) Social capital
C) Intellectual capital
D) Tacit knowledge
42. Tacit knowledge
A) is the same as explicit knowledge.
B) is found mostly at the lower levels of the organization.
C) can be codified but not reproduced.
D) can be accessed only with the consent of the employees
because it is in the minds of the employees.
43. New knowledge involves the continual interaction between
________________ and ___________ knowledge.
A) intellectual; pragmatic
B) theoretical; practical
C) tacit; explicit
D) detailed; tacit
44. According to the textbook, many firms try to protect their
human capital and diversify the ownership of their vital
knowledge by all of the following means except
A) emphasizing teamwork.
B) by developing learning programs.
C) by recruiting talented individuals from the best research
institutions.
D) by shackling employees with “golden handcuffs.”
45. Recently, in developed countries, a knowledge worker's
loyalty
to
his
or
her
employing
firm
has
_____________compared to his or her loyalty to his or her
profession and colleagues.
A) increased
B) decreased
C) remained the same
D) no correlation when
46. The text discusses three areas a firm must be concerned with
in order to keep their best and brightest employees from leaving.
These include all of the following except
A) hiring/selecting.
B) sorting/absorbing.
C) developing.
D) retaining.
47. According to the text, intellectual capital is the difference
between the market value and the book value of a firm.
Intellectual capital can be increased by
A) increasing retention of below average workers.
B) attracting and retaining knowledgeable workers.
C) decreasing labor costs.
D) increasing the turnover of employees.
48. Attracting and retaining human capital is a challenge for many
firms today. Firms experiencing high turnover should
A) focus on increased recruiting.
B) decrease money spent on human capital.
C) make their work environment less stimulating.
D) adopt effective retention strategies.
49. Firms must compete for top talent. When attracting and
selecting employees, firms must strive to select the best fit for
both the employee and the firm. In an effort to reduce wasted
time and effort in interviewing too many candidates while
assuring a good candidate pool, a firm should
A) run employment ads in the newspaper.
B) use a pre interview quiz or “bozo filter” (e.g., Cooper
Software).
C) only let lower level employees interview job candidates.
D) refrain from hiring by referrals of present employees.
50. According to Alan Davidson, an industrial psychologist, the
single best predictor of an employee's future behavior is
A) past behavior.
B) the individual's IQ.
C) academic accomplishments.
D) standardized test scores.
51. Many companies use referrals by current employees as a
source for new hiring and even monetarily reward them for the
following reasons because
A) it is less expensive than the fees paid to headhunters.
B) current employees are normally very careful in recommending
someone because their credibility is on the line.
C) it is a good test of employee loyalty.
D) A and B above.
52. Managing a knowledge intensive workforce is very
challenging. The best way for a firm to manage their workforce is
A) retain knowledge workers.
B) attract the brightest employees.
C) balance efforts in the attraction, selection, and retention
of top talent.
D) weed out less effective employees.
53. Developing human capital is essential to maintaining a
competitive advantage in today's knowledge economy. Efforts
and initiatives to develop human capital should be directed
A) at top managers.
B) at human resource departments.
C) at the employees themselves.
D) throughout the firm at all levels.
54. Maintaining a competitive workforce is very challenging in
today's economy. The role of evaluating human capital, in recent
years, has
A) increased.
B) decreased.
C) become less important.
D) remained the same.
55. In order to take advantage of investment in human capital a
firm should
A) rotate workers through functions in the company as quickly as
possible.
B) refrain from training individual employees.
C) establish practices that will enhance employee retention.
D) none of the above.
56. Cinergy, a Cincinnati-based electric, and energy services
company, desires to have the most qualified people in every
position throughout its organization. This is an example of a
concern for
A) developing human capital.
B) developing social networks.
C) decreasing labor intensive training.
D) leveraging organizational structure.
57. The “cascade approach” is used by managers as a tool for
A) developing human capital.
B) attracting intellectual capital.
