Multiple Choice

Question 1

Economic value is:

1) Price-cost
2) Benefit for users - Price
3) Benefit for uses - Supplier opportunity cost
4) Price - supplier opportunity costs

Answer 1

3)

because … 1) is the margin 2) is the consumer surplus 3) is producer surplus

Question 2

A sustained competitive advantage depicts a situation when a company

1) has lower production costs
2) generates superior benefit for users
3) produce more value society as a whole
4) has a profitability higher than the average of its competitors in the industry

Answer 2

4) because
1) and 2) refers to one of the 3 possible way to get a competitive advantage (cost leadership, price differentiation and focus). Moreover, max total welfare is reached when the marketplace is in a perfectly competitive state, where any firm gain any advantage.

Question 3

The most appropriate tool for assessing the attractiveness of an industry is

1) VRIO
2) BCG matrix
3) Porter’s diamond model
4) Porter’s Five Forces model
5) SWOT matrix

Answer 3

4) because
attractiveness of an industry is determined by his profitability. Profitability is attacked by competition and the five Porter forces are the key determinants of industry direct and extended competition. 1) aim at assessing internal resource and capabilities of a firm in that industry and checks whether firm’s assets can be a resource for competitive advantage 3) also aim at analysing internal capabilities but from a “local environment” perspective

Question 4

An industry in a maturity phase in its life cycle

1) has stable trends of sales revenue
2) an increase in new entries
3) an acceleration in the rate of investments in R&D
4) stable market shares

Answer 4

1) because
2) In a mature phase new comers would probably face already a market with overcapacity 3) R&D investments are held high only before a dominant design has come up, in mature phase probably this is already in place and all innovation is of incremental type. Differentiation is built via investments in brand image
4) in mature industry overcapacity is a possible scenario, if so then price competition can start to rise and end into a destructive price war

Question 5

In an industry after a dominant design has emerged

1) the threats of substitutes increase
2) the threats of new entrants increase
3) the rate of innovation in the product decrease
4) the market enters a phase of decline

Answer 5

3) because
A dominant design set a “de-facto” industry’s standard toward which customer are used to and therefore will mainly use that. This will move all other players decision toward it and cancel from the market any other similar attempt, reducing the amount of radical
innovation of industry products.
1) is likely to happen in a decline phase

Question 6

In a mature industry, which of the following organisational configuration is more likely:

1) simple and informal
2) mechanistic and bureaucratic
3) craft-bases
4) organic

Answer 6

2) because
When in mature phase, even if a differentiation strategy is being pursued, cost reduction and high efficiencies are very important aspects. Bureaucratic structures with centralised vertical communication, standardising processes and developing routines, at end lower the total costs by achieving higher efficiencies

Question 7

A company has competitive advantage when

1) it has superior cash flows
2) its product portfolio include a “rising star” product (McKinsey matrix)
3) the profitability of capital invested is higher than the cost of capital
4) its profitability is higher than the average profitability indexes of the direct competitors

Answer 7

4) because
3) do, even if an indicator of good firm performance, do not automatically implies that said firm is able to get higher profitability then another player

Question 8

A key condition for a competitive advantage is

1) possessing a Ricardian rent
2) a combination of 5 forces that determines a high industry attractiveness
3) possessing a resource which is valuable, rare and non-imitabile
4) having dynam capabilities

Answer 8

3) because
2) just detect that competing in that industry will be more likely to be “easy”, but competitive advantage is the result of doing something anyone currently does or foresees to do so, at the end, to possess VRIO assets

Question 9

In a stage of maturity of the lifecycle of an industry

1) achieving a sustained competitive advantage is easier
2) scale economies are not a critical success factor
3) high spending in advertising and R&D are a critical success factor
4) a high degree of formalisation in the organisation of work is desiderabile

Answer 9

4) because
mechanistic structure are able to gain higher efficiencies, so lower costs, standardising as much is possible processes, procedures and reducing the channels of communication toward the vertical apex
3) is not because in a mature industry probably a dominant design is in place and all innovation made is for incremental purposes: differentiation is not made anymore on product features but on brand image
2) is not because in a mature stage scale economies are instead crucial point because mass production have led the industry to suffer of overcapacity so firms tries to push down prices to sell unsold inventory

