Revision (Chapter 1 – 10)

MULTIPLE CHOICE QUESTIONS

Chapter 01:
What Is Strategy, and Why Is It Important?
#1. Which of the following scenarios illustrates a firm that has a
sustainable competitive advantage?
A. Newon Inc. generated a revenue of $300,000 this financial year, which is close to the
industrial revenue average of $320,000.

B. SM Inc. almost doubled its sales to 8500 units this year compared to its previous
year's sales of 5000 units, though the industry average is 10,000 units.

C. TrueLink Corp. was able to hold its market share of 68 percent in the social
networking industry for more than three years.

D. Max Electrova Inc. was able to outperform its competitors with its new production
system, in terms of revenue, for a brief period of four months.

#2. The average cost of production for a bottle of vitamin water in the
industry is $4 while its average price is $7. StoreAll Inc. manufactures the
same product for $3 per bottle and sells it for $7 per bottle. Which of the
following statements is most likely true of StoreAll Inc. in this scenario?
A. It has a competitive advantage in the industry.

B. It has a competitive disadvantage in the industry.

C. It has competitive parity with other firms in the industry.

D. It has formed a strategic alliance with other firms in the industry.

#3. A firm is said to gain a competitive advantage when it can:

A. exceed its own previous performances.

B. provide products similar to its competitors, but at lower prices.

C. perform at the same level as that of its competitors.

D. minimize the difference between value creation and cost.

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#4. FindFor Inc. is an e-commerce retail firm that sells a variety of
merchandise online. Through services like cash on delivery, easy return,
and online tracking, the company has created more customer value than its
competitors (brick-and-mortar businesses) at the same price. Also, the
company's costs are substantially low due to minimal investment in
operation and administration. In this scenario, FindFor Inc. has most likely
been able to provide superior value and cost control through _____.
A. strategic parity

B. strategic profiling

C. strategic liquidation

D. strategic positioning

#5. When a firm adopts a differentiation strategy to attain competitive

advantage, it focuses on:
A. delivering unique features to its customers.

B. providing the lowest prices to its customers.

C. maximizing its profits by providing minimal customer service.

D. lowering costs by employing low-skill employees.

#6. For a firm that operates in an industry where competition is high,

which of the following practices will result in inferior performance?
A. Choosing a distinct but different strategic position in the industry

B. Working toward increasing the difference between value creation and cost

C. Trying to be everything to everybody by combining different competitive trategies

D. Focusing on creating value for customers rather than destroying rivals

#7. TakeFlight Airways is a new entrant to the airline industry. While

most of its competitors are pursuing a cost-leadership strategy, TakeFlight
Airways has decided to execute a differentiation strategy. Which of the
following is the most likely implication of this decision?
A. TakeFlight Airways will not gain a competitive advantage in the airline industry.

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B. TakeFlight Airways will gain a competitive advantage by reducing its prices.

C. TakeFlight Airways will face low profit potential by pursuing a different strategy.

D. TakeFlight Airways will create value for customers by delivering unique features.

#8. Pink Couture Inc. and Pink Blush Inc. are two companies in the
apparel industry. While Pink Couture Inc. focuses on providing unique
product features and superior customer service, Pink Blush Inc. focuses on
low prices and minimal customer service. Both companies have been able
to gain a competitive advantage. This is most likely because:
A. the companies have executed integrated strategies.

B. the companies have entered into a cartel arrangement.

C. the companies have pursued distinct strategic positions.

D. the companies have engaged in direct imitation and substitution.

#9. Which of the following statements should ideally reflect a firm's

strategy for competitive advantage?
A. Our strategy is to win at any cost.

B. We will be number one in the industry.

C. Our aim is to create superior customer value while controlling costs.

D. We want to be the market leader by exactly replicating our competitor's strategy.

#10. A company wants to determine how industry effects have affected its
profitability. Which of the following elements should the company focus
on?
A. The barriers to entry and exit within the industry

B. The pricing method opted by the managers to face competition within the industry

C. The brand strategy the managers adopt to establish the firm in the industry

D. The strategic position the firm pursues within the industry

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#11. The management of Five Square Corp. wants to reduce the separation
between ownership (by shareholders) and control of the firm (by
professional managers). Which of the following practices would best help
the company do this?
A. Allowing employees to purchase the stock of the company at a discounted rate

B. Reinvesting the annual profits of the company into research and development

C. Issuing new additional shares to the existing stockholders in proportion to their

current holdings

D. Declaring the annual profits as bonus dividends to the existing stockholders

#12. Which of the following statements accurately describes corporate

social responsibility (CSR)?
A. CSR promotes the view that companies should single-mindedly focus on shareholders
alone.

B. CSR is limited to the notion of encouraging businesses to "just be nice" to society.

C. CSR provides a conceptual model that more completely describes a society's

expectations.

D. CSR is based on the tenet that the needs of both internal and external stakeholders
are the same.

#13. Paying taxes to local government authorities from the annual

revenues generated by a firm represents the firm's _____.
A. philanthropic responsibilities

B. economic responsibilities

C. psychographic responsibilities

D. political responsibilities

Chapter 2:
Strategic Leadership: Managing the Strategy Process
#14. Visionary companies are able to outperform their competitors
because:
A. their vision statements are more product-oriented.
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B. they provide more aspirational visions.

C. their visions are exclusively financial.

D. they isolate internal stakeholders in defining their visions.

#15. Cuisine Pro Inc. is a company that manufactures consumer

electronics like refrigerators, washing machines, and dishwashers. Which
of the following best illustrates a product-oriented vision for Cuisine Pro?
A. To make people's life simple and easy

B. To allow everyone to have the luxury of domestic technology

C. To help people save time and energy spent on household chores

D. To be the pioneering manufacturer of home and kitchen appliances

#16. Which of the following statements is true of customer-oriented

visions?
A. Customer-oriented visions identify how a customer need will be met.

B. Customer-oriented vision statements are not the same as listening to your customer.

C. Customer-oriented visions reduce a company's ability to adapt to a changing

environment.

D. Customer-oriented visions define a business in terms of goods or services provided.

#17. Pioneer Pharma Inc. and GH Medicines Corp. are two competing
firms in the pharmaceutical industry. While Pioneer Pharma Inc.'s vision is
"to be a preeminent drug manufacturer in the industry," GH Medicines
Corp.'s vision is "to make good health a reality for everyone around the
world." Which of the following is an implication of these different visions?
A. GH Medicines's vision is more product-oriented than the vision of Pioneer Pharma.

B. Pioneer Pharma is more likely to have a positive relationship between its vision and
firm performance than GH Medicines.

