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test bank for economics

Test Bank
Student: ___________________________________________________________________________

1.

The types of skills that are required to prepare an effective strategic case analysis can benefit you in
actual business situations.
True

2.

There are two capabilities that can be learned through case analysis—the ability to speculate and
integrate.
True

3.

False

Analytical tools such as value chain analysis and five forces analysis are useful tools to employ when
conducting strategic analysis.

True

9.

False

Writing down a problem statement is a needless waste of time when preparing a case.
True

8.

False

The first step in becoming familiar with the material is to read quickly through the case to get an overall
sense of the material.
True

7.

False

The business plan framework is not effective for analyzing strategic cases.
True

6.

False

The role of strategic decision maker is one that may be taken when analyzing a case.
True

5.

False

Case analysis takes students through the whole cycle of activity a manager would face.
True

4.


False

False

The current ratio, quick ratio and cash ration are all measures of short-term solvency.
True

False

10. The profit margin tells you how much investors are willing to pay per dollar of current earnings.
True

False

11. The basic aim of case analysis is to find solutions.
True

False

12. There are five basic rules for preparing an oral case presentation.
True

False

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13. According to the text, one of the reasons that case analysis is so enriching as a learning tool is that it
draws on many resources and skills besides what is in the textbook.
True

False

14. The case analysis process should focus strictly on the case itself and you should not be concerned about
your own performance.
True

False

15. According to the text, there are six rules for preparing a written case analysis.
True

False

16. The word conflict has negative connotations.
True

False

17. The illusion of unanimity is one of the symptoms of groupthink.
True

False

18. The use of a devil's advocate causes conflict that is counterproductive.
True

False

19. Dialectical inquiry is a technique whereby a problem is approached from two alternative points of
view.
True

False

20. To obtain synthesis, your analysis should ideally include the best components of each alternative.
True

False

21. The analysis-decision-action cycle is the recommended method of case analysis.
True

False

22. According to the text, the analysis-decision-action cycle should not include analysis of the external
environment but only focus on the internal aspects of the organization.
True

False

23. Three capabilities that can be learned through case analysis are
A. the ability to question, ponder, and answer.
B. the ability to differentiate, speculate, and integrate.
C. the ability to read, write, and perform mathematical calculations.
D. the ability to be cruel, competitive and cut-throat.
24. Being able to imagine different scenarios or contemplate the outcome of a decision are examples of the
capability known as
A. intergration
B. differentiation
C. speculation
D. none of the answers is correct

2


25. In order to place yourself inside a case, you might adopt the position of
A. an outside consultant.
B. a strategic decision maker.
C. the board of directors.
D. all of the answers are correct
26. People, opportunity, context, risk, and reward are all part of
A. the strategic groups approach.
B. the contingency model.
C. the business plan framework.
D. the financial planning framework.
27. When becoming familiar with a case it is recommended that you
A. skim the case only once.
B. you take several days to read and digest the case.
C. read it at night before bed and think about it in your sleep.
D. skim it once, and read it a second time, in depth, making notes as you read.
28. Sometimes problems in a case are not apparent until
A. after you do the analysis.
B. you read the case 12 times.
C. you write down the problem statement.
D. none of the answers are correct.
29. Price-earnings and market-to-book are examples of
A. market value ratios.
B. profitability ratios.
C. turnover ratios.
D. liquidity ratios.
30. The step in case analysis that involves using analytical tools from the textbook such as value chain
analysis is known as
A. identifying problems.
B. proposing alternative solutions.
C. conducting strategic analysis.
D. becoming familiar with the material.
31. The step in case analysis that involves the evaluation of choices and implications of those choices is
known as
A. identifying problems.
B. proposing alternative solutions.
C. conducting strategic analysis.
D. becoming familiar with the material.
32. The final step in the case analysis process is
A. identifying problems.
B. proposing alternative solutions.
C. making recommendations.
D. conducting strategic analysis.

