Mqm 385 Exam 2

Front 1

A fragmented industry is composed of a large number of small and medium-sized companies

Back 1

True

Front 2

Through chaining, companies increase their buying power, which allows them to negotiate large price reductions with their suppliers, which in turn promotes their competitive advantage.

Back 2

True

Front 3

It can be argued that Microsoft's near monopoly of PC operating systems helped raise the level of industry profitability

Back 3

True

Front 4

Ownership of an industry standard that is protected from imitation by patents and copyrights is a weak organizational resource

Back 4

False

Front 5

Pressure for cost reductions encourages a firm to pursue a cost-leadership strategy, while pressure for local responsiveness encourages a firm to pursue differentiation

Back 5

True

Front 6

An early mover entering a foreign country will experience many advantages but few or no disadvantages

Back 6

False

Front 7

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources

Back 7

True

Front 8

Vertical integration can raise costs if, over time, a company continues to purchase inputs from company-owned suppliers when independent suppliers can supply the same inputs at lower cost

Back 8

True

Front 9

Free cash flow refers to additional funds from a government stimulus program

Back 9

False

Front 10

Intel is an example of a company that moved from a related diversification strategy to a concentration strategy

Back 10

False

Front 11

Franchising is a business-level strategy that allows companies to

a. spread overhead and administrative costs over a large number of franchises

b. enjoy the competitive advantages of cost leadership or differentiation

c. hedge the costs of supplies

d. expand beyond their base of support

e. engage in new businesses that were previously beyond reach

Back 11

B. enjoy the competitive advantages of cost leadership or differentiation

Front 12

Amazon.com and eBay are examples of companies that

a. used the Internet to increase retail sales.

b. employed technology to consolidate what had previously been a fragmented industry

c. pursue a cost-leadership model

d. all of these choicese. none of these choices

Back 12

D. all of these choices

Front 13

Which is of the following is a technical standard

a. Typewriter keyboard

b. Dimensions of containers used to ship goods on trucks, railcars, and ships

c. Universal Serial Bus (USB)

d. Communication between a PC and the I nternet via a modem (TCP/IP)

e. All of them

Back 13

E. All of them

Front 14

Makers of complementary products will begin large-scale production when

a. the first mover introduces a new product

b. the dominant design is changing

c. consumer demand reaches the plateau of maturity

d. the technical standard is firmly established

e. industry participants begin to purchase from suppliers

Back 14

D. The technical standard is firmly established

Front 15

The globalization of production has allowed firms to

a. increase their market share

b. lower their cost structure

c. respond to individual market segments

d. avoid international competition

e. all of these choices

Back 15

B. Lower their cost structure

Front 16

When a company expands its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except

a. spreading fixed costs over its global sales volume

b. utilizing its production facilities more intensely

c. increased bargaining power with its suppliers

d. learning effects associated with higher volume

e. improved responsiveness

Back 16

E. Improved Responsiveness

Front 17

Forward integration means that a company is moving into

a. Sale

b. Retail

c. Distribution

d. All of these

e. None of these

Back 17

D. All of these

Front 18

When an intermediate manufacturer moves into final assembly, it is pursuing

a. backward integration

b. forward integration

c. taper integration

d. related diversification

e. unrelated diversification

Back 18

B. Forward Integration

Front 19

The three main types of diversification strategies are

a. Acquisitions, joint ventures, and divestments

b. Acquisitions, mergers, and buy outs

c. Acquisitions, internal new ventures, and joint ventures

d. Related acquisitions, unrelated acquisitions, and mergers

e. Joint ventures, strategic alliances, and long-term contracts

Back 19

C. Acquisition, internal new ventures, and joint ventures

Front 20

Product bundling refers to

a. preparation of products for shipment

b. a complete package of related products

c. a method of stocking products efficiently

d. an inventory procedure for ensuring effective counting of products

e. a package of unrelated products

Back 20

B. a complete package of related products

Front 21

Explain why a company in a fragmented industry would want to consolidate the industry?

Back 21

Fragmented industries have many competitors because of the low entry barriers. Most of these competitors are small to medium size firms. They are often successful following a focus strategy. Consolidating would lead to higher profit potential from cost leadership or differential business models that are successful in that industry.

Front 22

Strategies used to consolidate (First)

Back 22

They can choose chaining to established networks of liked merchandising outlets that are interconnected in a way that allows them to operate as one large business

Front 23

Strategies used to consolidate (Second)

Back 23

Franchising a company can expand its market presence quickly, and because franchisees essentially own their own business, they are usually strongly motivated to make the company business model work.

Front 24

Strategies used to consolidate (Third)

Back 24

Horizontal mergers allow companies to obtain economies of scale and a larger market for products.

Front 25

Strategies used to consolidate (Fourth)

Back 25

By using information technology and the internet a company can increase market potential and lower costs.

Front 26

What are technical standards?

Back 26

They refer to a set of technical specifications that producers adhere when making a product or component of it.

Front 27

What are technical standards? (Battles)

Back 27

Battles used to determine and control technical standards in a market are referred to as format wars. The outcome of the battle has huge implications because the winner has often won an important source of differentiation.

Front 28

Why are they important?

Back 28

They help guarantee compatibility between products and their complements.

Front 29

Why are they important? (Existence)

Back 29

The existence of standard helps reduce confusion in the minds of the customer.

Front 30

Why are they Important? (Emergence)

Back 30

The emergence of standard can help reduce production cost because once established, economies of scale in manufacturing can begin.

Front 31

Why are they important? (Reduce)

Back 31

Finally standards help reduce risk associated with supplying complementary products.

Front 32

How are they established? (Government)

Back 32

Companies may lobby the government to mandate a standard, or sometimes companies cooperate without gov involvement

Front 33

How are they established? (Set)

Back 33

They can be set by cumulative purchasing patterns of customers in the marketplace

Front 34

How are they established? (winner)

Back 34

The winner can realize significant benefits because each company is likely to protect innovations through copyrights and patents.

Front 35

Comparison vertical and horizontal integration

Back 35

Both risk the inability to blend two different organizational cultures and both can lead to lower costs.

Front 36

Horizontal integration

Back 36

Always with rivals

Front 37

Vertical Integration

Back 37

Is with buyer or supplier firms which leads to integration, implementation and cost savings differences. They face higher operating costs relative to buyers and suppliers due to lack of competitive pressure, and bureaucratic costs are likely higher because the need for coordination connected in the supply chain

Front 38

What circumstances would a firm prefer one over the other? (Mergers)

Back 38

Mergers are more common when the two firms are approximately the same size. It is the blending of assets and may be better for cash poor companies, they are also always friendly.

Front 39

What circumstances would a firm prefer one over the other? (Acquisition)

Back 39

Acquisitions require cash or other form of payment to meet the purchase price. They can be friendly or hostile, but when one party is reluctant acquisition is preferred.