C. Pioneer Pharma's vision is more long-term and futuristic than GH Medicines's vision.

D. GH Medicines will be more flexible than Pioneer Pharma when adapting to changing
environments.

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#18. As the CEO of a conglomerate, Juana Mark exhibited her strong
commitment toward the company's core value that customer's well-being is
more important than profit when she decided to liquidate the company's
tobacco subsidiary. The tobacco brand sold by her company was a major
revenue earner in lesser-developed nations. However, Juana believed that
her company had to be responsible toward the society. In this scenario,
Juana has demonstrated _____.
A. strategic leadership

B. intrapreneurship

C. Machiavellianism

D. individualism

#19. The pharmaceutical company Merck's new drug Vioxx was a

blockbuster, generating revenues of $2.5 billion a year by 2002 and growing
fast. When allegations began to appear in the medical community, Merck
announced the voluntary withdrawal of Vioxx from the market. In this
example, Merck provides an example of what can happen if a company
deviates from its _____.
A. voluntary responsibilities

B. realized strategy

C. core values

D. strategic decisions

#20. According to the Level-5 leadership pyramid, a manager in Level 1

typically:
A. makes productive contributions through motivation, talent, knowledge, and skills.

B. works effectively with others to achieve synergies and team objectives.

C. presents compelling vision and mission to guide groups toward superior

performance.

D. builds enduring greatness into the organizations he or she leads.

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#21. Richard is a manager. His colleagues and subordinates look up to him
as a man who always does the right things. Along with other skills, his
ability to effectively organize and deploy resources like manpower,
material, and money has been appreciated by his seniors. According to the
Level-5 leadership pyramid, which of the following levels would be the
immediate next step for Richard?
A. Level 2

B. Level 3

C. Level 4

D. Level 5

#22. Which of the following best describes a Level-5 manager in the Level-5
leadership pyramid?
A. Gina is an employee who just started her career GL Inc.; she has already been
appreciated for her knowledge and skills in the new company.

B. Derek is an employee at One Triangle Inc.; he has helped his team achieve their
targets by contributing to the team's efforts.

C. Harry is part of the marketing team at JB Corp.; he has been given the charge of
managing a team of three based on which he will be promoted to a manager's position
next month.

D. Walter is the CEO of Red Autos Inc.; he has helped his company in gaining and
sustaining a competitive advantage through ethical decision making.

#23. The CEO of True West Products Inc. (TWC) is a company that sells a
wide range of products. It has decided to enter the markets of emerging
nations like China and Brazil. This means that the cars, consumer
electronics, and services such as hotels included under the TWC banner
would be made available in these nations. Which of the following strategies
does this scenario best illustrate?
A. Corporate strategy

B. Functional strategy

C. Business strategy

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D. Divisional strategy

#24. As a part of strategy formulation, a firm's functional strategy

primarily concerns questions relating to:
A. where to compete.

B. when to compete.

C. how to implement business strategy.

D. how to enter target markets.

#25. Which of the following statements is true of corporate strategy?

A. The objective of corporate-level strategy is to ensure that the sum of the values of
individual business units is greater than the overall corporate value.

B. A corporate strategy must be able to create synergies across business units that are
quite different.

C. Formulating a corporate strategy involves general managers answering questions

relating to how to compete in order to achieve superior performance.

D. Deciding whether to adopt a differentiation or a cost-leadership strategy is part of

formulating the corporate strategy.

#26. Red Million Inc. is a large company that sells a variety of products
such as apparel, jewelry, canned foods, consumer electronics, and
automobiles. Apart from this, the company also has a strong presence in the
service industry through its chain of hotels, fast food restaurants, and
amusement parks. Each of its product divisions operates as an individual
business and is responsible for its own profits and losses. Thus, these
product divisions under Red Million can be referred to as _____.
A. limited liability companies

B. functional departments

C. strategic business units

D. corporations

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#27. T & R Autos Inc. is a large conglomerate that operates in 12 different
countries. The corporate executives at the headquarters have decided that
the company's objective for the next two years will be to increase its
customer equity. Based on this guideline received from the top
management team, the product leader of the home appliances division has
decided to adopt a cost leadership strategy in all his 12 units. Thus, the
decision made by the product leader best illustrates a _____.
A. corporate strategy

B. functional strategy

C. grand strategy

D. business strategy

#28. _____ is best described as a rational process in which executives at a

company's headquarters take primary responsibility to program future
success of the company they lead.
A. Bottom-up strategic approach

B. Top-down strategic planning

C. Reverse mentoring

D. Emergent strategic plan

#29. Which of the following is a top-down approach to the development of

strategy that involves asking "what if" questions to anticipate plausible
futures?
A. Top-down strategic planning

B. Bottom-up strategic thinking

C. Scenario planning

D. Reverse mentoring

#30. Which of the following methods of developing a strategy best

illustrates scenario planning?
A. Based on the previous year's profits, the CEO of Kelvon Inc. decided to adopt an
expansion strategy in its home market.

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B. A sales personnel of GL Foods Inc. suggested that the company should introduce a
baked version of its potato wafers to cater to the needs of the increasing health-
conscious population.

C. The managers at Vion Autos Inc. formulated a strategy to tackle any increase in the
prices of aluminum sheets in the future.

D. The CEO of DHP Inc., a large conglomerate, has decided to enter the Asian market
based on the competitor's success in the same market.

Chapter 03:
External Analysis: Industry Structure, Competitive Forces, and Strategic
Groups
#31. When companies that manufacture shipping containers want to buy
iron ore, the purchase decision is solely based on price. This is because
there are a large number of sellers in the iron ore industry, and iron ore is a
highly undifferentiated commodity. Which of the following industry
competitive structures does the iron ore industry best illustrate?
A. Monopoly

B. Oligopoly

C. Perfect competition

D. Monopolistic competition

#32. Beans Inc. operates in a perfectly competitive agricultural industry.

Classica Apparel Inc., in contrast, operates in a monopolistically
competitive industry. Keeping this information in mind, which of the
following statements is true?
A. Beans Inc. will face competition from many sellers, whereas Classica Apparel Inc. will
be the only seller in the market.

B. While Classica Apparel Inc. will have the power to set the prices for its products,
Beans Inc. will have little or no ability to do so.

C. Beans Inc. will have many buyers for its products, whereas Classica Apparel Inc. will
have very few buyers for its products.

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D. While Beans Inc. will communicate the degree of product differentiation through
advertising, Classica Apparel Inc. will need no advertising.