3


33. An essential part of preparing an oral presentation is:
A. organizing your thoughts.
B. being consistent and logical.
C. emphasizing strategic analysis.
D. all of the answers are correct
34. Conducting outside research when doing a case study is
A. unethical and irresponsible.
B. one of the ways to help get the most out of the experience.
C. not recommended.
D. none of the answers is correct.
35. Presenting information graphically is
A. one of the five rules for preparing a written case analysis.
B. one of the five rules for preparing an oral case presentation.
C. recommended only for liberal arts majors.
D. a form of brainstorming.
36. The use of conflict-inducing decision making techniques in case analysis
A. is designed to improve case analysis.
B. involves the constructive use of conflict.
C. can be helpful in arriving at better solutions to cases.
D. all of the answers are correct
37. The phenomenon known as groupthink is undesirable and can lead to poor decisions. The concept of
groupthink was developed by
A. Financial Post Advisor
B. Irvine Janis
C. Howard Jones
D. all of the answers are correct
38. Which of the following tries to identify problems with the proposed alternative and suggests reasons
why it should not be adopted?
A. the devil's advocate
B. the inquirer
C. the dialectic
D. the figurehead
39. Analyzing organizational goals and objectives is
A. a value-creating activity.
B. an affordable strategy in case analysis.
C. the first step in the analysis-decision-action cycle.
D. the final step in preparing a written case analysis.
40. Asking the question, "Have strategic principles been used in the process of obtaining valuable resources
and crafting effective entrepreneurial strategies?" is an essential part of
A. creating new ventures.
B. the final
step in the analysis-decision-action cycle.
C. the 12th step in the analysis-decision-action cycle.
D. all of the answers are correct

4


41. The analysis-decision-action model reflects
A. ideas that are linked sequentially
B. an overarching strategic perspective
C. material presented in Chapter 12
D. all of the answers are correct
42. Discuss the three capabilities that can be developed through case analysis and explain how these three
activities sometimes compete for a manager's attention.

43. Compare and contrast the positions of strategic decision maker, board of directors, and outside
consultant that may be adopted when conducting a strategic case analysis.

44. Describe the four characteristics of a business plan framework, and discuss when it might be appropriate
to use this framework to analyze strategic cases?

45. Outline the five easy steps that can be used to organize a strategic management case analysis.

5


46. Outline the five rules for preparing an oral case presentation and explain why each is essential to the
development of an effective presentation.

47. Discuss the resources beyond the textbook that might be used to conduct strategic case analysis and
explain how the use of additional resources can help you get the most out of the experience and expand
your horizons.

48. What are the five rules for preparing a written case analysis and how do these differ from the rules for
preparing an oral presentation?

49. Outline the various approaches to conflict-inducing decision making and provide examples of each.
Discuss how these techniques can improve the quality of case analysis.

6


50. Explain how the 12 ideas involved in the analysis-decision-action cycle are linked sequentially in terms
of an overarching strategic perspective.

51. Strategic management consists of the analysis, decisions, and actions an organization undertakes in order
to create and sustain competitive advantages.
True

False

52. Strategic management includes strategy analysis, strategy formulation, and strategy implementation.
True

False

53. According to the text, formulating strategy includes taking into consideration strategy at the business,
international, digital, and corporate levels.
True

False

54. Shareholders in a company are the only individuals with an interest in the financial performance in the
company.
True

False

55. Shareholders, employees, and the community-at-large are among a firm's stakeholders.
True

False

56. Symbiosis is the ability to recognize interdependencies among the interests of multiple stakeholders
within and outside an organization.
True

False

57. Social responsibility is the idea that organizations are not only accountable to shareholders but also to
the community-at-large.
True

False

58. Sears has developed a sophisticated quantitative model that can predict the relationship between
employee satisfaction, customer satisfaction and financial results. This is an example of a symbiotic
approach to strategic management.
True

False

59. Decisions by Boards of Directors are always consistent with shareholder interests.
True

False

60. Social responsibility for Suncor Energy of Calgary means accountability to customers but NOT to
employees.
True

False

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61. The strategic management process should be addressed only by top-level executives. Mid-level and
low-level employees are best equipped to implement the organization's strategies.
True

False

62. Globalization is the flow of capital, people, and information throughout the world.
True

False

63. Intellectual capital is becoming increasingly important in today's economy. It is a concern of managers
throughout organizations.
True

False

64. Objectives in organizations should be clear, stated, and known by employees throughout the
organization.
True

False

65. Strategic management should only include short-term objectives. Long-term objectives are covered in
the organization's vision statement.
True

False

66. Organizational goals and objectives should be vague in order to allow for changes in strategy.
True

False

67. Organizational vision statements are the beginning point for the hierarchy of goals throughout the
organization. An organization's vision statement should be massively inspiring, overarching, and
long-term.
True

