KUMPULKAN 17 Sept, email to albertsuryawanasida@gmail.

com
Subject: Group Assignment Week 4

Latihan Soal Bab 3

11) The ________ allows the scanning, monitoring, and evaluating of changes and trends in a
firm's macro environment.
A) VRIO framework
B) SWOT analysis
C) BCG matrix
D) PESTEL framework

12) Which of the following external forces is a part of a firm's task environment?
A) the composition of the strategic group to which the firm belongs
B) the interest rates prevalent in the economy in which the firm operates
C) the inflation level in the economy in which the firm operates
D) the recent innovations in process technology, including lean manufacturing
13) The government of Filvia has mandated that the standard minimum wage in the country be
increased to $8,000 per year. Which of the following factors in a firm's general environment does
this mandate best indicate?
A) ecological factors
B) sociocultural factors
C) technological factors
D) legal factors

14) Kirsten, a manager, is writing an analysis of her employer's current and possible future
revenues. Which of the following could she identify as an economic factor in her firm's external
general environment?
A) the government regulations and laws in the country in which the firm exists
B) the stage of the business cycle that the country is in
C) the values and norms prevalent in the society in which the firm operates
D) the bargaining power of the firm's suppliers and buyers

15) Managers at Sandburg Real Estate are surprised to hear that interest rates are likely to remain
low for the next six months. Which of the following is an implication of low interest rates?
A) Cost of capital for firms will be high.
B) Firms will invest less in future growth.
C) Economic growth rate will fall.
D) Consumer demand will increase.

16) Luz manages a chain of bars and restaurants in a tri-county area that has recently experienced
an economic boom because of fracking and high oil prices. What is most likely to happen when
there is too much money in the tri-county economy?
A) too many goods and services
B) a drop in interest rates
C) high economic growth
D) an increase in prices

17) Marina manages the supply chain for a company that sells diamond watches. She learns that
economists are predicting a moderate to severe recession in the next six to eight months. Based
on that information, what action should Marina recommend to the company's owner?
A) Increase supply. During recessions, businesses that focus on low-cost solutions make
significant profits.
B) Reduce supply. Customers generally reduce their purchases of luxury items when the
economy falters.
C) Maintain the supply at its current rate. Economic forecasts are rarely accurate.
D) Wait six months and see what happens. Recessions rarely affect consumer spending.
18) In a firm's external environment, ________ primarily capture population characteristics
related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic
class.
A) political trends
B) demographic trends
C) ecological trends
D) economic trends

19) Anders is researching sociocultural factors related to his employer, a sporting goods
manufacturer. Which of the following would be part of the sociocultural forces in a firm's
external environment?
A) the interest rates prevalent in an economy
B) the laws protecting small enterprises in a nation
C) the family size of the firm's target market
D) the rate of employee attrition within the firm

20) In 2008, BlackBerry's market cap peaked at $75 billion. By 2017 this valuation had fallen
more than 90 percent, to $3.9 billion. BlackBerry fell victim to two important PESTEL factors in
its external environment: sociocultural and technological. How did technology contribute to
BlackBerry's decline?
A) BlackBerry failed to offer strong security features for its device.
B) BlackBerry failed to change its device into one that could perform multiple tasks effectively.
C) BlackBerry failed to adapt to a groundswell that involved workers bringing mobile devices to
work.
D) BlackBerry failed to produce an efficient emailing system using a keyboard.

21) How is a firm's task environment different from its general environment?
A) Managers have some influence over external factors in the task environment; they have little
direct effect over external forces in the general environment.
B) Managers have no direct effect over external factors in the task environment; they have some
influence over external forces in the general environment.
C) Managers have no direct effect over external factors in the task environment; they have
influence over all external forces in the general environment.
D) Managers have influence over all external factors in the task environment; they have no direct
effect over external forces in the general environment.

22) Which of the following is a macroeconomic factor that can affect a firm's strategy?
A) power of buyers
B) power of suppliers
C) levels of employment
D) threat of substitutes

23) How do low interest rates affect a business?

A) Firms tend to defer investments until rates rise.
B) Firms can easily borrow money to finance future growth.
C) Consumer demand slows down.
D) Business credit is harder to obtain.
24) Which of the following is the best characterization of sociocultural forces?
A) a firm's culture, norms, and values
B) a society's culture, norms, and values
C) a competitor's culture, norms, and values
D) a focus group's culture, norms, and values

25) Quick Market Inc. is a food supply company that wants to sell its products directly to
consumers through mail order instead of going through supermarkets and other stores. However,
supermarket chains want to make this transaction either illegal or more difficult for Quick
Market. To accomplish this, they are using ________ to influence the political process.
A) ecological factors
B) lobbying forces
C) interest rates
D) demographic research

26) A firm's ________ relates to its ability to create value for customers (V) while containing the
cost to do so (C).
A) strategic position
B) industry effects
C) advantage of the marketplace
D) industry analysis

27) The primary objective of Porter's five forces model is to

A) understand valuable, rare, and hard-to-imitate resources.
B) understand the profit potential of industries.
C) reduce the gap between the value of a firm's product and its cost of production.
D) break down a firm's value chain activities into primary and support.

28) In the five forces model developed by Michael Porter, ________ is not defined narrowly as a
firm's closest competitors but rather more broadly to include other factors in an industry like
buyers, suppliers, potential new entry of other firms, and the threat of substitutes.
A) a stakeholder
B) regulation
C) competition
D) a barrier to entry

29) Which of the following is a primary feature of the five forces model?
A) It is concerned exclusively about the intensity of rivalry among direct competitors.
B) It takes into account a firm's internal resources, capabilities, and core competencies.
C) It helps managers determine the changing speed of an industry or the rate of innovation.
D) It views competition within an industry broadly to include forces such as buyers, suppliers,
and the threat of substitutes.
30) A firm's strategic position is likely to be strong when
A) the entry barriers within the industry it operates in are low and the exit barriers are high.
B) its suppliers and vendors can easily forward integrate and buyers can backward integrate.
C) all the five forces in Porter's model are strong.
D) the gap between the value the firm's product generates and the cost to produce it is large.