C) attracting and developing social capital.
D) retaining production workers.
58. In a 360-degree evaluation and feedback system,
______________ rate a person's skill and performance.
A) superiors
B) direct reports
C) colleagues
D) all of the above
59. Generally, employees are most likely to stay with an
organization if
A) the employer provides high salaries to technology
professionals.
B) the organization's mission and values align with the
employee's mission and values.
C) the firm is in a high tech industry.
D) the mission and values of the organization change often.
60. The least effective way to retain human capital is
A) encouraging employee identification with organizational
mission and goals.
B) requiring employees to sign agreements that prevent
them from working for competitors in the future.
C) providing employees with a challenging and stimulating work
environment.
D) providing employees with financial and nonfinancial rewards
and incentives.
61. Many successful firms use internal labor markets. The most
important reason they do this is because
A) they want to encourage job rotation.
B) if an employee is in the same department for too long, he/she
would become indispensable.
C) they want to keep highly mobile employees motivated and
challenged.
D) an employee who moves too much can be identified as
unreliable and eliminated.
62. Many Microsoft employees have left to start other companies.
In general, when such employees leave, they take with them
A) social capital.
B) human capital.
C) intellectual capital.
D) all of the above.
63. Human capital and social capital are vital for superior firm
performance. If a firm has strong human capital, the firm may
exploit this by building social capital. This can be accomplished
through
A) requiring workers to work independently of each other.
B) decreasing the interaction of departments within the firm.
C) encouraging the sharing of ideas between employees in
the firm.
D) structuring the firm with rigid departmental and employee
divisions.
64. In an effort to capture key employees from competitors, firms
may attract the symbolic leader of a group within a competing
firm and hope others will follow. This has been termed
A) the “Columbus effect.”
B) the “Pied Piper effect.”
C) strategically competitive hiring.
D) the “tech exit” effect.
65. Social capital is a source of strength to many firms. Firms
leverage their social capital in an effort to create competitive
advantages. A firm's social capital is based on
A) an employee's individual abilities.
B) the relationships among a firm's employees.
C) a firm's allocation of financial resources.
D) an individual's knowledge.
66. Sharing knowledge within an organization helps to build
social capital. This can be accomplished through the use of
A) email.
B) one-on-one conversations.
C) office memos.
D) all of the above.
67. Social capital has many potential benefits. However,
according to the text, some argue that social capital
A) is always beneficial to a firm.
B) may or may not be beneficial to a firm.
C) usually restricts the productivity of employees.
D) always hurts firm performance.
68. Among the downsides of social capital is/are:
A) high social capital may breed “groupthink,” i.e., a tendency not
to question shared beliefs.
B) socialization processes whereby individuals are socialized into
the norms and values of the organization may become
expensive.
C) individuals may become less willing to collaborate on joint
projects.
D) a and b
69. The use of information technology (e.g., email) has increased
in recent years in many organizations. This has helped to
A) increase social capital.
B) make more effective use of time in every situation.
C) restrict social network growth.
D) create smaller social networks.
70. The creation of knowledge assets is typically characterized
by
A) high upfront costs and subsequent high variable costs.
B) high fixed costs and high variable costs.
C) low upfront costs and high variable costs.
D) high upfront costs and low variable costs.
71. Bruce Strong, CEO of Context Integration invested half a
million dollars in a software package to help his consultants
share their ideas. After the program was unveiled few people
were motivated to use it. This may have been caused by
A) consultants not seeing value in the software.
B) consultants being protective of their ideas.
C) the software not being a part of the company's culture.
D) all of the above.
72. Pamela Hirshman, a project manager at Young and Rubicam,
was required to take over a project after the entire team left the
company. She was able to reconstruct what the team had
accomplished through reading emails exchanged by the previous
team's members. This is an example of
A) using explicit knowledge.
B) inefficient use of information management.
C) using tacit knowledge.
D) all of the above.