#33. Which of the following strategies will be most detrimental to firms

that are close rivals operating in an oligopolistic industry structure?
A. Competing against each other through product differentiation

B. Competing against each other through price-cutting

C. Competing against each other through new-product introductions

D. Competing against each other through lifestyle advertisements

#34. Which of the following statements accurately brings out the

difference between monopolistic competition and an oligopoly?
A. Sellers in an oligopoly provide highly differentiated products; in monopolistic
competition, the products sold are undifferentiated or standardized.

B. In an oligopoly, the number of buyers is large; in monopolistic competition, the

number of buyers is limited to three or four.

C. Firms in an oligopoly have no pricing power; firms in a monopolistically competitive

industry have the ability to raise prices.

D. In monopolistic competition, many firms compete against each other; in an

oligopoly, there are few large firms competing against each other.

#35. The telecommunication industry of United Canava is primarily

dominated by three large firms, AD Telecom Inc., Mystic Telecom Corp.,
and Total Talk Inc. Instead of cutting prices competitively, these firms have
resorted to non-price competition through branding and product
differentiation. Which of the following industry competitive structures are
these companies most likely in?
A. Monopoly

B. Perfect competition

C. Monopolistic competition

D. Oligopoly

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#36. Vibgyor TV Inc. is a large production company that controls a major
portion of the movie industry's market share along with two other firms.
Despite its competitiveness with the two other firms, it is influenced by
their actions and often has to consider their strategic actions before acting
on its own. In this scenario, Vibgyor TV Inc. is most likely functioning in
a(n) _____ industry.
A. oligopolistic

B. monopolistic

C. perfectly competitive

D. monopolistically competitive

#37. Demand for traditional fast-food providers such as McDonald's,

Burger King, and Wendy's has been on a decline in recent years. Consumers
have become more health conscious and demand has shifted to alternative
restaurants like Subway, Chick-fil-A, and Chipotle. Attempts by McDonald's
and Wendy's to steal customers from one another include frequent
discounting tactics such as dollar menus. Such competitive actions are
indicative of _____.
A. profitability increases

B. perfect competition

C. natural monopolies

D. cut-throat competition

#38. Which of the following forces was NOT originally a part of Michael
Porter's fives forces model?
A. Threat of substitute products or services

B. Bargaining power of buyers

C. Rivalry among existing competitors

D. Strategic role of complements

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#39. In the smartphone industry, Google is a complementor to Samsung.
Which of the following statements best explains why this is true?
A. Samsung apps are tailored exclusively for Google smartphones and tablets.

B. Google's smartphones increase in value because they face strong buying power rom
Samsung.

C. Samsung's smartphones increase in value when they are pre-installed with Google's
Android system.

D. Google accounts for a large quantity of Samsung's overall sales.

#40. In which of the following situations is the power of suppliers high in

an industry?
A. Suppliers offer products that are undifferentiated.

B. Suppliers can credibly threaten to backward integrate into the industry.

C. Suppliers depend heavily on the industry for their revenues.

D. Suppliers' industry is more concentrated than the industry it sells to.

#41. Samsung and Google cooperate as complementors to compete against

Apple's strong position in the mobile device industry, while at the same
time Samsung and Google are increasingly becoming competitive with one
another. This scenario best illustrates the process of:
A. co-opetition

B. perfect competition

C. monopolization

D. conglomeration

#42. Which of the following is a drawback of Porter's five forces model?

A. The model describes competition narrowly as a firm's closest competitors.

B. Managers cannot determine the changing speed of an industry or the rate of

innovation.

C. It fails to provide a basis for deriving implications for a firm's strategic position
within an industry.

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D. The model fails to consider that threat of substitutes can come from outside a given
industry.

#43. Which of the following is likely to happen due to horizontal mergers

between competitors such as Vietnam Airline and Vietjet Air?
A. The overall industry profitability will increase.

B. The threat of strong competitive forces such as supplier power will increase.

C. The industry will face excess capacity in the future.

D. The structure of the industry will change from consolidated to one that is fragmented.

Chapter 04:
Internal Analysis: Resources, Capabilities, and Core Competencies

#44. Nike has come a long way from its humble beginnings. It has been
able to outperform Adidas in sales and become the undisputed leader in the
athletic shoe and apparel industry. Which of the following statements
accurately explains one of the main reasons for Nike's success?
A. It stopped spending money on celebrity endorsements and started restricting its
expenditure for sponsoring only track and field sports stars.

B. It made the unorthodox move to spend basically its entire budget for a specific sport
on a single star athlete.

C. It spread its marketing budget more widely.

D. It focused on sponsoring future athletic superstars who embodied a likely success

story.

#45. _____ are best described as unique strengths, embedded deep within
a firm, that allow a firm to differentiate its products and services from
those of its rivals, creating higher value for the customer or offering
products and services of comparable value at lower cost.
A. Resource leverages

B. Core competencies

C. Capital gains

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D. Equity reserves

#46. True Sync Inc. is a software company, which has built and acquired
numerous assets over the years. According to the resource-based view of a
firm, which of the following assets of True Sync Inc. will best enable it to
gain and sustain a competitive advantage?
A. The resources of the company that are mobile

B. The capital raised by the company from its shareholders

C. The expertise acquired by the employees in the company

D. The headquarters owned by the company

#47. Coral Think Inc. is a new company in the publishing industry. It has
raised sufficient capital from multiple sources. It is planning to use its
capital to purchase certain assets. Which of the following assets will be the
most difficult for Coral Think Inc. to acquire using its capital?
A. Inventory

B. Tools and equipment

C. Land and building

D. Brand name

#48. Trust Machines Inc. is a company that manufactures and markets

consumer electronics. The unique microprocessors developed by the
company contribute to its high resource immobility. According to the
resource-based view of competitive advantage, which of the following is an
implication of this situation?
A. The competitive advantage of Trust Machine Inc. will soon be lost.

B. The resource heterogeneity of Trust Machine Inc. is low within the industry.

C. The resources of Trust Machine Inc. are difficult to replicate or imitate.

D. The environment in which Trust Machine Inc. operates is closest to perfect

competition.

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#49. Gene Craft Inc. is the market leader in the pharmaceutical industry.
Though most of its resources are common to those of its competitors, a few
rare resources have helped the company gain and sustain a competitive
advantage. Which of the following assets of Gene Craft Inc. is most likely to
be considered a rare resource that is best contributing to its competitive
advantage?
A. The company's land and buildings

B. The company's plant and machinery

C. The company's raw material supplies

D. The company's chemical patents

#50. With regard to the VRIO framework, Crocs Shoes was unable to
sustain its competitive advantage primarily because its products were:
A. invaluable and common.

