Test Bank
Student: ___________________________________________________________________________
1. The types of skills that are required to prepare an effective strategic case analysis can benefit you in actual business situations.
True False
2. There are two capabilities that can be learned through case analysis—the ability to speculate and integrate.
True False
3. Case analysis takes students through the whole cycle of activity a manager would face. True False
4. The role of strategic decision maker is one that may be taken when analyzing a case. True False
5. The business plan framework is not effective for analyzing strategic cases. True False
6. The first step in becoming familiar with the material is to read quickly through the case to get an overall sense of the material.
True False
7. Writing down a problem statement is a needless waste of time when preparing a case. True False
8. Analytical tools such as value chain analysis and five forces analysis are useful tools to employ when conducting strategic analysis.
True False
9. The current ratio, quick ratio and cash ration are all measures of short-term solvency. True False
10. The profit margin tells you how much investors are willing to pay per dollar of current earnings. True False
11. The basic aim of case analysis is to find solutions. True False
13. According to the text, one of the reasons that case analysis is so enriching as a learning tool is that it draws on many resources and skills besides what is in the textbook.
True False
14. The case analysis process should focus strictly on the case itself and you should not be concerned about your own performance.
True False
15. According to the text, there are six rules for preparing a written case analysis. True False
16. The word conflict has negative connotations. True False
17. The illusion of unanimity is one of the symptoms of groupthink. True False
18. The use of a devil's advocate causes conflict that is counterproductive. True False
19. Dialectical inquiry is a technique whereby a problem is approached from two alternative points of view.
True False
20. To obtain synthesis, your analysis should ideally include the best components of each alternative. True False
21. The analysis-decision-action cycle is the recommended method of case analysis. True False
22. According to the text, the analysis-decision-action cycle should not include analysis of the external environment but only focus on the internal aspects of the organization.
True False
23. Three capabilities that can be learned through case analysis are A. the ability to question, ponder, and answer.
B. the ability to differentiate, speculate, and integrate.
C. the ability to read, write, and perform mathematical calculations. D. the ability to be cruel, competitive and cut-throat.
24. Being able to imagine different scenarios or contemplate the outcome of a decision are examples of the capability known as
A. intergration B. differentiation C. speculation
25. In order to place yourself inside a case, you might adopt the position of A. an outside consultant.
B. a strategic decision maker. C. the board of directors. D. all of the answers are correct
26. People, opportunity, context, risk, and reward are all part of A. the strategic groups approach.
B. the contingency model. C. the business plan framework. D. the financial planning framework.
27. When becoming familiar with a case it is recommended that you A. skim the case only once.
B. you take several days to read and digest the case.
C. read it at night before bed and think about it in your sleep.
D. skim it once, and read it a second time, in depth, making notes as you read. 28. Sometimes problems in a case are not apparent until
A. after you do the analysis. B. you read the case 12 times.
C. you write down the problem statement. D. none of the answers are correct.
29. Price-earnings and market-to-book are examples of A. market value ratios.
B. profitability ratios. C. turnover ratios. D. liquidity ratios.
30. The step in case analysis that involves using analytical tools from the textbook such as value chain analysis is known as
A. identifying problems.
B. proposing alternative solutions. C. conducting strategic analysis.
D. becoming familiar with the material.
31. The step in case analysis that involves the evaluation of choices and implications of those choices is known as
A. identifying problems.
B. proposing alternative solutions. C. conducting strategic analysis.
D. becoming familiar with the material. 32. The final step in the case analysis process is
A. identifying problems.
B. proposing alternative solutions. C. making recommendations. D. conducting strategic analysis.
33. An essential part of preparing an oral presentation is: A. organizing your thoughts.
B. being consistent and logical. C. emphasizing strategic analysis. D. all of the answers are correct
34. Conducting outside research when doing a case study is A. unethical and irresponsible.
B. one of the ways to help get the most out of the experience. C. not recommended.
D. none of the answers is correct. 35. Presenting information graphically is
A. one of the five rules for preparing a written case analysis. B. one of the five rules for preparing an oral case presentation. C. recommended only for liberal arts majors.
D. a form of brainstorming.
36. The use of conflict-inducing decision making techniques in case analysis A. is designed to improve case analysis.
B. involves the constructive use of conflict.
C. can be helpful in arriving at better solutions to cases. D. all of the answers are correct
37. The phenomenon known as groupthink is undesirable and can lead to poor decisions. The concept of groupthink was developed by
A. Financial Post Advisor B. Irvine Janis
C. Howard Jones
D. all of the answers are correct
38. Which of the following tries to identify problems with the proposed alternative and suggests reasons why it should not be adopted?