Question 10

An organisational configuration that is organic

1) is fitter today a stage of the industry lifecycle that requires process innovation
2) is based on the use of mutual adjustments, high job autonomy in the operating line and decentralised decision making power
3) requires a high extent of work formalisation
4) requires a low degree of cervical integration

Answer 10

2)

Question 11

Functional grouping is aimed at

1) grouping similar resources in the same organisational units in order to achieve intra-group coordination and economies of scale
2) replicating similar resources in different organisational units in order to facilitate within such units
3) penalising the achievement of Economies of Scale
4) fostering product innovation

Answer 11

1) because

Question 12

The strength of suppliers bargaining power depends on (multiple answers)

1) client’s ability to integrate upstream their supplier
2) relative high concentration of suppliers compared to their clients
3) clients bear low switching costs in the relationships with suppliers
4) high competition threats from suppliers

Answer 12

2) and 1) because
If suppliers are more concentrated (so fewer in number) than their buyers then they can command more easily higher prices thanks to the oligopolistic benefit of their position. Moreover, supplier bargaining power is attacked by buyer threat to backward integrate

Question 13

Which of the following is not one of the determinant of the location advantages according to the porter diamond model (multiple answers)

1) company strategies, sector structure and degree of competition intensity
2) characteristics of global demand
3) related and support sectors
4) characteristics of local production factors

Answer 13

2) because

Question 14

What is the most appropriate coordination mechanism for the organisation of the work of nurses in a hospital

1) mutual adjustment
2) standardisation of processes
3) standardisation output
4) standardisation of skills

Answer 14

1) because

The decision they take do not require to vertically ask to docs what to do

Question 15

With high elasticity of demand, the most appropriate pricing strategy in ora to obtain a differentiation advantage is

1) maintain the same prices as rivals to increase their market share
2) set lower prices than rivals in order to increase market share
3) Set prices higher than rivals in order to increase the unit profits margin
4) none of the previous one

Answer 15

1) because

Question 16

For which of the following are incumbents unable to develop discontinued technologies in a profitable way

1) the technologies are competence destining for them
2) they switch too quickly to new technologies when demand uncertainties is too high
3) they switch late to new technologies and are unable to take advantage of learning economies like first movers
4) all previous

Answer 16

3) because

The returns associated with this technologies are usually difficult to justify to shareholders

Question 17

Competing on Cost is more likely when

1) there are more opportunities for product differentiation
2) growth rate in the market demand increases
3) low exit barriers
4) none

Answer 17

4) because
3) will free capacity of low profit firms with ease, not “blocking” capacity in the industry (price wars) or when growth rate is increasing it means there is room for product differentiation with innovation aiming at a dominant design

Question 18

IT and internet face affected firms’s MoB decisions since they

1) reduces transaction costs
2) reduced coordination costs between buyers and suppliers
3) favours collaboration between suppliers and buyers
4) al the previous

Answer 18

4)

Question 19

Low-skilled roles in an organisation are characterised by

1) low horizontal specialisation and high specialisation
2) high horizontal and high vertical specialisation
3) high horizontal and low vertical specialisation
4) none of this

Answer 19

2) because
Horizontal specialisation looks at
Instead vertical specialisation looks at

Question 20

Which of the following elements can be a source of competitive advantage based on Cost

1) scale economies
2) scope economies
3) business model innovation
4) all

Answer 20

4)

Question 21

In the jargon of BCG matrix, stats are products

1) with a competitive advantage
2) with high market share and increasing demand
3) that need further investment because of growing market demand and low market share
4) in with the firm de-invest due to the list market share and stable demand

Answer 21

2) because

Question 22

Market transaction costs are high

1) in a low appropriability regime
2) in a situation of high trust between the parties
3) under high asset specificity
4) under low information asymmetry

Answer 22

3

Question 23

Which of the following is generally a reason to opt for BUY decisions rather than MAKE

1) environment dynamism
2) industry regulation
3) differences in MES of production in different stages of the value chain
4) the firm’s intention to avoid sunk cosa

Answer 23

3) because
Especially if the given product is not source of competitive advantage for the company, the probably suppliers can achieve much faster EOS in the production of that items so, even if
They will charge a margin on the cost they bear, if that price do not overshoot the cost the firm would bear to MAKE then is better to BUY