False

68. Although vision statements vary from organization to organization, vision statements are intended to
motivate and inspire employees to work toward a general goal.
True

False

69. According to the text, a mission statement is an overarching statement that is massively inspiring,
long-term, and only discusses the purpose of the company.
True

False

70. A mission statement encompasses both the purpose of the company as well as the basis of competition
and competitive advantage.
True

False

71. Strategic objectives should be measurable, specific, appropriate, and realistic, but not constrained by
time deadlines.
True

False

72. It is important for organizations to focus primarily on financial objectives and be less concerned about
other objectives and goals.
True

False

8


73. The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives.
B. strategy must be focused on long-term objectives.
C. strategy must be focused on one specific area of an organization.
D. strategy must focus on competitor strengths.
74. The four key attributes of strategic management include all of the following except
A. including multiple stakeholder interests in decision making.
B. incorporating both short-term and long-term perspectives.
C. recognizing the trade-offs between effectiveness and efficiency.
D. emphasis on the attainment of short-term objectives.
75. Stakeholders are
A. a new way to describe shareholders.
B. individuals, groups, and organizations who have a stake in the success of the organization.
C. creditors who hold a lien on the assets of the organization.
D. attorneys and their clients who sue the organization.
76. "Effectiveness" is often defined as
A. doing things right.
B. stakeholder satisfaction
C. doing the right thing.
D. productivity enhancement.
77. According to Henry Mintzberg, the realized strategies of a firm
A. are a combination of deliberate and emergent strategies.
B. are a combination of deliberate and differentiation strategies.
C. must be based on a company's strategic plan.
D. must be kept confidential for competitive reasons.
78. In order to increase their competitiveness, organizations must continually analyze their strategy and their
competitive environments. According to the text, strategy analysis includes
A. assessing intellectual capital as well as analyzing the internal and external environment.
B. formulating Internet and international-level strategy.
C. strategic leadership and fostering entrepreneurship.
D. strategy implementation and strategic controls.
79. In terms of strategy analysis, the textbook describes Roth, CEO of Nortel, as having
A. set low targets.
B. ignored the experiences of competitors and set unrealistically high growth targets.
C. focused on the economic landscape.
D. all of the answers are correct
80. Sears has developed a sophisticated quantitative model and found that there were positive relationships
between employee satisfaction, customer satisfaction, and financial results. According to the text, this is
an example of ________________.
A. zero-sum relationship among stakeholders
B. stakeholder symbiosis
C. rewarding stakeholders
D. emphasizing financial returns

9


81. An organization is responsible to many different entities. In order to meet the demands of these groups,
organizations must participate in stakeholder management. Stakeholder management means that
A. interests of the shareholders are not the only interests that matter.
B. stakeholders are second in importance to the shareholders.
C. stakeholders and managers inevitably work at cross-purposes.
D. all stakeholders receive financial rewards.
82. While working to prioritize and fulfill their responsibilities, members of an organization's board of
directors should
A. represent their own interests.
B. represent the interests of the shareholders.
C. direct all actions of the CEO.
D. emphasize the importance of short-term goals.
83. Members of Boards of Directors are
A. appointed by the Securities and Exchange Commission.
B. elected by the shareholders as their representatives.
C. elected by the public.
D. only allowed to serve one term of four years.
84. Managers should do more than just focus on short-term financial performance. One concept that helps
managers do this is stakeholder symbiosis. This means that
A. stakeholders are dependent on each other for their success.
B. stakeholders look out for their individual interests.
C. one can only gain at the expense of someone else.
D. all stakeholders want to maximize shareholder returns.
85. Firms must be aware of goals other than short-term profit maximization. One area of concern should be
social responsibility which is
A. the expectation that business will strive to improve the overall welfare of society.
B. the idea that organizations are solely responsible to local citizens.
C. the fact that court costs could impact the financial bottom line.
D. the idea that businesses are responsible to maintain a healthy social climate for their employees.
86. According to the text, the "triple bottom line" approach to corporate accounting includes which three
components:
A. financial, environmental, and customer
B. financial, organizational, and customer.
C. financial, environmental, and social.
D. financial, organizational, and psychological.
87. Firms must be concerned with many types of capital. In the broader sense, these could include
A. ecological capital.
B. material capital.
C. human and social capital.
D. all of the above.