B. easy to imitate.

C. extremely expensive.

D. non-substitutable.

#51. Sarah has recently started a restaurant in a commercial area where

there are many other established restaurants and popular fast food chains.
Sarah owns the plot on which her restaurant is located and this makes her
cost of operations lower than the competitors. This factor allows her to
offer her products at a competitive price. Sarah has also invested a huge
amount on the interiors of the restaurant and in equipping the kitchen with
the latest appliances used by her competitors. In this scenario, which of the
following is the most valuable resource for Sarah's business?
A. The investments made by Sarah on the restaurant's interiors

B. The latest kitchen equipment that is at par with the restaurant's competitors

C. The restaurant's late entry into the market

D. The land owned by Sarah, which reduces cost of operations

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#52. True Moto Corp. (TMC) is a leading automobile company. The
company has been able to sustain its competitive advantage primarily due
to its high quality and efficient electric motors. Most of its competitors have
failed to develop similar electric motors at a reasonable price. Which of the
following resource attributes listed in the VRIO framework has helped TMC
sustain its competitive advantage?
A. Resource mobility

B. Inexhaustible nature

C. Intangibility of the company's resource

D. High costs involved in imitation

#53. Even though many valuable, rare, and inimitable resources were
generated at Xerox's Palo Alto Research Center (PARC), the management at
Xerox's headquarters failed to gain a competitive advantage by exploiting
the breakthroughs in computing software and hardware. What is the most
likely implication of this example?
A. It is advisable to outsource research and development functions.

B. Competitive advantage cannot be gained through unrelated diversification.

C. A firm must be effectively organized to capture value.

D. It is better to build competitive advantage on tangible assets rather than intangible

assets.

#54. Which of the following is NOT a condition that can help a firm sustain
its competitive advantage?
A. When managers have consistently better expectations about the future value of
resources

B. When the resource advantage can only be imitated after a long period of time

C. When past decisions act as constraints for the current dynamic capabilities

D. When the source of the competitive advantage is causally ambiguous

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 Chapter 05:
Competitive Advantage, Firm Performance, and Business Models

#55. The payable turnover for Apple and BlackBerry (as of fiscal year
2012) was 7.4 and 24.8 respectively. From this data we can conclude that:
A. BlackBerry has taken a longer time to pay its creditors as compared to Apple.

B. Apple has been more efficient than Blackberry in paying creditors and generating
interest-free loans from suppliers.

C. BlackBerry has a clear advantage over Apple as its credits are paid much faster than
that of Apple.

D. BlackBerry can extend its payment periods, while Apple is required to pay its
creditors more quickly.

#56. The receivables turnover of GD Products Inc. is 13.6 and that of its
competitor, AP Goods Inc., is 6.0. What does this financial data primarily
imply?
A. GD Products is less efficient than AP Goods in collecting accounts receivables.

B. AP Goods pays its creditors more quickly as compared to GD Products.

C. GD Products collects accounts receivables faster than what AP Goods does.

D. AP Goods has a larger value gap as compared to GD Products.

#57. Which of the following is an external performance metric?

A. Return on revenue

B. Fixed assets turnover

C. Inventory turnover

D. Total return to shareholders

#58. A firm has 30 million shares outstanding, and each share is traded at
$100. Also, each shareholder gets a dividend of $2000 annually. In this
case, the market capitalization is _____.
A. 30,000 shares, that is, 30 million shares/$100

B. $200,000, that is, $2000 × $100

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C. $3 billion, that is, 30 million shares × $100

D. 20:1, that is, $2000/$100

#59. Which of the following is a disadvantage of measuring firm

performance through total return to shareholders and firm market
capitalization?
A. Market volatility makes it difficult to assess firm performance through these
measures, particularly in the short term.

B. These tools fail to indicate how the stock market views all available public
information about a firm's expected future performance.

C. These tools measure competitive advantage in absolute terms rather than relative
terms.

D. Only the book value of the share prices is taken into account when applying these
measures, and not the market value.

#60. _____ is best described as the difference between a buyer's

willingness to pay for a product or service and a firm's total cost to produce
it.
A. Economic value created

B. Break-even point

C. Consumer surplus

D. Cost of capital

#61. A firm incurs $100 to manufacture an office table. It fixes the market
price of the table as $250, and discounts the price to $200. However, the
maximum a person is willing to pay for it is $180. What is the amount of
total perceived consumer benefits in this scenario?
A. $250

B. $200

C. $180

D. $100

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#62. Loi Nguyen paid $900 for a camera that he thought was worth $1100
for all the features included in it. For the consumer electronics firm selling
the camera, however, the cost of producing the camera was only $350.
What is the consumer surplus in this scenario?
A. $900

B. $1100

C. $550

D. $200

#63. Economic value creation is best expressed as _____.

A. producer surplus minus consumer surplus

B. consumer surplus minus cost of production

C. consumer surplus plus firm profit

D. producer surplus plus firm profit

#64. BKAV Electronics Inc. incurs a cost of $350 to produce one unit of a
Bphone. The company's management has priced the product at $600 in the
market. Considering the technological advancement of the Bphone,
customers perceive its value to be around $800. What is the economic value
created in this scenario?
A. $350

B. $450

C. $800

D. $200

#65. Which of the following is NOT an accurate expression of the economic

value created per unit of a product sold?
A. The sum of consumer surplus and producer surplus

B. The difference between consumer's reservation price and firm's cost

C. The sum of consumer surplus and firm profit

D. The difference between the price charged and the firm's cost

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#66. The cost of capital to create a product is a fixed cost because it is:
A. directly proportional to the output level.

B. uniform throughout all firms and industries.

C. not a part of the profit calculations.

D. unaffected by consumer demand.

#67. _____ are best described as the value of the best forgone alternative
use of the resources employed.
A. Variable costs

B. Opportunity costs

C. Social costs

D. Switching costs

#68. Which of the following is NOT a limitation of the economic value

creation framework?
A. The framework falls short when managers are called upon to operationalize
competitive advantage.

B. The framework is not as effective as accounting profitability or shareholder value

creation when the need for "hard numbers" arises.

C. The framework fails to provide the foundation that will help firms decide between
cost-leadership or differentiation strategies.

D. The framework cannot be effectively applied for assessing corporate-level

performance of diversified conglomerates.