Question 24

When a dominant design has just emerged, which of the following events occurs

1) product profitability decreases
2) firms start investing on radical product innovations
3) dorms start focusing their investments in efficiency of production processes
4) a growth in numbers of producers occurs

Answer 24

3) because
The dominant design now will push outside any further innovation, even if of higher efficiency or quality, because network externalities point toward it. What firms can do is optimise process to produce or make their product compatible to that design

Question 25

Mr. Vain is a dentist who wants to purchase an innovative medical machinery for whitening teethes. Prices for the machinery are hardly negotiable. This can be due to 1) industry regulations 2) supply exceeds demand 3) high switching costs for dentists 4) low number of suppliers

Answer 25

4) because 2) is wrong starting from the theory, 3) have to do with bargaining power of suppliers and asset-specificity but have effects after the dentists purchase the machine

Question 26

Training is very important to sustain one of the following coordination mechanism 1) process standardisation 2) input standardisation 3) output standardisation 4) direct supervision

Answer 26

2) because | process standardisation reduce skill requirement thus the need for training so, 1) is not

Question 27

In which of the following settings is output control the prominent mechanism of managerial control over operators? (multiple answers allowed) 1) an assembly line producing standard products 2) university 3) an IT consulting project 4) an automated bottling line

Answer 27

1) and 4)

Question 28

Which of the following items are not salient traits of organisational configuration of Taylorism (multiple ans) 1) high job rotation 2) high process standardisation 3) high horizontal job specialisation 4) low vertical job specialisation

Answer 28

1) and 4)

Question 29

In organisational theory, clans are intended for 1) organisations where corporate social responsibility in unimportant in the strategy-making process 2) forms of mutual adjustment 3) organisations with flat hierarchical structure 4) semi-formal organisations where members are tied through a commonality of values and beliefs

Answer 29

4)

Question 30

Clan theory has high practical relevance to managers in reference to (multiple ans) 1) vertical de-integration choices with reference to the role of trust in mitigating the transaction costs occurring between the parties 2) Market transactions as it explains how parties avoid making investments that are specific to the transaction with counterpart 3) how a firm should be positioned in a sector based on the industry lifecycle stage 4) how a firm should use leadership, direct supervision and mutual adjustment in a team work environment

Answer 30

1 and 4

Question 31

Under dynamic and complex environment which grouping mechanism should be adopted 1) functional 2) matrix with grouping criteria based on products and functions 3) pure divisional based on geographic grouping 4) pure divisional based on products families

Answer 31

2)

Question 32

A dynamic or turbulent industry is characterised by 1) steady growth in the investment made by firms 2) high growth in the market demand 3) an unpredictable rate of growth in the demand faced by the industry due to uncertainty of return of R&D investments made in the customer preferences 4) a variety of both inputs used and outputs

Answer 32

3

Question 33

Which of the following coordination mechanism should be prevalent for a cost leader operating in a stable environment 1) mutual adjustment 2) input standardisation (high level of workers skills) 3) process standardisation 4) a well-balanced combination of output standardisation and direct supervision

Answer 33

3) because | Cost-leader should aim at maximum reduction in costs so maximisation of efficiency

Question 34

The techno structure is critical to a firm performance in a context of 1) form pursuing cost leadership in a mature industry 2) a craft-based firm 3) a benefit differentiator operating in hi-growth and low-tech industry 4) a firm with a prevalence of direct supervision

Answer 34

1

Question 35

Which of the following factors is completely irrelevant to make-or-buy decisions for car makers 1) differences in MES along different stages in the value chain 2) the consequences of a make decision could have for the firms’s operational flexibility (scaling up or down with limited cost) 3) to avoid fluctuations in the materials costs 4) to avoid leaking of valuable knowledge

Answer 35

3) because Fluctuations in the input costs can be offset by the firm via long-term contracts of future contracts ... or a fund can be issued to cover short-termed fluctuations ... every solution would have an extremely lower cost rather then make. Moreover fluctuation of prices happens even if the firm make

