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BPS Exam 2 Practice

The primary aim of strategic management at the business level is:
achieving competitive advantage
Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?
overall cost leadership
Which of the following is an example of using a differentiation strategy to improve a firm’s competitive position as defined by the five forces model?
Lexus has enjoyed enhanced power over buyers because its top J. D. Power ranking makes buyers more willing to pay a premium price
Which of Porter’s generic strategies should be used when directing attention toward narrow product lines, buyer segments or targeted geographic markets?
focus
Two variants of the focus strategy rely on providing better service than broad-based competitors who are trying to serve the focuser target segment. What are they?
cost and differentiation
A narrow market focus is to a differentiation-based strategy as a
broadly-defined target market is to a cost leadership strategy
Which of the following is false regarding how a differentiation strategy can help a firm to improve its competitive position vis à vis Porter’s five forces?
supplier power is increased because suppliers will be able to charge higher prices for their inputs
High product differentiation is generally accompanied by
Decreased emphasis on competition based on price
Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform ______________.
higher than firms that achieve either a cost or a differentiation advantage
Primary value chain activities that involve the effective layout of receiving dock operations and support value chain activities that include expertise in process engineering characterize what generic strategy?
overall cost leadership
A manufacturing business pursuing cost leadership will likely:
rely on experience effects to raise efficiency
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by:
repeating a process until a task becomes easier
Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy?
overall cost leadership
Which of the following is a risk (or potential pitfall) of cost leadership?
cost cutting may lead to the loss of desirable features
A firm can achieve differentiation through all of the following means EXCEPT:
offering lower prices to frequent customers
Support value chain activities that involve excellent applications engineering support and facilities that promote a positive firm image characterize what generic strategy?
differentiation
A differentiation strategy enables a business to address the five competitive forces by:
lessening the competitive rivalry by distinguishing itself
potential pitfalls of a differentiation strategy
uniqueness that is not valuable, too high a price premium, perceptions of differentiation may vary between buyers and sellers
All of the following are potential pitfalls of a differentiation strategy EXCEPT:
All rivals share a common input or raw material
The text discusses 3 approaches to combining overall cost leadership and differentiation competitive advantages. These are:
automated and flexible manufacturing systems, exploiting the profit pool concept for competitive advantage, coordinating the extended value chain by way of information and technology
The text discuss three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following EXCEPT:
Deriving benefits from highly focused and high technology markets
Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to:
Assess niche markets in a highly specialized fashion
One of the primary advantages of diversification is sharing core competencies. In order for diversification to be most successful, it is important that
the similarity required for sharing core competencies must be in the value chain, not in the product
Firms that diversify into related businesses realize primary benefits from________ relationships in which businesses share intangible and tangible resources.
horizontal
A parenting advantage for a business new to the firm’s portfolio can result from unrelated diversification due to which of the following?
management expertise and support from the corporate office
Relates to the main means a company uses to make a profit. In essence, it is an interpretation of how a company has succeeded. It describes the cultural norms and beliefs that the company espouses.
Dominant logic
Refers to situations in which firms meet the same rivals in many markets, which may lead to a reduction of competitive pressure.
Multipoint competition
Corporate-level strategy addresses two related issues:
what businesses to compete in; how these businesses can achieve synergy
McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its superwarehouses. This is an example of
achieving economies of scope through related diversification
When a sporting goods store with several locations acquires another retail store that carries different product lines, it is able to reuse many of its resources such as staff, managerial skills and favorable reputation in order to realize overall cost savings. In this case, the firm benefits from which of the following?
economies of scope
Sharp Corporation specializes in optoelectronics technologies that are difficult to replicate, thus giving it competitive advantage over its rivals. These strategic resources are known as which of the following?