10


88. Many organizations have a large number of functional areas with very diverse, and sometimes
competing, interests. Such organizations will be most effective if
A. each functional area focuses on achieving their own goals.
B. functional areas work together to attain overall goals.
C. goals are defined at the bottom and implemented at the top.
D. management and employees have separate goals.
89. The text argues that a strategic perspective in an organization should be emphasized
A. at the top of the organization.
B. in the middle of the organization.
C. throughout the organization.
D. from the bottom up.
90. As our world increases in complexity, the global environment is increasingly competitive and
challenging. The key to effective globalization is
A. managing the flow of goods.
B. more people speaking more languages.
C. managing the flow of capital, people, and information.
D. governmental regulations.
91. As firms work to become more efficient and effective in the global business environment, they are
forced to continually innovate. Innovation in an organization
A. will always increase a firm's performance.
B. may enhance or destroy a firm's capabilities.
C. should not be pursued by industry leaders.
D. happens only incrementally.
92. Peter Senge, of M.I.T., recognized three types of leaders. _______________ are individuals that,
although having little positional power and formal authority, generate their power through the conviction
and clarity of their ideas.
A. Local line leaders
B. Executive leaders
C. Internal networkers
D. Shop floor leaders
93. Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should
emerge at which level(s) of an organization?
A. only at the top
B. in the middle
C. throughout the organization
D. only during times of change
94. The hierarchy of organizational goals is in this order (least specific to most specific):
A. vision statements, strategic objectives, mission statements
B. mission statements, strategic objectives, vision statements
C. vision statements, mission statements, strategic objectives
D. mission statements, vision statements, strategic objectives

11


95. Wellpoint Health Networks states: "Wellpoint will redefine our industry: through a new generation of
consumer-friendly products that put individuals back in control of their future." This is an example of a
A. strategic objective.
B. vision statement.
C. vague statement of direction.
D. line manager's individual goal.
96. Effective vision statement include
A. all strategic directions of the organization.
B. a brief statement of the company's direction.
C. strategic posturing and future objectives.
D. financial objectives and projected figures.
97. Examples of _____________ include: "to be the happiest place on earth" (Disney), and "restoring
patients to full life" (Medtronics).
A. vision statements
B. mission statements
C. strategic objectives
D. operational objectives
98. In contrast to an organization's vision, its mission should
A. be shorter in length.
B. encompass both the purpose of the company as well as the basis of competition.
C. encompass all the major rules and regulations of the corporate work force.
D. be less detailed.
99. Which "organizational vision" did the text credit belonging to BCE Bell Canada Enterprises?
A. "Restoring patients to full life"
B. "Providing Canadians with a one-stop destination in meeting their needs"
C. "Clear, Simple, First, True, Profitable, Proud"
D. "… the world's best quick service restaurant"
100.Vision statements are used to create a better understanding of the organization's overall purpose and
direction. Vision statements
A. are very specific.
B. provide specific objectives.
C. set organizational structure.
D. evoke powerful and compelling mental images.
101.Fortune Brands states they will "cut corporate costs by $30 million a year." This is an example of a
A. nonfinancial strategic objective.
B. financial strategic objective.
C. vision statement.
D. mission statement.

12


102.The strategic management process includes strategy analysis, strategy formulation, and strategy
implementation. Discuss each of these steps.

103.Discuss what is meant by recognizing trade-off between efficiency and effectiveness and provide an
example of how this attribute of strategic management could influence the strategic decisions of a firm.

104.A firm has a variety of different stakeholders. Identify several possible stakeholders a firm may have and
discuss how the firm may achieve stakeholder symbiosis.

105.Globalization is impacting most firms today. Discuss what "globalization" means and how and why it
impacts today's firms.

13


106.The text discusses several characteristics of effective strategic objectives. List several of these and
discuss why a firm's strategic objectives should meet these criteria.