Question 36

Process standardisation 1) reduces coordination costs in the case of high level of horizontal specialisation 2) reduces market transaction costs of buy decisions 3) increases the need of reciprocal interdependence among workers 4) increases the sustainability of costs leadership

Answer 36

1 because Procedures are standardised and the need to ask to the higher level of the hierarchy is eliminated since operators exactly know what to do in almost every circumstance

Question 37

In strategy the concept of sustainable competitive advantage means a firm’s capabilities to 1) generate value for society as a whole 2) reduces environmental Impact of its products and production 3) defend a competitive advantage from competitors imitation attempts 4) combine cost leadership and benefit differentiation

Answer 37

3 because It means to achieve advantage also in the very long term. This is possible only if firm resources are imperfectly mobile, inimitable and there are no substitutes for that (VRIO)

Question 38

Which of the following element of benefit differentiation provides the most sustainable competitive advantage 1) product features 2) producers’ brand reputation 3) economies of scale in mfg and distribution 4) product customisation

Answer 38

2) because Brand development requires high and time lengthy investments in technologies. Reputation is supported by the brand and by multiple interaction with the customer

Question 39

Which of the following elements of cost leadership provides the most sustainable competitive advantage 1) economies of scale and small market size 2) offshoring in low-income countries 3) product customisation 4) lean production

Answer 39

1) because It means incumbents can easily reach MES and also cover almost all the market leaving no room for entrants or competitors

Question 40

In organisation design, formalisation is typically associated with (multiple ans) 1) greater adoption and use of IS such as ERPs 2) less individual autonomy of workers 3) lower vertical specialisation 4) an extensive use of training and indoctrination

Answer 40

1 and 2 | Because decision making is centralised and ERP helps with that.

Question 41

What is likely to happen if many new firms succeed in entering a market 1) barrier to entry will rise 2) industry profits will increase 3) competitive rivalry will intensify 4) industry capacity will fall

Answer 41

2 because | More player, more obsession for market share, more likelihood of price competition, lower profitability

Question 42

All of the following are signs of industry maturity except for 1) overcapacity 2) lack of product innovation 3) low prices due to MC=0 4) M&A

Answer 42

3 because | MC=0 are to do with the cost structure of product and services and not with industry maturity

Question 43

In general, to maximise the appropriation of economic value form its own innovations, a firm should opt for 1) patents 2) industrial secret 3) dominant design 4) non-disclosure agreements with suppliers

Answer 43

2 because Patents give innovators time advantage to elaborate more the innovations plus they can enforce them but at the same Time patenting innovation where knowledge is easily codifiable and has been completely disclosed in the patent to file it then will surely allow competitors to quickly imitate it and “innovate around innovation” and so patent would have been only an avoidable cost. At the same time, keeping the industrial secret espone the firm to the risk someone else use patent it and then you will obliged to licence it from the competition.

Question 44

Which of the following items is not an advantage of divisional structure 1) allows local control of local situation 3) leads to market orientation within the whole firm 3) clear accountability 4) it promotes functional specialisation

Answer 44

4) because | Divisional has no functional specialisation given that every firm function is duplicated in every division

Question 45

Eh oh of these is a barrier to entry in the global smartphone market 1) customer loyalty to global brands 2) existence of several alternatives to smartphones 3) weak customer demand 4) lack of innovation

Answer 45

1) because Incumbent product differentiation via brand reputation belongs to one of the 7 barrier to entry for newcomers. Moreover there are no substitutes to smartphone and innovation is highly present

Question 46

In a service industry where network externalities/economies are important, firm should pursue 1) cost advantages 2) a rapid growth un the number of users of its service 3) scale economies 4) scope economies

Answer 46

2) because | In markets dominated by network externalities who get to the critical mass first the “winner takes all”

Question 47

A firm has competitive advantage based on benefit proximity, when compared to its direct competitors its product offers 1) the same benefit with same costs 2) Lowe benefit with much lower costs 3) superior benefit at higher cost 4) the same benefit at the same cost

Answer 47

2) because Because its delta benefit is much smaller than its delta cost so it can compete with differentiator being in their proximity but at the same time it is very distant from them in cost terms

Question 48

Which of the following options un a reason un favore to buy 1) improves coordination in the definition of design attributes of the local firm’s products 2) differences in the MES in different stages of supply chain 3) a high competition in the market environment 4) regulations