core competencies
Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that
the similarity required for sharing core competencies must be in the value chain, not in the product
When management uses common production facilities or purchasing procedures to distribute different but related products, they are
sharing activities
__________ reflect the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.
Core competencies
_________ is when a firm’s corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures.
Parenting
It may be advantageous to vertically integrate when
lower transaction costs and improved coordination are vital and achievable through vertical integration
The risks of vertical integration include all of the following except
lack of control over valuable assets
Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with
vertical integration
A firm should consider vertical integration when
the firm’s suppliers of raw materials are often unable to maintain quality standards
Vertical integration is attractive when
transaction costs are higher than internal administrative costs
Transaction costs include all of the following costs except
agency costs
Transaction costs include all of the following:
search costs, negotiating costs, monitoring costs
The process of identifying, selecting, and ___________ new venture opportunities is known as opportunity recognition.
developing
According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What are they?
Aviable opportunity, available resources, and a qualified and motivated founding team
Young, small firms get start-up funding most frequently from which of the following?
personal savings or contributions from family and friends
In recognizing opportunities, what two phases of activity are involved that lead to viable new venture opportunities?
discovery and evaluation
What four qualities must an opportunity have for it to be viable?
attractive, achievable, durable, and value creating
Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of
vertical integration
For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?
The new business must have an established large market share
Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller’s market share. This justification for diversification is best described as
capitalizing on core competencies
Individual investors are dependent upon the corporation’s managers to
add value to their investments in a way that the stockholders could not accomplish on their own
The three primary means by which a firm can diversify are:
mergers and acquisitions; joint ventures and strategic alliances; internal development
The downsides or limitations of mergers and acquisitions include all of the following except:
it is a slow means to enter new markets and acquire skills and competences.
According to Michael Porter: “There’s a tremendous allure to _______________. It’s the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets.”
mergers and acquisitions
Cooperative relationships such as _______ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.
joint ventures and strategic alliances
A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of
strategic alliance
Divesting businesses can accomplish many different objectives, including
all of these
__________ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.
Restructuring
All of the following are guidelines for managing strategic alliances EXCEPT
relying primarily on a contract to make the joint venture work.
Which of the following statements regarding internal development as a means of diversification is FALSE?
An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
__________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.
A. Strategic alliances; joint ventures; internal development
B. Internal development; mergers; acquisitions
C. Strategic alliances; mergers; joint ventures
D. Mergers; internal development; strategic alliances
Internal development; mergers; acquisitions
An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.
greenmail
An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called
a poison pill
The term “golden parachutes” refers to
pay given to executives fired because of a takeover
Antitakeover tactics include all of the following EXCEPT
golden handcuffs
A(n) ____________ is used by entrepreneurs who see products or business concepts that have been successful in one market niche and
introduce the same product in another segment of the market.
imitative new entry
Which of the following is NOT a common new entry strategy according to the text?
proactive new entry
Which of the following is NOT one of the characteristics of an entrepreneurial opportunity?
Affordable
Financing for entrepreneurial start-ups includes which of the following?
Investments by family and friends, personal savings, private investors
According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by
“lone wolf” entrepreneurs
Why is vision such an important element of entrepreneurial leadership?
Entrepreneur has to envision realities that do not yet exist
Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred
to as imitative new entry
For new business start-ups, opportunities come from many sources including _________ experiences, _________ that grow into businesses or lead to inventions, suggestions by friends or family, or _____________ that makes an entrepreneur aware of an unmet need.
current or past work; hobbies; a chance event
Intense rivalry involving actions and responses among ___________ vying for the same customers in a marketplace is known as __________.
similar competitors; competitive dynamics
Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentions by the text?
Clarifying job responsibilities
The US Small Business Administration supports small business through all of the following EXCEPT
investing venture capital
Based on statistics reported in the text, which of the following statements is FALSE?
Ninety percent of the companies financed with venture capital funds fail
All of the following statements about venture capital are true EXCEPT
venture capital is a form of public equity financing
Private individuals who provide seed capital to young ventures are known as
angels
All of the following statements about venture capital are true except
venture capital is a form of public equity financing.
Examples of early stage financing that are commonly used by entrepreneurial start-ups include all of the following except
venture capital

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