A. the devil's advocate B. the inquirer
C. the dialectic D. the figurehead
39. Analyzing organizational goals and objectives is A. a value-creating activity.
B. an affordable strategy in case analysis.
C. the first step in the analysis-decision-action cycle. D. the final step in preparing a written case analysis.
40. Asking the question, "Have strategic principles been used in the process of obtaining valuable resources and crafting effective entrepreneurial strategies?" is an essential part of
A. creating new ventures.
B. the final step in the analysis-decision-action cycle. C. the 12thstep in the analysis-decision-action cycle. D. all of the answers are correct
41. The analysis-decision-action model reflects A. ideas that are linked sequentially
B. an overarching strategic perspective C. material presented in Chapter 12 D. all of the answers are correct
42. Discuss the three capabilities that can be developed through case analysis and explain how these three activities sometimes compete for a manager's attention.
43. Compare and contrast the positions of strategic decision maker, board of directors, and outside consultant that may be adopted when conducting a strategic case analysis.
44. Describe the four characteristics of a business plan framework, and discuss when it might be appropriate to use this framework to analyze strategic cases?
46. Outline the five rules for preparing an oral case presentation and explain why each is essential to the development of an effective presentation.
47. Discuss the resources beyond the textbook that might be used to conduct strategic case analysis and explain how the use of additional resources can help you get the most out of the experience and expand your horizons.
48. What are the five rules for preparing a written case analysis and how do these differ from the rules for preparing an oral presentation?
49. Outline the various approaches to conflict-inducing decision making and provide examples of each. Discuss how these techniques can improve the quality of case analysis.
50. Explain how the 12 ideas involved in the analysis-decision-action cycle are linked sequentially in terms of an overarching strategic perspective.
51. Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
True False
52. Strategic management includes strategy analysis, strategy formulation, and strategy implementation. True False
53. According to the text, formulating strategy includes taking into consideration strategy at the business, international, digital, and corporate levels.
True False
54. Shareholders in a company are the only individuals with an interest in the financial performance in the company.
True False
55. Shareholders, employees, and the community-at-large are among a firm's stakeholders. True False
56. Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders within and outside an organization.
True False
57. Social responsibility is the idea that organizations are not only accountable to shareholders but also to the community-at-large.
True False
58. Sears has developed a sophisticated quantitative model that can predict the relationship between employee satisfaction, customer satisfaction and financial results. This is an example of a symbiotic approach to strategic management.
True False
59. Decisions by Boards of Directors are always consistent with shareholder interests. True False
60. Social responsibility for Suncor Energy of Calgary means accountability to customers but NOT to employees.
61. The strategic management process should be addressed only by top-level executives. Mid-level and low-level employees are best equipped to implement the organization's strategies.
True False
62. Globalization is the flow of capital, people, and information throughout the world. True False
63. Intellectual capital is becoming increasingly important in today's economy. It is a concern of managers throughout organizations.
True False
64. Objectives in organizations should be clear, stated, and known by employees throughout the organization.
True False
65. Strategic management should only include short-term objectives. Long-term objectives are covered in the organization's vision statement.
True False
66. Organizational goals and objectives should be vague in order to allow for changes in strategy. True False
67. Organizational vision statements are the beginning point for the hierarchy of goals throughout the organization. An organization's vision statement should be massively inspiring, overarching, and long-term.
True False
68. Although vision statements vary from organization to organization, vision statements are intended to motivate and inspire employees to work toward a general goal.
True False
69. 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.
True False
70. A mission statement encompasses both the purpose of the company as well as the basis of competition and competitive advantage.
True False
71. Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by time deadlines.
True False
72. It is important for organizations to focus primarily on financial objectives and be less concerned about other objectives and goals.
73. The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives. B. strategy must be focused on long-term objectives.
C. strategy must be focused on one specific area of an organization. D. strategy must focus on competitor strengths.
74. 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.
75. Stakeholders are
A. a new way to describe shareholders.
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. 76. "Effectiveness" is often defined as
A. doing things right. B. stakeholder satisfaction C. doing the right thing. D. productivity enhancement.
77. According to Henry Mintzberg, the realized strategies of a firm A. are a combination of deliberate and emergent strategies. B. are a combination of deliberate and differentiation strategies. C. must be based on a company's strategic plan.
D. must be kept confidential for competitive reasons.
78. In order to increase their competitiveness, organizations must continually analyze their strategy and their competitive environments. According to the text, strategy analysis includes
A. assessing intellectual capital as well as analyzing the internal and external environment. B. formulating Internet and international-level strategy.
C. strategic leadership and fostering entrepreneurship. D. strategy implementation and strategic controls.
79. In terms of strategy analysis, the textbook describes Roth, CEO of Nortel, as having A. set low targets.
B. ignored the experiences of competitors and set unrealistically high growth targets. C. focused on the economic landscape.
D. all of the answers are correct
80. Sears has developed a sophisticated quantitative model and found that there were positive relationships between employee satisfaction, customer satisfaction, and financial results. According to the text, this is an example of ________________.
A. zero-sum relationship among stakeholders B. stakeholder symbiosis
81. 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 shareholders are not the only interests that matter.