31) During an interview for a CEO position, Elena's potential employers ask her, "If you get this
job, will you focus more on industry effects or firm effects?" What should her answer be?
A) "Neither. I would focus on unexplained variances. They are the most mysterious effects and
the most powerful."
B) "Firm effects. I will be able to have the most impact on those."
C) "Industry effects. They have the most substantial effect on superior firm performance."
D) "Neither. I would focus on business cycle effects. These are the most predictable, so they are
worth the most effort."

32) Keeping in mind the five forces in the airline industry, which of the following best explains
the difficulty airlines have in generating a profit?
A) Substitutes are readily available in the form of trains, buses, and cars, thus reducing the profit
potential in the industry.
B) Suppliers have weak bargaining power because they offer products that are not differentiated.
C) Entry barriers in the industry are high, resulting in hardly any new airlines popping up.
D) Consumers in the industry make decisions based on price, thus reducing the intensity of
rivalry in the industry.

33) Etsuro is a management consultant. Baker Corp. asks him to evaluate their company, and he
finds that the difference between the cost of producing the firm's products and the value of those
products is extremely narrow. What should Etsuro suggest that Baker Corp. management do?
A) Find a way to widen the gap between cost and value.
B) Find a way to pass on as much profit as possible to suppliers and customers.
C) Shore up the company's strong position by erecting entry barriers.
D) Encourage customers to buy complements to their products.

34) The internet service provider industry in the country of Megalopolis is an industry
characterized by the presence of strong network effects, high brand loyalty, high economies of
scale, and proprietary technology among incumbent firms. Thus, in the internet service provider
industry, the
A) threat of substitutes is most likely high.
B) threat of new entrants is most likely low.
C) bargaining power of buyers is most likely low.
D) entry barriers are most likely nonexistent.
35) A new company named Far Reach Inc. entered the radio retail business, which is a fairly
consolidated industry. In response, two large incumbent radio retailers, Smooth Waves and Clear
Signal, lowered the price of their radios. Also, they spent more money to improve their radios
and on additional marketing. By doing this, Smooth Waves and Clear Signal
A) decreased industry exit barriers.
B) increased industry exit barriers.
C) decreased industry profit potential.
D) increased industry profit potential.

36) Kimba Inc. is a manufacturer of smart watches that track the wearer's heart rate and sleep
patterns. Which of the following is most likely an implication of new firms entering this
industry?
A) The bargaining power of buyers will reduce.
B) The industry's overall profit potential and sales will increase.
C) The rivalry among existing competitors will reduce.
D) The incumbent firms will spend more to satisfy their existing customers.

37) Economies of scale are cost advantages that accrue for firms with
A) high fixed costs.
B) low employee turnover.
C) larger output.
D) high capital risks.

38) Given the structure of the automobile industry, entering the auto manufacturing industry
seemed risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with
internal combustion engines, Tesla Motors entered the all-electric car segment, a much less
crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit
from in this market niche?
A) network effects
B) economies of scale
C) customer switching costs
D) capital requirements

39) 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.
40) Clear Calls Inc., a telephone service provider, has a large user base mainly because phone
calls and messages between all Clear Calls users are free. When a person switches to a Clear
Calls network, his or her entire network of family and friends is likely to switch to the same
network to receive the benefit of free calls and messages. In addition, an existing user who gets a
new user to register with Clear Calls Inc. is given a free wireless connection. This has helped to
keep competition away from Clear Calls. In this scenario, which of the following factors is
acting as an entry barrier for Clear Calls Inc.?
A) economies of scale
B) high capital requirement
C) network effects
D) high fixed costs

41) National Safety Inc., an insurance firm, replaced its existing project management software
with new software from another supplier. Since the new software has different features and
abilities, National Safety has had to spend $10,000 on training its employees to use it. In this
scenario, $10,000 represents National Safety's
A) opportunity cost.
B) switching cost.
C) octroi charge.
D) excise duty.

42) In the aircraft manufacturing industry, at least for large commercial jets, Boeing and Airbus
are the only competitors. There is not a significant threat of entry because
A) entering the aircraft manufacturing industry requires huge capital investments.
B) there is expected to be a huge return on investment within this industry.
C) there is no credible threat of retaliation from the incumbents.
D) entering the aircraft manufacturing industry means violating government policies.

43) In an industry, the threat of entry is high when

A) capital requirements are low.
B) expected returns are low.
C) technological know-how is industry specific.
D) switching costs are high.

44) How are cumulative learning and experience effects of a company most likely to affect
Michael Porter's five forces?
A) Threat of new entrants will be low.
B) Bargaining power of suppliers will be high.
C) Availability of complements will be low.
D) Threat of substitute products and services will be high.

45) In which of the following situations is a company that exists in the telecommunications
industry most likely to face the highest threat of entry?
A) if the company is able to put up a credible threat of retaliation
B) if the capital requirements in the industry are high
C) if the customer switching costs in the industry are high
D) if the industry has recently become deregulated
46) Soapsuds Inc., a manufacturer of cleaning agents, supplies its products to All Needs Inc., a
supermarket chain. It demands that All Needs create more shelf space in its stores for Soapsuds'
products. However, All Needs Inc. refuses to do this. Instead, it decides to produce its own range
of cleaning agents with its own label "All Wash." In this scenario, All Needs Inc. has exercised
its bargaining power as a buyer through
A) price stability.
B) retroactive market share.
C) enhanced technology.
D) backward integration.

47) Which of the following features about a buyer indicates that the buyer has high bargaining
power?
A) when the buyer cannot credibly threaten to backwardly integrate into the industry
B) when the buyer cannot purchase specific products from other sellers
C) when the buyer faces high switching costs
D) when the buyer operates in an industry where products are undifferentiated

48) When fashion magazines face competition from fashion blogs on the web, which of the
following forces in Michael Porter's five forces model primarily gets stronger?
A) the emergence of entry barriers
B) the bargaining power of suppliers
C) the availability of complements
D) the threat of substitutes

49) Which of the following fundamental insights was provided by Porter's five forces framework
from the completion of the Alta Velocidad Española (AVE)?
A) A strong threat of substitutes decreases the rivalry among existing competitors.
B) All the five forces must work together to have a meaningful impact.
C) Any of the five forces on its own, if sufficiently strong, can extract industry profitability.
D) Competition must be defined more narrowly to remain confined to the industry's closest
competitors.