#69. Which of the following frameworks used to measure competitive

advantage relies on both an internal and an external view of a firm?
A. The economic value creation model

B. The accounting profitability model

C. The shareholder value creation model

D. The balanced scorecard model

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 Chapter 06:
Business Strategy: Differentiation, Cost Leadership, and Integration

#70. Free Color Inc. is an apparel company that caters to the highly price-
conscious customers. Through its simple apparel designs, acceptable
quality levels, and minimal customer service, the company has been able to
sell its merchandise at the lowest prices in the industry. Which of the
following generic business strategies is Free Color applying?
A. Cost-leadership

B. Differentiation

C. Niche marketing

D. Product diversification

#71. Vin Mart is a chain of supermarkets that sells its products at higher
prices than its competitors. Yet, the supermarket chain has a large
customer base due to its wide product portfolio and superior customer
service. Which of the following generic business strategies has Vin Mart
adopted in this scenario?
A. Cost-leadership

B. Differentiation

C. Market penetration

D. Product diversification

#72. “Ngon” is a restaurant that caters to the needs of a small percentage

of highly health-conscious consumers. It has an all-organic, vegan menu.
Since there are very few restaurants that offer the same unique services,
customers are willing to pay a premium price for its products and services.
In this scenario, “Ngon” is following a _____.
A. product diversification strategy

B. liquidation strategy

C. mass market strategy

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D. focused differentiation strategy

#73. Both VTB Electronics Inc. and JL Electronics Inc. incur a cost of $400
to manufacture an LED television. However, the economic value created by
JL Electronics is more than that created by VTB Electronics. What does this
indicate?
A. VTB Electronics has a competitive advantage over JL Electronics.

B. Both VTB Electronics and JL Electronics have achieved competitive parity.

C. JL Electronics can charge a premium price on its televisions.

D. VTB Electronics has created a higher value gap than JL Electronics.

#74. Coral Orchids is a chain of premium hotels around the globe that
charges higher prices for its rooms and suites when compared to the
average industry standards. Yet, the hotel enjoys the largest market share
in the industry. This is mainly due its highly responsive staff that has a
strong commitment toward achieving a 100 percent guest satisfaction. In
this scenario, which of the following is the key value driver?
A. Superior customer service

B. Low cost of input factors

C. Availability of complements

D. Economies of scale

#75. Both BioThink Inc. and GD Pharma Inc. have discovered similar
vaccines to prevent cancer. While GD Pharma's vaccine sells at $100 per
unit, BioThink sells its vaccine at $90 per unit. This price differentiation
has mainly been attributed to the companies' capital decisions. While
BioThink used its retained earnings to develop the vaccine, GD Pharma
borrowed funds from banks to develop the vaccine. Thus, GD Pharma pays
a higher interest on its capital, which makes it necessary to price its vaccine
higher. Thus, the key driver for BioThink's competitive advantage is:
A. low-cost input factors.

B. economies of scale.

23
C. superior customer service.

D. availability of complements.

#76. Aeon Inc. is a large chain of hypermarkets. It has cost benefits due to
its extensive operation. The company's marketing and sales, logistics,
administrative, and other such related costs get divided between a large
number of product units stocked in its stores. This makes it difficult for
smaller retail stores and supermarkets to compete against Aeon's low
prices. Thus, Aeon has a competitive advantage due to its_________
A. superior customer service.

B. time compression economies.

C. economies of scale.

D. learning-curve effects.

#77. A differentiation strategy works best when a:

A. firm has tangible resources, its focus of competition shifts to price, and equivalent
substitutes are readily available.

B. firm's focus of competition shifts to price, and when increasing differentiation of

product features do not create additional value.

C. firm's differentiated products are commoditized, and costs of providing uniqueness

do not rise above the customer's willingness to pay.

D. firm has intangible resources, is able to pass on increases in supplier cost to the
customer, and its differentiation appeal creates customer loyalty.

#78. Which of the following statements accurately brings out the

difference between economies of scale and economies of scope?
A. Economies of scale refer to the decreases in per-unit cost with decreases in output,
whereas economies of scope refer to the increases in per-unit cost with increases in
output.

B. Economies of scale result in decreasing returns to scale, and economies of scope

result in constant returns to scale.

C. Economies of scope are the savings that come from producing two or more outputs
from the same resources, whereas economies of scale are decreases in per-unit cost with
increases in output.
24
D. Economies of scope are realized when a firm operates at the minimum efficient scale,
whereas economies of scale are realized when the firm operates beyond the minimum
efficient scale.

#79. According to the five forces model, which of the following is viewed as
a major risk to a business pursuing a cost-leadership strategy?
A. Competition switching from non-price attributes to pricing

B. Innovation that allows competitors to emerge with more economical replacements

C. New entrants with small production scale

D. Suppliers requesting a 2% price increase across the industry

#80. In the multiplex industry, Vibrant Movies Inc. is an upscale multiplex

that focuses on superior customer experience. The firm charges premium
prices for its movie tickets and services. Global Cine Inc., in contrast,
charges the lowest price in the industry with its no-frills approach. In
between these two segments is True Movies Inc., which offers a customer
experience comparable to that of Vibrant Movies at a price almost as low as
that of Global Cine. What strategy is True Movies pursuing in this scenario?
A. Liquidation strategy

B. Product diversification strategy

C. Market penetration strategy

D. Integration strategy

#81. Innovate Electronics Inc. allows its customers to personalize their

refrigerators in terms of the dimensions, the panels inside, and the color
and design of the outer body. Also, customers can include additional
features like in-built radios, extra lights, and cold water dispensers based
on their individual requirements. The company successfully manufactures
these tailor-made goods at a relatively low unit cost and provides it to the
customers at a price almost equal to that of the standard refrigerators sold
by other companies. What does this scenario best illustrate?
A. Mass customization

25
B. Cannibalization

C. Product standardization

D. Direct imitation

Chapter 07:
Business Strategy: Innovation and Entrepreneurship

#82. After Jeff Bezos read about how the Internet was growing by 2,000
percent a month, he set out to use the Internet as a new distribution
channel and founded Amazon, which is now the world's largest online
retailer. This is clearly an example of a(n):
A. firm that uses closed innovation.

B. entrepreneur who commercialized invention into an innovation.

C. business that entered the industry during its maturity stage.

D. exception to the long tail business model.

#83. FindFriend is an instant messaging application for smartphones. New

smartphone users find it easier to connect with friends and relatives
through this mobile app when compared to other similar instant messaging
applications. Hence, it has the largest user base in the industry. Thus,
FindFriend app's value has increased primarily due to its _____.
A. learning curve effects

B. economies of scale

C. economies of scope

D. network effects

#84. In the context of industrial growth, which of the following statements

is true of standards?
A. Standards emerge exclusively from bottom-up through competition in the
marketplace.