B. stakeholders are second in importance to the shareholders. C. stakeholders and managers inevitably work at cross-purposes. D. all stakeholders receive financial rewards.
82. While working to prioritize and fulfill their responsibilities, members of an organization's board of directors 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. 83. Members of Boards of Directors are
A. appointed by the Securities and Exchange Commission. B. elected by the shareholders as their representatives. C. elected by the public.
D. only allowed to serve one term of four years.
84. Managers should do more than just 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.
85. Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is
A. the expectation that business will strive to improve the overall welfare of society. B. the idea that organizations are solely responsible to local citizens.
C. the fact that court costs could impact the financial bottom line.
D. the idea that businesses are responsible to maintain a healthy social climate for their employees. 86. 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.
87. Firms must be concerned with many types of capital. In the broader sense, these could include A. ecological capital.
B. material capital.
C. human and social capital. D. all of the above.
88. 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. functional areas work together to attain overall goals. C. goals are defined at the bottom and implemented at the top. D. management and employees have separate goals.
89. The text argues that a strategic perspective in an organization should be emphasized A. at the top of the organization.
B. in the middle of the organization. C. throughout the organization. D. from the bottom up.
90. As our world increases in complexity, the global environment is increasingly competitive and challenging. The key to effective globalization is
A. managing the flow of goods.
B. more people speaking more languages.
C. managing the flow of capital, people, and information. D. governmental regulations.
91. As firms work to become more efficient and effective in the global business environment, they are forced to continually innovate. Innovation in an organization
A. will always increase a firm's performance. B. may enhance or destroy a firm's capabilities. C. should not be pursued by industry leaders. D. happens only incrementally.
92. Peter Senge, of M.I.T., 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
93. 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
94. The hierarchy of organizational goals is in this order (least specific to most specific): A. vision statements, strategic objectives, mission statements
B. mission statements, strategic objectives, vision statements C. vision statements, mission statements, strategic objectives D. mission statements, vision statements, strategic objectives
95. Wellpoint Health Networks states: "Wellpoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a A. strategic objective.
B. vision statement.
C. vague statement of direction. D. line manager's individual goal. 96. Effective vision statement include
A. all strategic directions of the organization. B. a brief statement of the company's direction. C. strategic posturing and future objectives. D. financial objectives and projected figures.
97. Examples of _____________ include: "to be the happiest place on earth" (Disney), and "restoring patients to full life" (Medtronics).
A. vision statements B. mission statements C. strategic objectives D. operational objectives
98. In contrast to an organization's vision, 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.
99. Which "organizational vision" did the text credit belonging to BCE Bell Canada Enterprises? A. "Restoring patients to full life"
B. "Providing Canadians with a one-stop destination in meeting their needs" C. "Clear, Simple, First, True, Profitable, Proud"
D. "… the world's best quick service restaurant"
100.Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements
A. are very specific.
B. provide specific objectives. C. set organizational structure.
D. evoke powerful and compelling mental images.
101.Fortune Brands states they will "cut corporate costs by $30 million a year." This is an example of a A. nonfinancial strategic objective.
B. financial strategic objective. C. vision statement.
102.The strategic management process includes strategy analysis, strategy formulation, and strategy implementation. Discuss each of these steps.
103.Discuss what is meant by recognizing trade-off between efficiency and effectiveness and provide an example of how this attribute of strategic management could influence the strategic decisions of a firm.
104.A firm has a variety of different stakeholders. Identify several possible stakeholders a firm may have and discuss how the firm may achieve stakeholder symbiosis.
105.Globalization is impacting most firms today. Discuss what "globalization" means and how and why it impacts today's firms.
106.The text discusses several characteristics of effective strategic objectives. List several of these and discuss why a firm's strategic objectives should meet these criteria.
107.Environmental scanning and competitor intelligence provide important inputs for forecasting activities. True False
108.Environmental monitoring deals with tracking changes in environmental trends that are often uncovered during the environmental scanning process.
True False
109.Competitor Intelligence (CI) is a tool that can provide management with "early warnings" about both threats and opportunities.
True False
110.Competitor Intelligence gathering is no different from spying. True False
111.Competitive intelligence generally does not benefit very much from gathering information on competitors from sources in the public domain.
True False
112.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.
True False
113.The same environmental trend can often have very different effects on firms within the same industry. True False
114.Although changes in the general environment may often adversely or favorably impact a firm, they seldom alter an entire industry.
True False
115.Scenario analysis draws on a range of disciplines and interests. True False
116.Nearly one-fifth of Canadians will be over 65 by 2025. True False
117.Technological innovations can create entirely new industries and alter the boundaries of industries. True False
118.The Canadian forestry industry has gained significant advantage over competitors in Sweden and Finland through the use of advanced technology.
True False
119.Porter's five forces model is designed to help us understand how social attitudes and cultural values impact U.S. businesses.