107.Environmental scanning and competitor intelligence provide important inputs for forecasting activities.
True

False

108.Environmental monitoring deals with tracking changes in environmental trends that are often uncovered
during the environmental scanning process.
True

False

109.Competitor Intelligence (CI) is a tool that can provide management with "early warnings" about both
threats and opportunities.
True

False

110.Competitor Intelligence gathering is no different from spying.
True

False

111.Competitive intelligence generally does not benefit very much from gathering information on
competitors from sources in the public domain.
True

False

112.Even with all of the advances in recent years, forecasting is typically considered more of an art than a
science and it is of little use in generating accurate predictions.
True

False

113.The same environmental trend can often have very different effects on firms within the same industry.
True

False

114.Although changes in the general environment may often adversely or favorably impact a firm, they
seldom alter an entire industry.
True

False

115.Scenario analysis draws on a range of disciplines and interests.
True

False

116.Nearly one-fifth of Canadians will be over 65 by 2025.
True

False

14


117.Technological innovations can create entirely new industries and alter the boundaries of industries.
True

False

118.The Canadian forestry industry has gained significant advantage over competitors in Sweden and
Finland through the use of advanced technology.
True

False

119.Porter's five forces model is designed to help us understand how social attitudes and cultural values
impact U.S. businesses.
True

False

120.Porter's five forces model helps to determine both the nature of competition in an industry and the
industry's profit potential.
True

False

121.In some industries, high switching costs can act as an important barrier to entry.
True

False

122.Industries characterized by high economies of scale typically attract fewer new entrants.
True

False

123.The power of a buyer group is increased if the buyer group has less concentration than the supplier
group.
True

False

124.Buyer power tends to be higher if suppliers provide undifferentiated or standard products.
True

False

125.Supplier power tends to be highest in industries where products are vital to buyers, where switching
from one supplier to another is very costly, and where there are many suppliers.
True

False

126.The power of suppliers will be enhanced if they are able to maintain a credible threat of forward
integration.
True

False

127.The more attractive the price/performance ratio of substitute products, the more tightly it constrains an
industry's ability to charge high prices.
True

False

128.Rivalry is most intense when there are high exit barriers and high industry growth.
True

False

129.Rival airlines Air Canada and WestJet are battling over allegations of corporate espionage.
True

False

15


130.Michael Porter's Five Forces Analysis is a dynamic tool for analyzing industry attractiveness.
True

False

131.Complementary products are products that typically have a negative impact on the value of a firm's own
products or services.
True

False

132.Bombardier studies people's travel patterns to decide on the number of seats they should plan for future
aircraft.
True

False

133.The use of the strategic groups concept is generally not helpful in charting the future directions of firms'
strategies.
True

False

134.The strategic groups in the world-wide automobile industry have been very stable and unchanging in
recent years.
True

False

135.According to the text, Canadian Tire is more concerned about Wal-Mart than Holt Renfrew.
True

False

136.Gathering "competitive intelligence"
A. is good business practice.
B. is illegal.
C. is considered unethical.
D. minimizes the need to obtain information in the public domain.
137.Two key inputs to developing forecasts discussed in the text are
A. environmental scanning and stakeholder identification.
B. environmental scanning and competitor intelligence.
C. assessing internal strengths and environmental scanning.
D. environmental scanning and a SWOT analysis.
138._____________ tracks the evolution of environmental trends, sequences of events, or streams of
activities.
A. Environmental scanning
B. Environmental monitoring
C. Environmental surveying
D. Competitive intelligence
139.Environmental forecasting involves developing plausible projections about the ________ of
environmental change.
A. direction
B. scope
C. speed
D. all of the answers are correct

16


140.In the Canadian telecommunications industry, the companies used to be governed by
A. different federal agencies.
B. the same federal agency, CRTC.
C. various provincial agencies.
D. industry associations.
141.A danger of forecasting discussed in the text is that
A. in most cases, the expense of collecting the necessary data exceeds the benefit
B. forcasting's retrospective nature provides little information about the future
C. managers may view uncertainty as "black and white" while ignoring important "grey areas"
D. it can create legal problems for the firm if regulators discover the company is making forecast.
142.The aging of the population, changes in ethnic composition, and effects of the baby boom are
A. macroeconomic changes.
B. demographic changes.
C. global changes.
D. sociocultural changes.
143.Increasingly larger numbers of women entering the work force since the early 1970s is an example of
A. demographic changes.
B. political and legal environmental changes.
C. sociocultural changes.
D. technological developments.
144.Which of the following would be considered part of a firm's general environment?
A. decreased entry barriers
B. increased trade deficit
C. increased bargaining power of the firm's suppliers
D. increased competitive intensity
145.Emerging sociocultural changes in the environment include
A. changes in the ethnic composition.
B. the increasing educational attainment of women in the past decade.
C. progressively less disposable income by consumers.
D. changes in the geographic distribution of the population.
146.The political/legal segment: When the US congress passed the Sarbanes-Oxley Act in 2002,
A. Canada deregulated the associations.
B. no similar Canadian legislation was developed.
C. Canada followed with similar provisions.
D. the provincial governments developed similar laws.
147.In the Air Canada - WestJet conflict, the issue is:
A. Air Canada claims their employee website was hacked.
B. WestJet claims their employee website was hacked.
C. Air Canada claims their email was stolen.
D. Air Canada claims WestJet used employee access information to obtain flight info.