50) Which of the following factors most contributes to the U.S. automotive industry being
characterized by high entry barriers?
A) New auto companies create electric cars powered by simpler motors and gearboxes.
B) New entrants in the automotive industry expect that incumbents will not or cannot retaliate.
C) Car manufacturers require large-scale production in order to be cost-competitive.
D) Few industrial products are as easy to build as cars powered by internal combustion engines.

51) 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
52) Pure Carat Inc. is a company that sells 24-carat gold biscuits to companies that manufacture
jewelry. Since the company operates in an industry where many other suppliers sell standardized
products, it can most likely
A) easily achieve a temporary competitive advantage.
B) easily achieve a sustainable competitive advantage.
C) only achieve competitive parity.
D) maintain its absolute advantage for long time.

53) Lu runs a company that manufactures satellites for commercial and government use. It has
few rivals. At the moment, the power of buyers, the power of suppliers, and the threat of
substitutes are all low. Based on this information, what can Lu conclude?
A) The manufacturer is likely to see little profit until the power of buyers improves.
B) In this scenario, suppliers are likely to create and sell effective substitutes.
C) This firm is an example of near-perfect competition.
D) The company is likely to be very profitable as long as the threat to entry is low.

54) Corner Market Inc. is a supermarket chain. Due to strong competition from other stores in
the industry, Corner Market has aggressively used branding, pricing, and superior customer
service to uniquely position itself in the market. As a result, the supermarket chain has been able
to differentiate itself from its competitors and sell its products at higher prices. Which of the
following industry competitive structures does this scenario best illustrate?
A) perfect competition
B) monopolistic competition
C) monopoly
D) oligopoly

55) Eon Inc., Electravia Inc., and FC Inc., the three largest firms in the consumer electronics
industry, hold close to 85 percent of the industry's market share. These companies mainly
compete against each other by providing unique features in their products rather than pricing
them low. These firms are interdependent, and each firm must consider the strategic actions of its
competitors. Which of the following industry competitive structures does this scenario best
illustrate?
A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition

56) 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.
57) Three large firms dominate the telecommunication industry of United Canava: 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

58) Fadia Ammunition Inc., a firm controlled and managed by the government of Fadia, is the
only company that has the license to produce defense arms in the country. Which of the
following industry competitive structures does this best illustrate?
A) monopolistic competition
B) monopoly
C) oligopoly
D) perfect competition

59) While Tender Chicken Inc. operates in a monopolistically competitive industry, Future
Wireless Inc. operates in a monopoly. Keeping this information in mind, which of the following
statements is most likely true?
A) The threat of new entrants will be higher for Tender Chicken than for Future Wireless.
B) Tender Chicken will have more pricing power than Future Wireless does.
C) Tender Chicken will have more profit potential than Future Wireless.
D) The number of buyers will be limited for both Tender Chicken and Future Wireless.

60) Magical Productions is a large production company that controls a major portion of the
television 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, Magical Productions is most likely functioning
in a(n) ________ industry.
A) oligopolistic
B) monopolistic
C) perfectly competitive
D) monopolistically competitive

61) Curry Rush is a premium Asian restaurant chain that differentiates itself from a large number
of competitors by providing exclusively organic Vietnamese cuisine. It has some pricing power
because it provides differentiated products and therefore, has some entry barriers in place. In this
scenario, Curry Rush is most likely operating in a(n)
A) oligopoly.
B) monopoly.
C) perfectly competitive industry.
D) monopolistically competitive industry.
62) 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) cutthroat competition.

63) Competitive rivalry based solely on ________ is destructive to firms as it transfers most of
the value created in the industry to the customers.
A) price-cutting
B) new product releases
C) promotional campaigns
D) product differentiation

64) Due to economic regression in Freedonia, the profitability of the large corporation Happiness
Products Inc. (HPI) was poor. An analysis of the company's business showed that the company
could become profitable if it divested a few strategic business units under its banner. From which
of the following businesses would HPI find it most easy to exit?
A) the automobile industry, where the company has contractual obligations with suppliers
B) the airline business, where the company's strategic commitments are long-term
C) the e-commerce retail business, where investments on assets are low
D) the pharmaceutical business, where the company has a large number of fixed costs

65) Peerless Inc., a large conglomerate, wants to liquidate its business in certain industries to
improve its overall profitability. Which of the following industries would Peerless Inc. find it
most difficult to exit?
A) the management consultancy industry in which the company's fixed costs are low
B) the steel industry in which the company has obligations like severance pay toward employees
C) the corporate training industry in which the company's commitments are mostly short-term
D) the e-commerce industry where the company has no long-term contractual agreements with
suppliers

66) Euan manages product design and development at a toy company. The junior managers who
report to him tell him that new complementors for the firm's products are available. What should
Euan's reaction be?
A) He should consult lawyers about the possibility of suing for copyright infringement.
B) If the industry barriers to entry are low, he doesn't need to do anything.
C) He needs to find out if his company as well as other companies can provide the complements.
D) If the industry barriers to entry are high, he doesn't need to do anything.
67) 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.

68) Mara is a management consultant for a soda manufacturer that wants to expand into health
drinks such as green tea and after-workout drinks. Based on what you have read, which of these
is sensible advice for Mara to offer her client?
A) "Pinpoint the best time to enter this new market, and then make a yes-or-no decision quickly."
B) "Carefully consider the entry choices over time before making a decision."
C) "Your best bet is to undercut competitors' prices and lure them into a price war."
D) "Focus on what your company does well rather than trying to expand into untried areas."

69) Bryan is a manager at a software firm. The CEO tells him that the industry as a whole has
become increasingly profitable over the past five years. Based on this information, Bryan is most
likely to expect
A) increased competition in the future and therefore he should recommend that the company
upgrade its products to slow the entry of rival companies.
B) increased profitability in the future and therefore he should recommend that the company
remain on its current course.
C) a leveling off of profitability in the next few years and therefore he should recommend that
the company cooperate with its rivals to stimulate the industry.
D) decreased competition in the next few years and therefore he should recommend that the
company take advantage of its pricing power.