True False
120.Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential.
True False
121.In some industries, high switching costs can act as an important barrier to entry. True False
122.Industries characterized by high economies of scale typically attract fewer new entrants. True False
123.The power of a buyer group is increased if the buyer group has less concentration than the supplier group.
True False
124.Buyer power tends to be higher if suppliers provide undifferentiated or standard products. True False
125.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.
True False
126.The power of suppliers will be enhanced if they are able to maintain a credible threat of forward integration.
True False
127.The more attractive the price/performance ratio of substitute products, the more tightly it constrains an industry's ability to charge high prices.
True False
128.Rivalry is most intense when there are high exit barriers and high industry growth. True False
130.Michael Porter's Five Forces Analysis is a dynamic tool for analyzing industry attractiveness. True False
131.Complementary products are products that typically have a negative impact on the value of a firm's own products or services.
True False
132.Bombardier studies people's travel patterns to decide on the number of seats they should plan for future aircraft.
True False
133.The use of the strategic groups concept is generally not helpful in charting the future directions of firms' strategies.
True False
134.The strategic groups in the world-wide automobile industry have been very stable and unchanging in recent years.
True False
135.According to the text, Canadian Tire is more concerned about Wal-Mart than Holt Renfrew. True False
136.Gathering "competitive intelligence" A. is good business practice.
B. is illegal.
C. is considered unethical.
D. minimizes the need to obtain information in the public domain. 137.Two key inputs to developing forecasts discussed in the text are
A. environmental scanning and stakeholder identification. B. environmental scanning and competitor intelligence. C. assessing internal strengths and environmental scanning. D. environmental scanning and a SWOT analysis.
138._____________ 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
139.Environmental forecasting involves developing plausible projections about the ________ of environmental change.
A. direction B. scope C. speed
140.In the Canadian telecommunications industry, the companies used to be governed by A. different federal agencies.
B. the same federal agency, CRTC. C. various provincial agencies. D. industry associations.
141.A danger of forecasting discussed in the text is that
A. in most cases, the expense of collecting the necessary data exceeds the benefit B. forcasting's retrospective nature provides little information about the future
C. managers may view uncertainty as "black and white" while ignoring important "grey areas" D. it can create legal problems for the firm if regulators discover the company is making forecast. 142.The aging of the population, changes in ethnic composition, and effects of the baby boom are
A. macroeconomic changes. B. demographic changes. C. global changes. D. sociocultural changes.
143.Increasingly 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.
144.Which of the following would be considered part of a firm's general environment? A. decreased entry barriers
B. increased trade deficit
C. increased bargaining power of the firm's suppliers D. increased competitive intensity
145.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.
146.The political/legal segment: When the US congress passed the Sarbanes-Oxley Act in 2002, A. Canada deregulated the associations.
B. no similar Canadian legislation was developed. C. Canada followed with similar provisions.
D. the provincial governments developed similar laws. 147.In the Air Canada - WestJet conflict, the issue is:
A. Air Canada claims their employee website was hacked. B. WestJet claims their employee website was hacked. C. Air Canada claims their email was stolen.
148.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; neutral
B. negative; neutral C. negative; positive D. positive; negative
149.Which is considered a force in the "Five Forces model"? A. increased deregulation in an industry
B. the threat of government intervention C. rivalry among competing firms D. recent technological innovation
150.A large fabricator of building components purchased a steel company to provide raw materials for its production process. This is an example of
A. backward integration. B. economies of scale. C. forward integration. D. product differentiation.
151.An independent group of suppliers, such as farmers, gathers to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of
A. threat of entry. B. backward integration. C. forward integration.
D. threat of substitute products.
152.The threat of new entrants is high when there are A. low economies of scale.
B. high capital requirements. C. high switching costs.
D. high differentiation among competitors' products and services. 153.Which of the following would be an entry barrier?
A. large economies of scale B. low switching costs
C. easy access to raw materials D. low capital requirements
154.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 firm that produces substitute goods to your product line C. a competitor to your product where a high switching cost exists
D. a firm in the same industry and in the nearest strategic group looking to join your group 155.The rivalry between Air Canada and WestJet
A. recently moved from the skies to the courtroom.
B. includes allegations that WestJet set up a screen-scraper program to automatically lift data.
C. includes allegations that Air Canada sent investigators to pilfer a WestJet Executives garbage looking for data.
156.Buyer power will be greater when
A. the products purchased are highly differentiated. B. there are high switching costs.
C. the industry's product is very important to the quality of the buyer's end products or services. D. it is concentrated on purchasing large volumes relative to seller sales.
157.The bargaining power of suppliers increases as A. more suppliers enter the market.
B. importance of buyers to supplier group increases. C. switching costs for buyers decreases.
D. the threat of forward integration by suppliers increases.
158.In Porter's Five Forces model, conditions under which a supplier group can be powerful include all the following except
A. lack of importance of the buyer to the supplier group. B. high differentiation by the supplier.
C. dominance by a few suppliers. D. readily available substitute products.
159.A supplier group would be most powerful when there is/are A. many suppliers.