17


148.Interest rate increases have a ________ impact on the residential home construction industry and a ___
effect on industries that produce consumer necessities such as prescription drugs or basic grocery items.
A. positive; neutral
B. negative; neutral
C. negative; positive
D. positive; negative
149.Which is considered a force in the "Five Forces model"?
A. increased deregulation in an industry
B. the threat of government intervention
C. rivalry among competing firms
D. recent technological innovation
150.A large fabricator of building components purchased a steel company to provide raw materials for its
production process. This is an example of
A. backward integration.
B. economies of scale.
C. forward integration.
D. product differentiation.
151.An independent group of suppliers, such as farmers, gathers to form a cooperative to sell their products
to buyers directly, replacing their former distributor. This is an example of
A. threat of entry.
B. backward integration.
C. forward integration.
D. threat of substitute products.
152.The threat of new entrants is high when there are
A. low economies of scale.
B. high capital requirements.
C. high switching costs.
D. high differentiation among competitors' products and services.
153.Which of the following would be an entry barrier?
A. large economies of scale
B. low switching costs
C. easy access to raw materials
D. low capital requirements
154.Which of the following firms would likely pose the least competitive threat?
A. a firm in the same industry and in the same strategic group
B. a firm that produces substitute goods to your product line
C. a competitor to your product where a high switching cost exists
D. a firm in the same industry and in the nearest strategic group looking to join your group
155.The rivalry between Air Canada and WestJet
A. recently moved from the skies to the courtroom.
B. includes allegations that WestJet set up a screen-scraper program to automatically lift data.
C. includes allegations that Air Canada sent investigators to pilfer a WestJet Executives garbage looking
for data.
D. all of the answers are correct

18


156.Buyer power will be greater when
A. the products purchased are highly differentiated.
B. there are high switching costs.
C. the industry's product is very important to the quality of the buyer's end products or services.
D. it is concentrated on purchasing large volumes relative to seller sales.
157.The bargaining power of suppliers increases as
A. more suppliers enter the market.
B. importance of buyers to supplier group increases.
C. switching costs for buyers decreases.
D. the threat of forward integration by suppliers increases.
158.In Porter's Five Forces model, conditions under which a supplier group can be powerful include all the
following except
A. lack of importance of the buyer to the supplier group.
B. high differentiation by the supplier.
C. dominance by a few suppliers.
D. readily available substitute products.
159.A supplier group would be most powerful when there is/are
A. many suppliers.
B. few substitute products.
C. low differentiation of products supplied.
D. high threat of backward integration by the buyers.
160.Threat of substitute products comes from
A. other companies in the same industry.
B. foreign companies which can use cheap labour in their countries.
C. firms in other industries that produce products or services that satisfy the same customer need.
D. all of the answers are correct
161.Strategic groups within industries: Canadian retailer Holt Renfrew is described as
A. a high growth industry with low fixed costs.
B. similar to Canadian Tire.
C. a prestigious upscale player.
D. a competitor of Wal-Mart.
162.Exit barriers arise from
A. specialized assets with no alternative use.
B. governmental and social pressures.
C. strategic interrelationships with other business units within the same company.
D. all of the answers are correct
163.The general and competitive environments
A. are independent and dynamic over time.
B. tend to be interrelated and dynamic over time.
C. have similar impact on organizations of different industries.
D. are independent and static over time.