70) Fran owns Consolidated Auto Parts, a company that got its start making auto parts related for
hybrid vehicles, but her firm has had difficulty establishing itself as a maker of parts for the
more-profitable internal combustion engine. What is most likely contributing to Consolidated's
problem in this area?
A) Newcomers cannot use existing assets or reconfigure their value chains.
B) New competitors usually ignore stakeholders who are not stockholders.
C) It is difficult for outsiders to gauge which stage of the "life cycle" that industry is in.
D) Entry barriers usually protect the incumbent players in a profitable industry.

71) Bethany is a chef who owns three moderately successful restaurants with innovative menus.
Based on what you have read, which of these approaches could help her improve her profits?
A) Change her menus and décor to appeal to economy-minded consumers.
B) Carefully time the opening of her business and focus on underserved niches.
C) Use her existing knowledge, equipment, and staff to launch a catering business.
D) Expand to new locations in economically struggling areas.
72) 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.
D) The model fails to consider that threat of substitutes can come from outside a given industry.

73) Which of the following statements with regard to industry structures is true?
A) They are stable over time, not dynamic.
B) Having a large number of competitors generally equates to higher industry profitability.
C) A consolidated industry tends to be more profitable than a fragmented one.
D) Having few but large competitors increases the threat of strong competitive forces such as
supplier or buyer power.

74) Which of the following is likely to happen due to horizontal mergers between competitors
such as Delta and Northwest airlines?
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.

75) Years ago, the travel industry was controlled by a few large travel companies that booked
holidays, air tickets, bus tickets, and hotels for their customers. However, with the emergence of
the internet, smaller travel agencies started mushrooming in the industry and customers started
making their own reservations. Which of the following can be inferred from this information?
A) The travel industry changed from a consolidated structure to a fragmented one.
B) The pricing power of the incumbent firms in the travel industry has increased.
C) The bargaining power of buyers in the travel industry has decreased.
D) The structure of the travel industry changed from monopolistic competition to an oligopolistic
one.

76) Jamie is a manager in an industry that has a few large players and that has remained
relatively stable over the past few years. He finds out that legislators are proposing new laws to
deregulate the industry. If the laws pass, which of these scenarios will Jamie most likely face?
A) many new competitors
B) technological innovation
C) the end of globalization
D) across-the-board price increases
77) With the emergence of smartphones, users no longer have to carry a separate music player, a
video game, a laptop, or a magazine to keep themselves entertained when traveling. A
smartphone is loaded with a variety of applications to satisfy all the customer needs that different
industries or products individually satisfied earlier. As a result, the smartphone industry has been
posing a threat to a lot of other unrelated industries. What is this phenomenon best known as?
A) industry convergence
B) backward integration
C) product differentiation
D) customer myopia

78) A strategic group will typically include

A) firms within the same industry.
B) customers belonging to a particular socioeconomic class.
C) firms employing similar number of employees, irrespective of their industries.
D) employees within a firm earning the same amount in salary.

79) Companies in the same strategic group are ________ to each other.
A) strategic allies
B) direct competitors
C) merger partners
D) stakeholders or shareholders

80) Hammer and Nails, Local Motion, DIY Palace, and Handy Paradise are all hardware stores
that compete against each other through everyday low pricing and discounts on bulk purchases.
All four stores cater to the needs of highly price-sensitive customers. Thus, together these stores
form a
A) focus group.
B) command group.
C) strategic group.
D) cross-functional group.

81) Addams Coaches Inc. is a bus line with service to several major cities. It has several
competitors that each offer service to one or two cities, and based on its current outlays, it cannot
match or beat those competitors on price. Because of long-term contracts and an increase in the
cost of gasoline, it is not possible to reduce expenditures at this time. Which of these strategies
should Addams pursue instead?
A) Create a strategic group through mergers.
B) Compete based on inter-group rivalry, not intra-group rivalry.
C) Pursue a differentiated strategy.
D) Close the business until the cost of gas decreases.
82) Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers
who are concerned about quality dining rather than the prices. In this scenario, which of the
following will be a part of Golden Harvest's strategic group?
A) a nearby fast-food restaurant
B) a food kiosk in an adjacent subway station
C) a premium rooftop restaurant in the same city
D) a mobile food cart parked opposite to the five-star hotel

83) Which of the following statements is true about strategic groups?

A) It is not possible to have two different strategic groups within the same industry.
B) Rivalry within the same strategic group tends to be lower than rivalry between different
strategic groups.
C) Profitability varies between different strategic groups.
D) Companies within the same strategic group are complementors to each other.

84) Zoom Zoom Car Rental follows a cost-leadership strategy. Which of the following firms will
most likely be its direct competitor?
A) Classic Car Rentals Inc., which follows a cost-increase strategy
B) Paul Bunyan Car and Truck Rentals, which follows a differentiation strategy
C) Reliable Rental Cars, which follows a low-cost strategy
D) Rent-an-Auto LLC, which follows a standardization strategy

85) While implementing strategic group mapping for the U.S. domestic airline industry, two
strategic groups become apparent: low-cost, point-to-point airlines (Virgin Atlantic, Alaska
Airlines, JetBlue, and Southwest Airlines) versus differentiated airlines using a hub-and-spoke
system (American, Delta, and United). Which of the following statements is true about these two
strategic groups?
A) Competitive rivalry between Virgin Atlantic and JetBlue is likely to be higher than that
between American and Southwest Airlines.
B) American, United, and Delta Airlines will be affected differently by Porter's five competitive
forces.
C) Alaska Airlines and Delta Airlines will be affected by the external environment in very
similar ways.
D) Competitive rivalry between Virgin Atlantic and Delta Airlines is likely to be higher than that
between American, Delta, and United.
LATIHAN SOAL BAB 4

11) Cartech Inc. is a manufacturer of automobile parts, which it sells to retail auto supply stores.
Its core competencies include superior design and engineering capabilities, as well as a highly
integrated and efficient supply chain. To sustain its competitive advantage, Cartech should first
A) seek to replicate its nearest competitor's competency in innovative marketing.
B) attempt to cut costs by replacing assembly line workers with robots.
C) upgrade its engineering department and improve its supply chain.
D) diversify its product offerings by developing parts for construction equipment.
12) Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy,
Sennheiser, and Sony in the high-end, premium headphone market. Which of the following
statements accurately explains one of the main reasons for the success of Beats?
A) It produced the highest-quality headphones.
B) It created a perception that owning its products was cool.
C) It emphasized marketing over core competency.
D) It focused on sponsoring future athletic superstars.

13) Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its
competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in
stores. This advantage of Cloud Cones best exemplifies a
A) markup.
B) resource flow.
C) capital gain.
D) core competency.

14) Organizational and managerial skills that find their expression in a company's structure,
routines, and culture are referred to as
A) tangible resources.
B) reserves.
C) capital gains.
D) capabilities.

15) Amazon.com's network of distribution centers allow it to drastically reduce its delivery times
compared to other online retailers. These distribution centers are examples of Amazon's
A) core competency.
B) intangible resources.
C) tangible resources.
D) capabilities.

16) The management of a company is assessing the value of all the tangible resources the
company owns. Which of the following will be included in this assessment?
A) a reputation for fast customer service
B) a culture of proactive communication
C) patents for electronic components
D) the punch presses that produce parts

17) As manager of a relatively new company, you are tasked with analyzing company resources
to identify core competencies capable of supporting a competitive advantage. Which of the
following resources is most likely to generate a competitive advantage?
A) new production facilities
B) large cash holdings
C) stockpile of supplies
D) enthusiastic company culture
18) Smooth Fusion Inc. is a software company that has built and acquired numerous assets over
the years. According to the resource-based view of a firm, which of the following assets of
Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?
A) the cloud computing service that it uses
B) the capital the company raised from its shareholders
C) the expertise acquired by the employees in the company
D) the headquarters building owned by the company

19) Which of the following statements accurately brings out the difference between tangible and
intangible resources?
A) Tangible resources contribute to a company's competitive advantage, whereas intangible
resources have little effect on competitive advantage.
B) Tangible assets can be bought on the open market by anyone with the necessary cash,
whereas intangible assets cannot be easily purchased.
C) Tangible resources take a longer time to build, whereas intangible assets can be built
comparatively easily.
D) Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily
replicated.

20) GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible
assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s
tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What
can be concluded from this information?
A) BC Inc. will be less competitive than GN Corp. because of its smaller investment in tangible
assets.
B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive
advantage.
C) Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time
than GN Corp.
D) There is no resource heterogeneity between the two firms, BC Inc. and GN Corp., as they
operate in the same industry.

21) Threadbare Industries is a new high-end textile company that 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 Threadbare Industries to acquire using its capital?
A) a new CEO
B) software
C) a lease for a new building
D) brand name
22) Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product
retailing companies. Their products consist primarily of day-to-day items that are easy to imitate
and sell. All three companies use the same resources and capabilities in the production and
distribution of their products. Judging from the market conditions described in this scenario,
which of the following statements is true?
A) Resource immobility of the firms will be low.
B) The industry structure will be far from perfect competition.
C) Barriers to entry within the industry will be high.
D) Any advantage that one firm has will be short-lived.

23) Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic
industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s
commitment to innovation. The company has adequate financial and human capital to invest in
research and development, an area in which One Electro Inc. lags behind. In this scenario, which
of the following critical assumptions of the resource-based view of a firm has been illustrated?
A) resource value
B) resource heterogeneity
C) resource immobility
D) resource imitation

24) Brain Boost Inc. is a leading educational toy company. Competitors across the globe have
failed to imitate Brain Boost's production models, supply chain systems, knowledge systems, and
culture. These attributes have remained unique to Brain Boost Inc. for a long time. Which of the
following assumptions of the resource-based model of competitive advantage does this scenario
best illustrate?
A) resource homogeneity
B) resource cost
C) resource substitution
D) resource immobility

25) In the context of the resource-based model of competitive advantage, if a successful firm
exhibits resource immobility it means that the
A) rival firms have better accessibility to quality resources, which they will be able to acquire
and deploy to their benefit.
B) firm will have a sustained competitive advantage because of its unique resources that are
difficult for others to replicate that are difficult for others to replicate.
C) competitors can easily replicate or copy the firm's resource bundles and capabilities.
D) resources of the firm cannot be effectively deployed within its own organization.

26) Due to resource immobility, a critical assumption in the resource-based model of a firm, the
A) competitive advantage of a firm exists for a short period of time.
B) resource bundles of a firm can be easily imitated by competitors.
C) resource differences between firms last for a long time.
D) competencies and capabilities of all firms in an industry are similar.
27) In the context of the resource-based model of competitive advantage, which of the following
scenarios best exemplifies resource immobility?
A) AP Corp. has earned a good reputation among its shareholders by investing more heavily in
equipment than in building up brand equity.
B) Two Triangle Inc. has lost its market share because its resources are rigid, inflexible, and
static.
C) Blue Elixir Corp. has been able to gain a competitive advantage because of its ability to
efficiently move its resources from one manufacturing unit to another.
D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its
employee experience is difficult for competitors to replicate.

28) How are the critical assumptions of the resource-based model of a firm fundamentally
different from the way in which a firm is viewed in the perfectly competitive industry structure?
A) In the resource-based model, resources are freely available and mobile, whereas in the
perfectly competitive industry structure, resources are highly immobile.
B) In perfect competition, it is extremely difficult to replicate the resource bundles of a firm,
whereas in the resource-based model, it is extremely easy to imitate them.
C) In perfect competition, all firms have access to the same capabilities, whereas in the resource-
based model, resource differences exist between firms in the same industry.
D) In the resource-based model, only physical assets of a firm are considered as resources,
whereas in perfect competition, a firm's capabilities and competencies are also considered as
resources.

29) The competitive advantage that one firm has will be short-lived in an industry in which
A) resource immobility is high.
B) perfect competition exists.
C) resource heterogeneity is high.
D) capabilities of a firm are not easily replicable.