B. few substitute products.
C. low differentiation of products supplied.
D. high threat of backward integration by the buyers. 160.Threat of substitute products comes from
A. other companies in the same industry.
B. foreign companies which can use cheap labour in their countries.
C. firms in other industries that produce products or services that satisfy the same customer need. D. all of the answers are correct
161.Strategic groups within industries: Canadian retailer Holt Renfrew is described as A. a high growth industry with low fixed costs.
B. similar to Canadian Tire. C. a prestigious upscale player. D. a competitor of Wal-Mart. 162.Exit barriers arise from
A. specialized assets with no alternative use. B. governmental and social pressures.
C. strategic interrelationships with other business units within the same company. D. all of the answers are correct
163.The general and competitive environments A. are independent and dynamic over time. B. tend to be interrelated and dynamic over time.
C. have similar impact on organizations of different industries. D. are independent and static over time.
164.Delayed marriages, fewer people in relevant age groups, and rising interest rates dampening demand for houses illustrates
A. that more than one segment of the general environment may affect an industry. B. that the global environment is not as powerful an influence as thought.
C. that macroeconomic forces dominate the general environment.
D. that the competitive environment often has a strong influence on the general environment.
165.Which of the following best demonstrates the interrelationships among different segments of the general environment?
A. A new technology results in the development of a substitute product for your firm's product.
B. Government deregulation results in different firms being able to offer the same product as your firm. C. The recession results in several of your competitors cutting prices and intensifying rivalry.
D. Increased concern for the environment results in legislation that impacts your current packaging. 166.Which of the following is an example of the interrelationship between the general and competitive
environments?
A. A decline in a nation's educational standards results in a decline in the nation's productivity. B. A country's technological inferiority results in its enactment of strong trade barriers against
importation.
C. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic beverages industry.
D. Greater awareness of the environment results in environmental legislation. 167.In the value-net analysis, complementors are
A. firms that produce substitute products.
B. customers who compliment the company for their good products and services.
C. firms that produce products or services that have a positive impact on the value of a firm's products or services.
D. firms that supply critical inputs to a company. 168.Strategic groups consist of
A. top executives who make strategies for a company. B. firms within an industry that follow similar strategies.
C. executives drawn from different companies within an industry that makes decisions on industry standards.
D. firms within an industry that decide 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 firms' strategies.
D. Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole.
170.Explain why managers must recognize opportunities and threats in their firm's external environment.
171.Using the Canadian beer as an example, explain how an industry or competitive environment might be defined and analyzed.
172.Explain how competitor intelligence can be improved by gathering information about competitors in the public domain. Provide examples.
173.Discuss some of the limitations of forecasting.
174.Many indicators of the macroeconomic environment such as GNP, interest rates, savings rates, trade and budget deficits/surplus, etc. are interrelated. Explain.
175.Explain the important barriers to entry in an industry. Provide examples.
176.Discuss and provide examples of factors that would lead to greater buyer power.
177.What are some of the factors that would cause a supplier group to become powerful? Illustrate.
178.Several factors usually interact which result in intense rivalry among competitors. Explain.
179.Explain how the value net analysis adds to the five-forces analysis. Be sure to include examples from at least two industries.
180.What value is the strategic groups concept as a tool in analyzing an industry?
181.Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses.
True False
182.The automotive sector represents one of Canada's most important economic engines. True False
183.In value chain analysis, value is measured by market value of the total stock outstanding of the company.
True False
184.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.
True False
185.The value chain concept assumes that both primary and support activities are capable of producing value for customers.
True False
186.Performing a value chain analysis provides a complete assessment of the firm's strengths and weaknesses.
True False
187.Outbound Logistics: Campbell's Soup uses continuous replenishment for the Loblaw stores it supplies in Canada.
True False
188.Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis.
True False
189.Technology development is a much broader concept than research and development. True False
190.In value chain analysis, general management is considered part of a firm's infrastructure. True False
191.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). True False
192.Tangible resources are assets that are relatively easy to identify such as financial and physical assets. True False
193.A firm's intangible resources refer to its capacity to deploy tangible resources over time and leverage those resources effectively.
True False
194.Products and services that are difficult to imitate help firms sustain their profitability. True False
195.Path dependency has no impact on the inimitability of resources. True False
196.Capabilities that are causally ambiguous are difficult to imitate. True False
197.For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.
True False
198.Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.
True False
199.An increase in profits indicates an improvement in cash flow. True False
200.Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations. True False
201.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.
True False
202.Historical comparisons are most appropriate during periods of recession or economic boom. True False
203.A primary benefit of the "balanced scorecard" is that it complements financial indicators with
operational measures of customer satisfaction, internal processes, and the organization's innovation and improvement activities.