26
B. As the size of a market expands, a standard signals the market's agreement on a
common set of engineering features and design choices.

C. Standards are exclusively imposed top-down by government or other standard-

setting agencies such as the Institute of Electrical and Electronics Engineers.

D. After a standard is established in an industry, the basis of competition tends to move

away from process innovations toward product innovations.

#85. While cell phones with holographic keyboards are currently in the
introduction stage of the industry life cycle, tablet computers are in the
growth stage. In the context of this scenario, which of the following
statements is true?
A. The industry for cell phones with holographic keyboards will face greater competition
than the tablet industry.

B. While the industry for cell phones with holographic keyboards will focus on product
innovation, the tablet industry will focus on process innovation.

C. While the industry for cell phones with holographic keyboards can reap the benefits
of economies of scale, the tablet industry will experience no such benefits.

D. The industry for cell phones with holographic keyboards will face price competition,
whereas, in the tablet industry, the mode of competition will be non-price.

#86. In emerging economies, the LCD television industry is in that phase of

the industry life cycle in which the previously increasing market demand
becomes limited. The competitive intensity within the industry is high, and
inefficient firms have begun to exit the industry. This has allowed only a few
major companies to come out as cost leaders and hold the shrinking
market. Which of the following stages of the industry life cycle is the LCD
television industry currently in?
A. Growth stage

B. Introduction stage

C. Shakeout stage

D. Decline stage

27
#87. In developed economies, the electric car industry is in the
introduction stage, and the industry for MP3 players is in the shakeout
phase. What does this imply?
A. The mode of competition in the electric car industry will be based on price, whereas
in the MP3 player industry, the mode of competition will be non-price based.

B. The industry for electric cars will focus more on product innovation, whereas in the
MP3 player industry, the focus will be on process innovation.

C. The electric car industry will move to the maturity stage, whereas the industry for
MP3 players will enter the growth stage next.

D. The industry for electric cars will primarily pursue an integration strategy, whereas in
the MP3 players industry, the focus will be on differentiation.

#88. A few efficient and strong firms in the laptop industry have remained
and emerged successful from the shakeout stage. Which of the following
stages of the industry life cycle will they move to next?
A. Growth stage

B. Introduction stage

C. Maturity stage

D. Decline stage

#89. While the industry for e-book readers is in its growth stage, the
industry for landline telephones is in the decline stage of the industry life
cycle. Which of the following can be inferred from this?
A. While firms in the e-book reader industry will focus on pursuing a harvest strategy,
firms in the landline telephone industry will focus on product innovations.

B. The e-book reader industry is at a more advanced stage than the landline industry of
the industry life cycle.

C. While firms in the e-book reader industry will attract customers categorized under
late majority, firms in the landline telephone industry will attract the early majority
customers.

D. The number of competitors in the e-book reader industry will be larger when
compared to the landline telephone industry.

28
#90. While the industry for 3D televisions is in the introduction stage of
the industry life cycle, the CRT (Cathode ray tube) television industry is in
its decline stage. Which of the following statements will be true in this
scenario?
A. The market size for 3D televisions is extremely large, while the market size for CRT
televisions is moderate.

B. While product innovation will be at its maximum for the 3D television industry,
process innovation will be more crucial for the CRT television industry.

C. The focus in the 3D television industry will be on cost-leadership, whereas in the CRT
television industry, the focus will be on differentiation.

D. While the strategic objective of the CRT television industry will be achieving market
acceptance, the strategic objective of the 3D television industry will be pursuing a
harvest strategy.

#91. While the personal computer industry is flooded and growing with
laptops and tablets, John recently bought a desktop, his first personal
computer. He realized that a computer at home would be helpful for his
children for their school projects, and he could use it to maintain the simple
accounts of his plumbing business. Which of the following customer
segments does John best represent?
A. Early adopters

B. Category captains

C. Laggards

D. Early majority

#92. ModelLife Electronics Inc. is a company that builds diagnostic

devices. It was the first company to develop a compact MRI scanner by
reconfiguring the components of the MRI technology. This smaller and
user-friendly version of the huge MRI scanner created demand from small
hospitals, nursing homes, and private practice doctors who were earlier
dependent on the scanning machines in large hospitals. Which of the
following types of innovations does this scenario best illustrate?
A. Disruptive innovation

29
B. Incremental innovation

C. Radical innovation

D. Architectural innovation

#93. Which of the following statements is true of a disruptive innovation?

A. It begins as a low-cost solution to a new problem.

B. It initially performs better than the existing technology.

C. It involves leveraging existing technologies in new markets.

D. It invades the market from the bottom up, by first capturing the low end.

#94. As a start-up company, Virtue Mobiles Inc. entered the low end of the
highly competitive cell phone industry with its low-cost smartphones.
Initially, the company was able to sell its inferior technology due to its low
prices. Over the years, however, its rate of technology improvements
increased above the industry standards. This helped the company to create
a strong strategic position for its smartphones in the high-end segment and
claim a premium price. Which of the following types of innovation does this
scenario best illustrate?
A. Radical innovation

B. Incremental innovation

C. Architectural innovation

D. Disruptive innovation

#95. Digital photography replacing film photography would be an example

of a(n) _____.
A. regressive innovation

B. radical innovation

C. architectural innovation

D. disruptive innovation

30
#96. Which of the following is stated by the long tail phenomenon?
A. When production is increased by 80 percent, the decrease in cost is close to 20
percent due to economies of scale.

B. To gain a competitive advantage, it is necessary for a business to internalize 80

percent of its R&D, and outsource the remaining 20 percent.

C. For an incumbent firm, 80 percent of its revenue comes from existing customers, and
new customers account for the remaining 20 percent.

D. Almost 80 percent of sales in a given product category come from only 20 percent of
the offerings in that category.

Chapter 08:
Corporate Strategy: Vertical Integration and Diversification

#97. Grace Apparel Inc. has decided to procure fabrics required for its
garments from external suppliers instead of maintaining its own dyeing
and weaving facilities. How will this decision affect the firm?
A. The firm will be protected against the principal-agent problem.

B. The firm's administrative costs will be low because of necessary bureaucracy.

C. The firm will have more flexibility in purchasing and comparing prices of goods and
services.

D. The firm will have high-powered incentives, such as hourly wages and salaries.

#98. A drawback of short-term contracting as an alternative to making a

component in-house is that:
A. it is the most-integrated alternative to performing an activity so the principal
company has no control over the agent.

B. the supplying firm has no incentive to make any transaction-specific investments to

increase performance or quality.