30) You are the manager of Impromptu Printing, a leading print shop. Impromptu's resources
include a highly experienced staff and state-of-the-art printing presses. However, your closest
competition has started to cut into your market share by offering same-day turnaround on most
orders. Although your staffing and equipment is not optimized for rapid production, you decide
to start offering a same-day guarantee to your customers. According to the resource-based view,
what is wrong with this decision?
A) You have failed to take into account resource immobility.
B) Customers tend to have negative opinions of firms that imitate other firms.
C) Employees are often resistant to changes in strategy.
D) Your business is not organized to capture value.
31) Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors
has made its laptops the most advanced computers in the market. This competency, along with
the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability
by lowering its production costs. Thus, Crystal's competency in designing and manufacturing
microprocessors will be considered a(n) ________ resource in the VRIO framework.
A) valuable
B) substitute
C) imitable
D) organized

32) Gladiator Apparel is the market leader in the sportswear 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 Gladiator Apparel is
most likely to be considered a rare resource that is 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 design patents

33) Facing stiff competition in the e-reader market, Sumac Industries wants to protect its
competitive advantage by increasing the perceived value of its reader. Sumac's best strategy to
accomplish this would be to
A) increase the cost of production to add innovative new features.
B) highlight the number of celebrities who use Sumac e-readers.
C) lower the retail price of its e-reader to attract new customers.
D) try to imitate some of the features found in competing products.

34) The "Natural Nourishment" granola bars manufactured by Global Good Foods have been the
top-selling granola bars in the market. Though the market for granola bars is flooded with
competitors, Global Good has been able to maintain its market position for a long time. This is
mainly attributed to the pleasant texture of its granola, which comes from a proprietary
processing technique used by the company. This competency of Global Good Foods will be
considered as a(n) ________ resource in the VRIO framework.
A) imitable
B) rare
C) intangible
D) organizational

35) Salubre Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals
with diabetes. After Salubre receives FDA approval of the drug, its marginal cost to produce the
drug for market will be
A) low.
B) high.
C) moderate.
D) unpredictable.
36) The "diagonal assembly system" was a production system pioneered by the automobile
company Gogo. Recently, Gogo was able to sue a competitor and won the suit, thereby receiving
$100 million in damages. Which of the following would most likely enable Gogo to win such a
lawsuit?
A) The competitor ran advertising that criticized Gogo's assembly system.
B) The competitor failed to apply for a patent of its own assembly system.
C) The competitor infringed on Gogo's patent of the "diagonal assembly system."
D) The competitor developed an assembly system that worked on a newer theory than Gogo's
system.

37) According to an evaluation using 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 rare.
D) non-substitutable.

38) Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that
manufacture televisions, develop the same customer knowledge base and create products with
the same customer appeal as Invoro, then
A) Finolo and Ethver will have a VRIO resource.
B) Invoro will have a resource that is valuable but no longer rare.
C) Invoro will have a sustainable competitive advantage in the industry.
D) Invoro will have a resource that is rare but no longer valuable.

39) Riya has recently started a restaurant in a commercial area that already has many other
established restaurants and popular fast-food chains. Riya owns the building in which her
restaurant is located, rather than leasing premises as her competitors do. This factor allows her to
offer her products at a more competitive price. Riya has also invested a huge amount in
designing the restaurant's interior and in equipping the kitchen with the appliances that are most
widely used in her industry. In this scenario, which of the following is the most valuable resource
for Riya's business?
A) the investments made by Riya on the restaurant's interior
B) the type of kitchen equipment widely used in her industry
C) the restaurant's late entry into the market
D) the building owned by Riya, which reduces cost of operations

40) 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
41) During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was
dominated by multiple, well-established brands. These brands mostly sold their products in
exclusive outlets and departmental stores. SC management realized that a new entrant would
require a different business model to be successful. Thus, SC started selling its products through
direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily
through
A) path dependence.
B) technology transfer.
C) knowledge diffusion.
D) strategic equivalence.

42) Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones
are visually similar to the Y-series range of smartphones from Talkie Gen Inc., in terms of its
shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to
replicate the valuable and rare resource of Talkie Gen Inc.?
A) direct imitation
B) strategic equivalence
C) substitution
D) innovation

43) ________ are barriers to imitation that prevent rivals from competing away the advantage a
firm may enjoy.
A) Embargoes
B) Cartel arrangements
C) Isolating mechanisms
D) Market niches

44) Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa
Rica, where its main suppliers were located, would double in less than three years. This would
significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new
partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans
increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans
was able to maintain its profit margins in turbulent times. Which of the following isolating
mechanisms does this scenario best illustrate?
A) intellectual property protection
B) causal ambiguity
C) time compression diseconomies
D) better expectations of future resource value
45) Leading guitar string producer Wound Up Inc. has enjoyed a competitive advantage based on
its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated
strings. One of Wound Up's competitors, however, has recently developed a similar coating
using less expensive ingredients, which allows it to charge a lower price than Wound Up for
similar-quality strings. Wound Up's competitive advantage is in danger due to
A) a lack of perceived value.
B) a lack of organization.
C) direct imitation and substitution.
D) resource immobility.

46) ________ describes a process in which the options one faces in a current situation are limited
by decisions made in the past.
A) Social complexity
B) Path dependence
C) Cannibalization
D) Causal ambiguity

47) Iceberg Storage, a leading hard drive manufacturer, recently filed for bankruptcy. While
most of Iceberg's competitors were shifting away from physical data storage devices toward
online cloud storage services, Iceberg invested most of its retained earnings in the effort to
improve its hard drives. Once the hard-drive market drastically declined, Iceberg Storage was
unable to capitalize on the new technology. Which of the following does this scenario best
illustrate?
A) causal ambiguity
B) knowledge diffusion
C) social complexity
D) path dependence

48) Trendline Architects' core competency is building multi-family housing in urban areas. This
competency is based primarily on the decisions made by the company's top management over
several years to focus on building in densely populated cities. This process is called
A) path dependence.
B) dependence complexity.
C) causal dependence.
D) path immobility.

49) Assume a firm's resources and capabilities are costly to imitate. This is because rival
companies do not clearly understand the relationship between the resources and capabilities
controlled by the firm. In this case, the firm's competitive advantage is protected against
imitation by
A) path dependence.
B) dependence complexity.
C) causal ambiguity.
D) social complexity.
50) When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop
technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management
channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in
less than a year. However, the company failed because Blue Tech Inc.'s models were inferior to
the third- and fourth-generation models its competitors were selling. In this scenario, Blue Tech
Inc.'s failure can be best attributed to
A) causal ambiguity.
B) diseconomies of scope and scale.
C) time compression diseconomies.
D) social complexity.