204.The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial.
True False
205.An important implication of the balanced scorecard is that managers need not look at their job as primarily balancing stakeholder demands.
True False
206.Inbound logistics include A. machining and packaging.
B. warehousing and inventory control. C. repair and parts supply.
D. promotion and packaging.
207.___________ 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
208.A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the
A. interrelationships among functional areas and firm strategies. B. need to maintain the reputation of the company.
C. organizational culture and leadership. D. synergy of the business units.
209.Advertising is a ______ activity. Supply of replacement parts is a _________ activity. A. primary; primary
B. support; primary C. support; secondary D. primary; support
210.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
211.In assessing its primary activities, an airline would examine A. employee training programs.
B. baggage handling.
C. criteria for lease versus purchase decisions. D. the effectiveness of its lobbying activities.
212.Customer service would include A. product promotion.
B. product distribution. C. parts supply.
D. procurement of critical supplies.
213.Which of the following is a support activity? A. inbound logistics
B. operations
C. technology development D. customer service
214.Which of the following lists consist 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. human resource management, information systems, procurement, and firm infrastructure D. customer service, information systems, technology development, and procurement
215.Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It
A. supports only individual primary activities. B. supports only individual support activities.
C. supports both individual primary and support activities and the entire value chain. D. supports mostly support activities but does have some impact on primary activities.
216.According to value chain analysis, which of the following would be considered part of a firm's infrastructure?
A. human resource management B. information systems
C. technology development D. procurement
217.For firms such as Campbell Soup Company, information systems have been a source of competitive advantage by enabling them to
A. forecast future demand.
B. replenish products in a timely manner. C. monitor inventories in distribution centres. D. all of the answers are correct
218.Assessment of a firm's primary activities should include analysis of all of the following except: A. inbound logistics
B. operations C. human resources D. marketing and sales
219.The resource-based view (RBV) of the firm combines 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 as well as the external analysis of the industry and competitive
environment
220.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
221.To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines:
A. real estate and store fixtures B. brand name and experienced staff C. accumulated reputation for quality D. all of the answers are correct
222.______________ are the competencies or skills that a firm employs to transform inputs into outputs. A. Tangible resources
B. Intangible resources C. Reputational resources D. Organizational capabilities
223.Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of their
A. tangible resources. B. intangible resources. C. organizational capabilities. D. strong primary activities.
224.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. easy for competitors to substitute C. valuable
D. difficult for competitors to imitate
225.For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes:
A. rare, valuable, mobile, nonsubstitutable
B. rare, inimitable, physically unique, nonsubstitutable C. rare, valuable, inimitable, nonsubstitutable
D. rare, valuable, physically unique, causally ambiguous
226.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. path dependency. C. physical uniqueness. D. causal ambiguity.
227.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. social complexity. B. path dependency. C. physical uniqueness. D. tangible resources.
228.A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics:
A. physical uniqueness, path dependency, causal ambiguity, and social complexity B. psychographic uniqueness, path dependency, causal ambiguity, and substitutability C. rarity, path dependency, causal ambiguity, and social substitutability
D. geographic uniqueness, cause dependency, social ambiguity, and path complexity 229.The following are examples of socially complex organizational phenomena except:
A. a firm's culture
B. interpersonal relations among a firm's managers C. complex physical technology
D. reputation with suppliers and customers
230.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. competitive parity.
C. a temporary competitive advantage. D. a sustainable competitive advantage.
231.The best measure of a company's ability to meet imminent financial obligations is known as the A. current ratio.
B. total asset turnover. C. debt ratio.
D. profit margin.
232.Which of the following would be most difficult to assess? A. the liquidity position of a firm
B. the legitimacy and reputation of a firm C. market share growth
D. the efficiency with which a firm utilizes its assets
233.Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?
A. leverage ratios B. profitability ratios C. activity ratios D. liquidity ratios
234.A meaningful ratio analysis
A. must go beyond the calculation and interpretation of financial ratios. B. is based primarily on leverage ratios.
C. involves only liquidity ratios.
235.Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading
A. if the overall strategy of the firm is the same. B. in periods of recession or economic boom. C. if the firm shows constant growth.
D. if the firm's stock is publicly traded.
236.How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?
A. Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry. B. Compare the firm's financial ratios over the most recent one-year period.
C. Compare the financial ratios of all firms in the country's industry—some of whom serve very diverse market segments and have specialized accordingly.
D. Compare the financial ratios of firms in the company's strategic group.
237.The "balanced scorecard" provides top managers with a _____________ view of the business. A. detailed and complex
B. fast but comprehensive C. simple and routine D. long-term financial
238.The "balanced scorecard" developed by Kaplan and Norton helps to integrate A. financial analysis and a firm's reputation.
B. intangible resources and operational measures. C. financial analysis and stakeholder perspectives. D. short-term perspectives and strategic positioning.