C. it fails to allow a long planning period that individual market transactions provide.

D. the buying firm cannot demand lower prices due to the lack of a competitive bidding
process.

31
#99. _____ are best described as voluntary arrangements between firms
that involve the sharing of knowledge, resources, and capabilities with the
intent of developing processes, products, or services to lead to competitive
advantage.
A. Embargos

B. Cartel agreements

C. Strategic alliances

D. Corporate acquisitions

#100. _____ is best described as a form of long-term contracting in the

manufacturing sector that enables firms to commercialize intellectual
property.
A. Lean manufacturing

B. Licensing

C. Crowdsourcing

D. Bootlegging

#101. Silver Weave Inc., an apparel company, operates through a business

model in which individuals can buy the rights to set up Silver Weave stores
and sell the company's merchandise in return for a lump sum fee at the
beginning of the contract and a percentage of revenues every month. The
owners of the stores have to stock the collection approved from the
company's headquarters and also maintain consistent customer service as
expected in its flagship store. Which of the following alternatives to
integration does this best illustrate?
A. Crowdsourcing

B. Credit Rationing

C. Franchising

D. Bootstrapping

32
#102. Divina Pharma Inc. and MF Electronics Inc. have together invested
and created a new organization, FirstHealth Inc., to focus on developing
diagnostic devices. Through this new firm, both companies are attempting
to combine their core competencies to innovate and reduce their risks
associated with transaction-specific investments. However, the new
organization operates independent of Divina Pharma and MF Electronics.
Which of the following alternatives to integration does this scenario best
illustrate?
A. A joint venture

B. A franchisee

C. A licensing contract

D. A corporate acquisition

#103. Which of the following alternatives on the make-or-buy continuum

allows for most integration?
A. Short-term contracting

B. Joint ventures

C. Licensing

D. Parent-subsidiary relationship

#104. _____ is best described as a firm's ownership of its production of

needed inputs or of the channels by which it distributes its outputs.
A. Venture capitalism

B. Bootlegging

C. Vertical integration

D. Crowdsourcing

#105. _____ is best described as changes in an industry value chain that

involve moving ownership of activities closer to the end (customer) point of
the value chain.
A. Forward vertical integration

33
B. Corporate divestiture

C. Reverse engineering

D. Closed innovation

#106. Neon Electronics Inc. sourced touchscreens required for its tablet
computers, cell phones, and televisions from a manufacturer in China. But
the demand for such components was high globally, and the supplier could
not meet the quality standards of Neon Electronics. Thus, Neon Electronics
decided to set up its own unit to develop and manufacture the required
touchscreens. What does this scenario best illustrate?
A. Crowdsourcing

B. New product development

C. Backward vertical integration

D. Conglomerate diversification

#107. Which of the following best illustrates forward vertical integration?

A. A firm that manufactured and sold car engines to major automobile companies
launches its own line of cars.

B. A chain of ice cream parlors launches a brand of toys and accessories for children.

C. A multinational coffee chain sources its coffee beans from plantations in Brazil and
Vietnam.

D. A designer shoe company that previously purchased leather from external suppliers
establishes its own leather tannery.

#108. PepsiCo operates in many countries and sells a wide variety of aerated
drinks, other beverages, different types of chips, and Quaker Oats goods to
achieve continuous growth. From this data, we can conclude that PepsiCo
has been involved in _____.
A. strategic outsourcing

B. lean manufacturing

C. product-market diversification

D. process diversification

34
#109. _____ is best described as an increase in the variety of products and
services a firm offers or markets and the geographic regions in which it
competes.
A. Taper integration

B. Open innovation

C. Diversification

D. Differentiation

#110. Evara Inc. started as a luxury brand for designer apparel. Soon, the
company expanded by launching its own line of premium perfumes,
watches, bags, and home furnishings. This expansion allowed the
businesses under the company to share a few, if not all, of the common
competencies in products, services, technology, and distribution. Which of
the following corporate strategies is Evara pursuing in this scenario?
A. Taper integration strategy

B. Niche marketing strategy

C. Related-constrained strategy

D. Related-linked strategy

Chapter 09:
Corporate Strategy: Mergers and Acquisitions, Strategic Alliances

#111. The success of the Pixar-Disney strategic alliance demonstrated that:

A. Disney was in desperate need of Pixar's graphic display systems.

B. the two entities' complementary assets matched.

C. it was easier for the alliance partners to reduce the value gap created.

D. the companies were effectively managing an unrelated diversification strategy.

#112. When does a merger between companies typically occur?

A. When two firms of comparable size join to form a combined entity

35
B. When large, incumbent firms buy startup companies

C. When a target firm does not want to be acquired

D. When two or more firms enter a temporary vertical strategic alliance

#113. The Mansion Hotel Group purchased Red Brick Hotels for an
estimated value of $120 billion. All the hotels previously owned by Red
Brick Hotels are now managed by the Mansion Hotel Group and are known
as Mansion hotels. What does this scenario best illustrate?
A. A merger

B. A joint venture

C. An acquisition

D. An equity alliance

#114. Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This
allowed Titan Autos to use its technological competencies along with Cadvia
Autos's marketing capabilities to capture a larger market share than what
the two entities individually held. What does this scenario best illustrate?
A. Backward integration

B. Forward integration

C. Horizontal integration

D. Vertical integration

#115. PureSource Pharma Inc. recently acquired BioChem Pharmaceuticals

Inc. It now sells its own products along with the products originally sold by
BioChem Pharmaceuticals. As a result, PureSource Pharma's sales force
will also be marketing the acquired company's products. How will this
horizontal integration most likely affect PureSource Pharma?
A. PureSource Pharma will lower its costs through economies of scale.

B. PureSource Pharma will diminish its economic value creation.

C. PureSource Pharma will increase its cost of distribution.

D. PureSource Pharma will reduce the size of its sales force.

36
#116. Which of the following reasons motivated Facebook to acquire
Instagram, a photo and video-sharing social media site, for $1 billion in
2012?
A. The desire to gain a new capability

B. The need to enter a new geographical market

C. The need to reduce its level of horizontal integration

D. The desire to pursue an unrelated diversification strategy

#117. The main reason behind Google's decision to acquire the Israeli
startup company Waze for $1 billion was to:
A. preempt its competitors from buying Waze.

B. share its capabilities with Waze.

C. support startup companies with venture capital.

D. gain access to technology that is alien to it.

#118. While Cisco Systems has been successful in selecting and buying both
big and small technology ventures, HP had to write off some of its recent
technology acquisitions. Which of the following statements best explains
this scenario?
A. Cisco was successful due to its unrelated diversification, whereas HP failed by
pursuing a related-linked diversification strategy.