Answer 48

2 because If suppliers reach MES quickies than the firm and the supplier charge the firm within the admissibility cost range (Cmake>Psupplier>Csupplier) then is better to buy

Question 49

When a dominant design stands out 1) product profitability decreases 2) operational excellence becomes a KSF 3) firms increase investment in R&D and innovation 4) number of firms in the market surges dramatically

Answer 49

2) because | Process efficiency now value the most

Question 50

Which coordination mechanism should be prevalently used by a firm positioned in a a fa blue market with a cost leadership strategy 1) mutual adjustment 2) process standardisation 3) direct supervision 4) pooled interdependence

Answer 50

2) because Stable markets are suitable for mechanistic organisation. Because the strategy is on cost then process standardisation reduce the coordination costs while improving efficiency

Question 51

Cash cows are business units 1) production products where the demand is stable and market shares are relatively high 2) with competitive advantage 3) producing products characterised by high market share and growing demand 4) producing products with low market share but growing demand

Answer 51

1

Question 52

Which of the following options in not a natural barrier for imitation 1) technology complexity 2) high degree of codifiability of in the innovation 3) learning economies 4) network externalities

Answer 52

2) because | codifiable knowledge is replicable

Question 53

The corporate level is where management directs 1) all employees for orientation 2) its efforts to stabilise recruitment needs 3) overall strategy for the entire organisation 4) overall sales projections 5) business area strategy

Answer 53

3 because | Is the vertical apex

Question 54

A likely reason for high industry profitability would be 1) low barriers to entry 2) strong supplier bargaining power 3) a few strong customer dominate demand 4) few substitutes

Answer 54

4 because All the others have dismal effects on industry profitability: low barrier = more entrance = lower returns ; strong supplier bargain power = higher costs of supplies or high switching costs ; high buyer concentration = buyer purchasing decision are critical

Question 55

A strategy of differentiation is likely to involve each of the following except 1) superior product quality 2) clear branding 3) offering a standard product 4) charging price premiums

Answer 55

3 because | How u differentiate a standard product whose is then similar to a commodity?

Question 56

Value for shareholders of a firm is measured by 1) customer satisfaction 2) stock performance and profitability 3) sales revenues 4) satisfactory employees targets 5) profitable year-end balance sheet

Answer 56

2 | unfortunately because stock values and financial values usually heavily depend on short-termed events

Question 57

The bargaining power of customers is usually strong if (multiple ans) 1) there are millions of them 2) there are only a few of them 3) there is regulation fo the market 4) there are few alternative products

Answer 57

2 and 3

Question 58

Which are the main concerns of a Corporate social responsibility approach in strategy making 1) monetary and profits 2) legal and regulatory 3) social and environmental 4) moral and ethical

Answer 58

3

Question 59

A likely reason for low industry profitability would be 1) high barrier to entry 2) very few substitutes 3) low barrier to entry 4) little competitive rivalry

Answer 59

3 because | low barrier = more entrances = lower profits

Question 60

Which of these might be an approach if a firm trying to be a cost leader 1) high innovation 2) labour intensive production 3) niche distribution channels 4) high productivity and capacity utilisation

Answer 60

4

Question 61

Cash cows are SBU that typically generate 1) problems for product managers 2) paper losses in the long run 3) large awareness levels but few sales 4) a lot of competition 5) large amounts of cash

Answer 61

5

Question 62

Which of porter’s generic strategies would be used be a small firm targeting a niche market segment 1) cost leadership 2) differentiation focus 3) cost focus 4) diversification

Answer 62

2 because Cost leadership even in niches are bring from incumbents whose have capabilities of exploiting EOS ... small firms should raise a niche by using first-movers advantage innovating there

Question 63

The means by which long-term objectives will be achieved are 1) mission statements 2) strategies 3) vision statements 4) long-term goals 5) tactics

Answer 63

2 because Vision are statement about what we seek to became in the future, strategies are detailed paths of decision to take to arrive there

Question 64

A likely barrier to entry to a luxury good market is that existing firms 1) enjoy economies of scale and low unit costs 2) have low selling prices 3) have strong product differentiation 4) are protected by governament legislation

Answer 64

3