239.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
240.An important implication of the "balance scorecard" approach is that:
A. Managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. B. The key 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; increasing
satisfaction among multiple stakeholders can be achieved simultaneously.
D. Gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction.
242.What are the key advantages of value chain analysis over SWOT analysis?
243.How can a firm develop (or enhance) its advantages in the marketplace by having strong, positive interrelationships among its value chain activities and those of its suppliers and customers? Provide an example.
244.What are some ways in which a firm's general administration can help create (or enhance) competitive advantages?
245.The resource-based view (RBV) combines both the internal analysis of the firm and the external analysis of the environment. Discuss and provide examples.
246.Explain the four attributes that a resource must have to provide a firm with a sustainable competitive advantage.
247.What are the benefits and limitations of making historical comparisons in analyzing a firm's performance?
248.What are the four perspectives that the "balanced scorecard" enables managers to evaluate their business?
249.What are some of the most important implications of using the "balanced scorecard" approach?
250.According to the text, Xerox is well known for its excellent use of human capital. True False
251.The importance of intellectual capital has decreased in recent years. For this reason, many firms have placed greater attention on attracting but not on developing or retaining talent.
253.Writers have defined intellectual capital as the difference between the market value and book value of a firm.
True False
254.Creation of new knowledge typically involves the continual interaction of explicit and tacit knowledge. True False
255.Knowledge workers are more loyal to their companies than traditional workers. True False
256.Attracting top talent is a challenge of many organizations. In today's economy, knowledge workers typically have multiple possible employment opportunities.
True False
257.Human capital consists of the "individual capabilities." True False
258.Technical skills are a necessary and sufficient condition for hiring an employee. True False
259.Canadian steel company Dofasco invests time and resources in developing new employees because it expects them to stay for most of their working life.
True False
260.Companies have found that referrals from their own employees are generally an ineffective approach to recruiting top talent.
True False
261.The "cascade approach" described in the text is one of the important ways of developing human capital. True False
262.In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor.
True False
263.360-degree evaluation and feedback systems address many of the limitations of traditional approaches of evaluating human capital.
True False
264.BC Biomedical missed out on being named one of Canada's "Best Employers" for the third year running.
True False
265.The most effective method of improving a firm's retention of top talent is to intensify its hiring efforts. True False
266.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.
True False
267.Rather than focus solely on financial considerations, many firms offer attractive benefits to entice employees to stay. These may include on-site stores, ATMs and athletic facilities.
True False
268.CIBC Canada, in an attempt to retain employees, offers emergency babysitting services to ALL employees across Canada.
True False
269.Social capital is based on the network of relationships within a firm, not in the skills and abilities of an individual employee.
True False
270.Social capital is found in the knowledge, skills, and abilities of individual employees. True False
271.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.
True False
272.One possible negative outcome of building social capital in an organization is "groupthink"—a tendency not to question shared beliefs.
True False
273.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.
True False
274.The use of email can be distracting to employees when they use it excessively or for personal reasons. True False
275.Many firms attempt to codify the tacit knowledge of employees in an effort to retain that knowledge after the employee leaves the firm.
True False
276.Protecting a firm's intellectual capital requires a concerted effort. True False
277.Patents typically provide long-term protection for a firm since they do not expire. True False
278.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.
279.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.
280.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 answers are correct
281.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
282.Canadian steel company Dofasco found that every dollar spent on training returns A. $5 in production costs cut.
B. $30 in productivity gains over the following three years. C. 5 years of savings.
D. $10,000 in daily expenses. 283.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.
284.____________ includes creativity and problem solving ability. A. Physical capital
B. Human capital C. Social capital D. Emotional capital
285.In terms of retaining human capital, Magna's strategy is to A. allocate 10% of pre-tax profits to employees.
B. cultivate the creative potential of its workforce. C. distribute 6% of profits to senior managers. D. all of the answers are correct
286.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. 287.New knowledge involves the continual interaction between ________________ and ___________
knowledge.
A. intellectual; pragmatic B. theoretical; practical C. tacit; explicit
D. detailed; tacit
288.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"
289.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
290.BC Biomedical, which has been named one of Canada's "Best Employers" attributes their success to having a
A. pyramid organization. B. flat organization.
C. "top down" organization. D. "bottom up" organization.
291.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 labour costs.
D. increasing the turnover of employees.
292.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.
293.Firms must compete for top talent. Whirlpool Canada dealt with conflicting demands of family and work by
A. paying for daycare at all offices across Canada.
B. offering additional work/life balance days to each employee. C. paying 6% of profits to senior managers.
D. developing a flat organization.
294.According to Alan Davidson, an industrial psychologist, the single best predictor of an employee's future behaviour is
A. past behaviour. B. the individual's IQ.
C. academic accomplishments. D. standardized test scores.
295.Many companies use referrals by current employees as a source for new hiring and even monetarily reward them 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. it is less expensive than the fees paid to headhunters and current employees are normally very careful in recommending someone because their credibility is on the line.