B. Cisco treated the management of the larger firms it took over more like acquisitions,
whereas HP treated its acquisitions as strategic alliances.

C. The acquisitions were successful as the learning and experience curve effects were
low.

D. Acquisition and integration capabilities were not equally distributed across firms.

#119. A _____ is best described as a voluntary arrangement between firms

that involves the sharing of knowledge, resources, and capabilities with the
intent of developing processes, products, or services.
A. proprietorship

B. cooperative

37
C. strategic alliance

D. leveraged buyout

#120. How did Apple plan to attack Amazon's stronghold in the e-reader
market?
A. It orchestrated a web of strategic alliances with major publishing houses.

B. It directly imitated Amazon's Kindle product technology.

C. It acquired startup publishing houses prior to launching its iPad product.

D. It sold e-books at prices lesser than that of Amazon.

#121. Why did Yahoo enter into a strategic alliance with Microsoft?
A. To pursue an unrelated diversification strategy

B. To overcome its competitive disadvantage in comparison to Google

C. To invest its excess cash flow in Microsoft's superior technology

D. To share its continuously updated search technology with Microsoft

#122. Aro Shoes Inc. and Mova Shoes Inc., two competing shoe brands,
entered into a strategic alliance to study and acquire each other
competencies. Aro Shoes entered the strategic alliance to acquire the
production system pioneered by Mova Shoes. Similarly, Mova Shoes agreed
to the strategic alliance to study the designing process of Aro Shoes.
However, Aro Shoes was more successful and faster than Mova Shoes in
accomplishing its alliance goal. What does this scenario best illustrate?
A. Network effects

B. Economies of scope

C. Learning races

D. Time compression diseconomies

38
 Chapter 10:
Global Strategy: Competing Around the World
#123. Japanese and European engineering companies entered China to
participate in building the world's largest network of high-speed trains
worth billions of dollars. Companies such as Kawasaki Heavy Industries
(Japan), Siemens (Germany), and Alstom (France) were joint-venture
partners with domestic Chinese companies. These firms now allege that the
Chinese partners built on the Japanese and European partners' advanced
technology to create their own, next-generation high-speed trains. This
example best highlights the _____ that firms can experience when
expanding overseas.
A. threat of new entrants

B. liability of foreignness

C. loss of reputation

D. intellectual property exposure

#124. Welcome Inc. is a global Internet company that offers country-

specific variations of its sites, keeping in mind the linguistic and religious
differences between the countries. Welcome Inc. is most likely doing this
to:
A. reduce its geographical distance from the other countries.

B. increase its administrative distance from the other countries.

C. increase its economic distance from the other countries.

D. reduce its cultural distance from the other countries.

#125. Which of the following statements is true with regard to international

trade between countries?
A. Greater cultural distance between the home and host countries decreases the liability
of foreignness to multinational companies.

B. Colony-colonizer relationships have a strong negative effect on bilateral trade

between countries.

C. Wealthy countries engage in relatively more cross-border trade than poorer ones.

39
D. Political integrations decrease the expected trade intensity between two countries.

#126. Which of the following statements best explains why Walmart is

finding it difficult to replicate its existing business model in India?
A. Because of the political differences between India and U.S.

B. Because NAFTA prohibits Walmart from investing in countries outside North

America

C. Because of the large economic distance between U.S. and India

D. Because Walmart's low-cost strategy has not been accepted by Indian consumers

#127. Which of the following modes of entering a foreign market allows for
the lowest level of control?
A. Greenfield ventures

B. Exporting

C. Joint ventures

D. Acquisitions

#128. Which of the following types of organizations comparatively requires

the lowest levels of investment and control?
A. Joint ventures

B. Franchising

C. Acquisition

D. Greenfield operations

#129. Which of the following is not included within the types of strategic
alliances?
A. Joint ventures

B. Franchising

C. Acquisitions

D. Licensing

40
#130. For a multinational enterprise (MNE), applying the globalization
hypothesis would mean:
A. being highly responsive to the heterogeneous needs and preferences of consumers
globally, without focusing on cost reduction.

B. customizing each product sold by an enterprise to differentiate it from its

competitors.

C. manufacturing products on international platforms and slightly modifying them to

meet local tastes and standards.

D. pursuing a focused differentiation strategy instead of a cost-leadership strategy to

gain a competitive advantage.

41
 SHORT ESSAY QUESTIONS
Chapter 01:
What Is Strategy, and Why Is It Important?
#131. What are the economic responsibilities of a business? Give Example?

#132. What are the three important stakeholder attributes that managers need to pay
attention to during all stages of the stakeholder impact analysis?

Chapter 2:
Strategic Leadership: Managing the Strategy Process
#133. Comment on the statement “Customer-oriented visions do not define how a
customer need will be met.”

#134. Discuss how managers progress with each level in the level-5 leadership pyramid.

Chapter 03:
External Analysis: Industry Structure, Competitive Forces, and Strategic
Groups
#135. List the five macroeconomic factors that can affect a firm's strategy. Explain.

#136. What are the two key insights that form the basis of Michael Porter's seminal five
forces model.

Chapter 04:
Internal Analysis: Resources, Capabilities, and Core Competencies
#137. Describe the core competencies of any three successful companies in today's
business environment.

#138. In the context of the VRIO Framework, what does a valuable resource mean?

Chapter 05:
Competitive Advantage, Firm Performance, and Business Models
#139. Explain the freemium business model with the help of an example.

#140. Describe the razor-razor-blade business model with the help of an example.

Chapter 06:
Business Strategy: Differentiation, Cost Leadership, and Integration
#141. Briefly explain the difficulties in pursuing an integration strategy.

#142. List the value and cost drivers that managers can use to pursue an integration
strategy with the help of examples.

42
 Chapter 07:
Business Strategy: Innovation and Entrepreneurship
#143. Compare closed and open innovation models.

#144. How does the long tail business model allow online retailers to overcome the
problem of thin markets?

Chapter 08:
Corporate Strategy: Vertical Integration and Diversification
#145. What are the two types of additional costs associated with a related-
diversification strategy?

#146. Briefly discuss the application of the Boston Consulting Group (BCG) growth-
share matrix.

Chapter 09:
Corporate Strategy: Mergers and Acquisitions, Strategic Alliances
#147. What are the necessary conditions for selecting a partner for successful alliance
formation?

#148. What are the advantages and disadvantages of a joint venture?

Chapter 10:
Global Strategy: Competing Around the World
#149. Discuss national competitive advantage with the help of examples.

#150. China is infamous for its rampant business in illegal materials. Explain.

43