51) How does causal ambiguity act as an isolating mechanism for organizations?
A) It makes it difficult for the competitors to understand why a company has been so successful.
B) It creates a situation in which different social and business systems interact with one another.
C) It makes it difficult for competitors to deploy their resources by creating ambiguity within
their organizational structures.
D) It makes it difficult for competitors to imitate core competencies quickly due to time
compression diseconomies.

52) Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable
resources, capabilities, or competencies. This is primarily because the source for the company's
success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due
to its strong leadership, the skills of its research and development team, or the timing of the
company' s product introductions. Gene Electronics Inc. has been protected from losing its
competitive advantage as a result of
A) time compression diseconomies.
B) resource homogeneity.
C) causal ambiguity.
D) path dependence.

53) Tony's Pizza has been trying to directly copy the strategies of Moonlight Pies. Even though it
is evident that the success of Moonlight Pies' success comes from the freshness and variety of
ingredients it uses, Tony's Pizza has not been able to introduce the same types of produce into its
recipes. This is because Moonlight's network of relationships with local growers, as well as its
efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation
does this scenario best illustrate?
A) path dependence
B) social complexity
C) resource mobility
D) resource homogeneity
54) An observer may conclude that the organizational culture of Zappos, an online retailer for
shoes and clothing, might be the basis for its competitive advantage. However, reverse social
engineering to crack Zappos' code of success might be much more difficult for a company trying
to exactly imitate its strategy. Thus, the source of Zappos competitive advantage is said to be
A) socially complex.
B) inexhaustible.
C) non-substitutable.
D) nonambiguous.

55) The owners of Puff Ball bakery want to open a second retail outlet. Which of the following
scenarios is most likely to yield a competitive advantage?
A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business
district currently under construction.
B) Purchase an existing bakery from a business that closed due to declining sales and try to
revive it.
C) Build a shop in a sparsely populated rural area where the land is inexpensive and few other
bakeries exist.
D) Open a shop in a crowded downtown location where several other bakeries have been
successful over the years.

56) A firm will fail to create a sustained competitive advantage when the
A) fit between its internal strengths and the external environment is static.
B) source of its competitive advantage is causally ambiguous.
C) source of its competitive advantage is socially complex.
D) resource bundles exhibit heterogeneity and immobility.

57) Given the accelerated pace of technological change, in combination with deregulation,
globalization, and demographic shifts, a firm will be successful today only if its
A) competitive advantage is derived from static resource or market advantages.
B) resource advantage is not causally ambiguous or socially complex.
C) resource advantage is maintained for a short period of time.
D) internal strengths change with its external environment in a dynamic fashion.

58) InVue, a consumer electronics company, is the leading manufacturer of high-definition (HD)
LED televisions. HD technology has been its core competency and the company holds 60
percent shares in that market. However, InVue's competitors have now begun to produce more-
advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to
the dynamic capabilities perspective, what should InVue do?
A) InVue should start working on Ultra HD and Smart television technologies to adapt its core
competency to suit the external environment.
B) InVue should stick to its existing core competency, that is HD LED technology, as it is the
best in that segment.
C) InVue should take steps to reduce the causal ambiguity and socially complexity of its core
competency.
D) InVue should work on enhancing the mobility of its core competency.
59) Which of the following statements accurately describes a firm's resource stock?
A) Resource stocks are a firm's level of resources that are common to competitors.
B) Resource stocks are a firm's future estimate of both tangible and intangible resources.
C) Resource stocks are a firm's current level of intangible resources.
D) Resource stocks are a firm's level of investments to maintain or build a resource.

60) Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in
upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be
$130,000 and accounts payable $75,000. In monetary terms, what would Ironhorse's resource
flows be?
A) $1,650,000
B) $130,000
C) $75,000
D) $700,000

61) Seth's Computer Repair has maintained a competitive advantage based on its thorough and
professional service, reasonable pricing, and money-back guarantee. Management at the
company is so committed to doing repairs well that they often have rejected employee
suggestions to expedite their processes. Recently, the company has begun to lose customers to a
new local service offering same day in-home repairs and 24/7 online customer support.
According to the dynamic capabilities perspective, Seth's Computer Repair has lost its
competitive advantage due to
A) value chain disruption.
B) core rigidity.
C) resource flows.
D) resource stocks.

62) Which of the following is an implication of high employee turnover in a company?

A) It results in a reduction in the company's intangible-resource stocks.
B) It makes the source of the company's competitive advantage causally ambiguous.
C) It makes the source of the company's competitive advantage socially complex.
D) It results in greater immobility and heterogeneity of the company's resources.

63) Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn
Autos Inc., a rival company. What does this imply?
A) The resource stock of Bass Automobiles Inc. increased.
B) Bass Automobiles Inc. faced resource leakage.
C) The resource flow into Unicorn Autos Inc. was reduced.
D) Bass Automobiles Inc.'s tangible assets decreased.

64) According to the value chain analysis, which of the following is a primary activity?
A) research and development
B) human resources management
C) accounting and finance
D) marketing and sales
65) Your company, a small software development firm, has attracted many of the top young
programmers in your area. As a result, the apps you produce have been praised for their
innovative features and intuitive user experience. According to the bathtub metaphor in the
dynamic capabilities perspective, what is the best way for you to protect against resource
leakage?
A) Invest in an online marketing campaign for existing products to retain customers.
B) Open a satellite office overseas to support the company culture of taking chances.
C) Attempt to undercut the competition by imitating their top-selling product.
D) Improve the benefits package to retain key employees and reduce turnover.

66) Online retailer NetShop had been drastically losing market share to its competitors. The
management hired a reputed consulting firm to advise the company. The experts from the
consulting firm pointed out that the company primarily lost out on its competitive advantage due
to its poor customer service, including slow response times to customer inquiries and unclear
return policies. These ineffective policies and procedures led to many disgruntled customers and
a steady migration to more customer-friendly retailers. NetShop can best solve its problem by
working on its
A) immobile assets.
B) support activities.
C) resource flows.
D) resource stocks.

67) To help a firm achieve a competitive advantage, each distinct activity performed in the value
chain needs to
A) contribute to the firm's strategic position as either low-cost leader or differentiator.
B) reduce the immobility and the heterogeneity of the firm's resources.
C) create a static fit between the company's internal resources and the external environment.
D) reduce the causal ambiguity and the social complexity of the firm's source of success.