296.Managing a knowledge-intensive workforce is very challenging. The best way for a firm to manage their workforce is to
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.
297.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.
298.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 answers are correct
299.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.
300.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 answers are correct
301.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.
302.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 answers are correct
303.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 by
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.
304.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.
305.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.
306.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. Waterloo-based Open Text's Livelink which enables employees to share documents. D. all of the answers are correct
307.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.
308.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. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs and socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.
309.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.
310.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.
311.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 answers are correct
312.Effective protection of intellectual property is necessary in order to obtain A. diminishing returns.
B. financial investment in an undertaking. C. conceptual roots going back centuries. D. zero marginal gains.
313.The capacity to build and protect competitive advantage rests on A. knowledge.
B. assets.
C. competencies.
314.What is intellectual capital and what is its effect on the ratio of a firm's market value to book value?
315.Why is the management of knowledge and knowledge professionals so critical in today's organizations?
316.Discuss the attributes of human capital. Give examples of how firms work to develop and retain it.
317.Discuss the adage "hire for attitude, train for skill." What are its implications for the attraction, training, and retention of top talent?
318.In an effort to attract and retain top talent, firms provide financial and nonfinancial rewards to their employees. Give examples of each and describe how the incentives you have chosen may impact individual employees.
319.Discuss how technology has impacted the attraction, training, and retention of professionals. How has technology helped firms to enhance their human capital and social capital?
320.Discuss the current situation of RIM and its context with U.S. patent troll firm NTP.
321.Colt is a Canadian success story that began in the 1950s in New Hampshire and Quebec. True False
322.Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle.
True False
323.Concentrating solely on one form of competitive advantage generally leads to the highest possible level of profitability.
True False
324.A firm striving for cost leadership will typically spend relatively more on product-related R&D than on process-related R&D.
True False
325.The focus strategy refers to focusing on the "non-price" attributes of a company's products. True False
326.To generate above average returns, a firm following an overall cost leadership position should not be concerned with attaining parity or proximity on the basis of differentiation relative to its peers. True False
327.The experience curve concept suggests that production costs tend to decrease as production increases regardless of where an industry is at in its life cycle.
328.Firms that compete on overall cost are vulnerable if all rivals share a common input or raw material that contributes a significant amount to total costs.
True False
329.One of the advantages of high differentiation is that even if many competitors follow the same strategy, differentiation still exists for all.
True False
330.The example of Lexus automobiles in the text points out that a firm can strengthen its differentiation strategy by achieving integration at multiple points along the value chain.
True False
331.A successful differentiation strategy lowers entry barriers because of customer loyalty and the firm's ability to provide uniqueness in its products and services.
True False
332.A successful differentiation strategy increases rivalry since buyers become more price-sensitive. True False
333.If a firm has a successful differentiation strategy, it is not necessary to attain parity on cost. True False
334.One pitfall of a differentiation strategy is that a brand's identification in the marketplace may become diluted through excessive product line extensions.
True False
335.Creating a niche by differentiating one's product or service often allows small firms to compete successfully with market leaders.
True False
336.Focus, by itself, often constitutes a competitive advantage. True False
337.A pitfall of a focus strategy is that focusers can become too focused to satisfy buyer needs. True False
338.A disadvantage of firms that successfully integrate overall cost leadership and differentiation strategies is that they are relatively easy for competitors to imitate.
True False
339.Mass customization enables manufacturers to be more responsive to customer demands for high quality products.
340.An important idea behind the "profit pool" concept is that there is always a strong relationship between the generation of revenues and the capturing of profits.
True False
341.An important pitfall of an integrated overall cost leadership and differentiation strategy is that firms may fail to implement either one and become "stuck-in-the-middle."
True False
342.The market life cycle should be used as a short-run forecasting device because it provides a conceptual framework for understanding what changes typically occur.
True False
343.An important advantage of first movers in a market is that they may establish brand recognition that may later serve as an important switching cost.
True False
344.During the growth stage of the market life cycle, customers are very likely to establish brand loyalty. True False
345.Given the attractiveness of premium pricing during the growth stage of the market life cycle, managers should emphasize short-term results to increase profits.
True False
346.As markets mature, competition on the basis of differentiation is preferable to price competition. True False
347.As markets mature, the magnitude of differentiation and cost leadership advantages among competitors decrease.
True False
348.Businesses that compete in markets that are in decline should simply be harvested or divested since they are no longer profitable.
True False
349.During the decline stage of the product life cycle, a harvesting strategy means that a firm keeps a product going without significantly reducing marketing support, technological development, or other
investments, while hoping that competitors will exit the market. True False
350.Many firms facing a turnaround situation try to reduce their costs by outsourcing the production of many inputs.
True False
351.Many firms in the maturity stage of the life cycle bring about their own decline by selective product and market pruning.