68) Igor's Furniture has seen its profit margins shrink over the past several years as increased
competition has driven down furniture prices. You have been tasked with improving the
company's margins. Which of the following approaches makes the most sense within the context
of strategic activity systems?
A) Go against the trend and raise prices.
B) Install modern manufacturing equipment to improve efficiency.
C) Increase spending on online marketing efforts.
D) Focus on imitating the most successful products of competitors.

69) Juanita, a manager at a multinational organization, is trying to carefully scan and link the
firm's internal environment to its external environment. The insights from this analysis will allow
her to effectively leverage the company's internal strengths to exploit external opportunities,
while mitigating internal weaknesses and external threats. In this scenario, which of the
following managerial tools is Juanita employing?
A) Blake Mouton managerial grid
B) Ansoff's matrix
C) BCG analysis
D) SWOT analysis
70) In the context of the SWOT matrix, which of the following best exemplifies a firm's internal
strength?
A) increase in a firm's customer loyalty
B) growth in the size of the market in which a firm operates
C) rise in the income of the demographic segment to which a firm caters
D) loss of a competitor's reputation

71) In the context of SWOT analysis, which of the following best exemplifies a firm's internal
weakness?
A) fall in the purchasing power of the firm's customers
B) increased competition in the industry where the firm operates
C) irregularity in the raw materials supply throughout the industry
D) decline in the firm's market share

72) In the context of SWOT analysis, which of the following best exemplifies a firm's external
opportunity?
A) an increase in its financial resources
B) an increase in its brand equity
C) an increase in its customers' disposable income
D) an increase in its employee productivity

73) Which of the following is a drawback of the SWOT analysis?

A) The SWOT analysis takes into account only the internal environment of a firm, ignoring the
equally important external environment.
B) This framework is only applicable to the manufacturing industries; it is ineffective when
applied to the service firms.
C) A problem with this framework is that a strength can also be a weakness, and that an
opportunity can also simultaneously be a threat.
D) A drawback of this framework is that it allows managers to evaluate only a firm's current
situation and not its future prospects.

74) Which of the following applies to the Strength-Threats quadrant of the SWOT matrix?
A) The local fast-food chain Easy Hot Dogs expanded its limited menu to maintain its advantage
against stiff competition.
B) The local fast-food chain Easy Hot Dogs added a salad bar to maintain its competitive
advantage against stiff competition.
C) The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its
competitive advantage against stiff competition.
D) The local fast-food chain Easy Hot Dogs revised its image of being a cheap-food place to
being a wholesome family place to maintain its competitive advantage against stiff competition.

75) A resource-based view of a firm provides a model that systematically aids in identifying
A) core rigidities.
B) core competencies.
C) competitive disadvantage.
D) competitive parity.
76) Superlative Productions spent 10 million dollars to buy the rights to a best-selling novel. The
company then prepared for production by hiring a screenwriter to adapt the novel, casting the
main roles, renting cameras and other equipment, and scouting locations in southern Arizona.
Which of the following pairs of resources are both intangible?
A) money spent to buy rights to the novel; screenwriter's experience adapting novels
B) money spent to buy rights to the novel; locations in southern Arizona
C) best-selling novel; locations in southern Arizona
D) best-selling novel; screenwriter's experience adapting novels

77) Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to
outperform its competitors over several decades. Continental and Delta attempted to copy SWA
with their offerings of Continental Lite and Song, respectively. Neither Continental nor Delta,
however, was able to successfully imitate the resource bundles and firm capabilities that make
SWA unique. Which of the following is this case an example of?
A) resource immobility
B) resource heterogeneity
C) resource imitation
D) resource substitution

78) Which of the following provides an example of how a firm's valuable resource can be
imitated?
A) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a
model of a generic medieval cathedral.
B) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a
model of the Leaning Tower of Pisa.
C) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a
model of the U.S.S. Enterprise aircraft carrier.
D) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a
model of a castle from a fantasy movie.

79) Which of the following describes a situation in which firms acquire resources at a low cost,
laying the foundation for a competitive advantage later?
A) better expectations of future resource value
B) path dependence affecting current decisions
C) causal ambiguity
D) social complexity

80) Which of the following best exemplifies social complexity as an isolating mechanism?
A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management
and product development systems with little success.
B) Kristin's Cosmetics failed to acquire the resources for its eyeliner at a low cost and thereby
lost its competitive advantage over Monica's Makeup.
C) Kristin's Cosmetics had difficulty competing with Monica's Makeup because it could not
access the many makeup factories in Kentucky as easily as its competitor.
D) Kristin's Cosmetics did not fully understand the reasons for the success of Monica's Makeup
and therefore had difficulty competing with the firm.
81) Dynamic capabilities are especially relevant for surviving and competing in markets that
A) shift quickly.
B) shift slowly.
C) remain constant.
D) remain unpredictable.

82) Merton's Toothpaste has been the leader of dental care products for about 40 years. However,
this company relied too long on its competency of reducing cavities without refining or
upgrading other aspects of its product. As a result, other personal hygiene companies that began
to offer toothpastes with natural whitening agents gained a competitive advantage over Merton's.
This case is an example of
A) resource flow.
B) dynamic capabilities.
C) core rigidity.
D) value chain.

83) To reduce the amount of time it takes to apply packaging to its finished products, North Star
Foods is implementing new equipment at its production plants. By doing this, North Star is
addressing a ________ in the value chain analysis.
A) primary activity
B) secondary activity
C) support activity
D) premier activity

84) O'Ryan Plastics maintains a manufacturing plant overseas. The local government has just
been overthrown by a military group that opposes foreign influence in the country. According to
the SWOT analysis, the political situation in this location is considered to be an
A) external opportunity.
B) external threat.
C) internal strength.
D) internal weakness.

85) After conducting a SWOT analysis, your firm has decided to focus on addressing issues
located in the Weaknesses–Opportunities quadrant. Which of the following steps are you most
likely to take?
A) Devote more resources to an extremely popular advertising campaign to promote an exciting
new product.
B) Shut down struggling retail outlets in an economically depressed region.
C) Deploy top sales personnel to prevent buyers from migrating towards lower-priced
competition.
D) Reorganize the inefficient research and development department to bring innovative products
to market more quickly.