19


164.Delayed marriages, fewer people in relevant age groups, and rising interest rates dampening demand for
houses illustrates
A. that more than one segment of the general environment may affect an industry.
B. that the global environment is not as powerful an influence as thought.
C. that macroeconomic forces dominate the general environment.
D. that the competitive environment often has a strong influence on the general environment.
165.Which of the following best demonstrates the interrelationships among different segments of the general
environment?
A. A new technology results in the development of a substitute product for your firm's product.
B. Government deregulation results in different firms being able to offer the same product as your firm.
C. The recession results in several of your competitors cutting prices and intensifying rivalry.
D. Increased concern for the environment results in legislation that impacts your current packaging.
166.Which of the following is an example of the interrelationship between the general and competitive
environments?
A. A decline in a nation's educational standards results in a decline in the nation's productivity.
B. A country's technological inferiority results in its enactment of strong trade barriers against
importation.
C. Increased awareness of personal health leads to lower demand, and greater rivalry in the alcoholic
beverages industry.
D. Greater awareness of the environment results in environmental legislation.
167.In the value-net analysis, complementors are
A. firms that produce substitute products.
B. customers who compliment the company for their good products and services.
C. firms that produce products or services that have a positive impact on the value of a firm's products or
services.
D. firms that supply critical inputs to a company.
168.Strategic groups consist of
A. top executives who make strategies for a company.
B. firms within an industry that follow similar strategies.
C. executives drawn from different companies within an industry that makes decisions on industry
standards.
D. firms within an industry that decide to collude rather than compete with each other so that they can
increase their profits.
169.Which of the following statements about strategic groups is false?
A. Two assumptions are made: (1) no two firms are totally different; (2) no two firms are exactly the
same.
B. Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from
attacks by other groups.
C. Strategic groups help chart the future directions of firms' strategies.
D. Strategic groups are helpful in thinking through the implications of each industry trend for the group
as a whole.

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170.Explain why managers must recognize opportunities and threats in their firm's external environment.

171.Using the Canadian beer as an example, explain how an industry or competitive environment might be
defined and analyzed.

172.Explain how competitor intelligence can be improved by gathering information about competitors in the
public domain. Provide examples.

173.Discuss some of the limitations of forecasting.

174.Many indicators of the macroeconomic environment such as GNP, interest rates, savings rates, trade and
budget deficits/surplus, etc. are interrelated. Explain.

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175.Explain the important barriers to entry in an industry. Provide examples.

176.Discuss and provide examples of factors that would lead to greater buyer power.

177.What are some of the factors that would cause a supplier group to become powerful? Illustrate.

178.Several factors usually interact which result in intense rivalry among competitors. Explain.

179.Explain how the value net analysis adds to the five-forces analysis. Be sure to include examples from at
least two industries.

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180.What value is the strategic groups concept as a tool in analyzing an industry?

181.Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful
framework for analyzing a firm's strengths and weaknesses.
True

False

182.The automotive sector represents one of Canada's most important economic engines.
True

False

183.In value chain analysis, value is measured by market value of the total stock outstanding of the
company.
True

False

184.Primary activities contribute to the physical creation of a product or service, its sale and transfer to the
buyer, and its service after the sale.
True

False

185.The value chain concept assumes that both primary and support activities are capable of producing value
for customers.
True

False

186.Performing a value chain analysis provides a complete assessment of the firm's strengths and
weaknesses.
True

False

187.Outbound Logistics: Campbell's Soup uses continuous replenishment for the Loblaw stores it supplies in
Canada.
True

False

188.Establishing a customer service hotline to handle customer complaints would be considered a primary
activity in value chain analysis.
True

False

189.Technology development is a much broader concept than research and development.
True

False

190.In value chain analysis, general management is considered part of a firm's infrastructure.
True

False

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191.Managers should focus their attention on interrelationships among value chain activities within the firm,
not on relationships among activities within the firm and other organizations (such as suppliers and
customers).
True

False

192.Tangible resources are assets that are relatively easy to identify such as financial and physical assets.
True

False

193.A firm's intangible resources refer to its capacity to deploy tangible resources over time and leverage
those resources effectively.
True

False

194.Products and services that are difficult to imitate help firms sustain their profitability.
True

False

195.Path dependency has no impact on the inimitability of resources.
True

False

196.Capabilities that are causally ambiguous are difficult to imitate.
True

False

197.For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria:
rareness and difficulty in substitution.
True

False

198.Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a
complete guide to study companies.
True

False

199.An increase in profits indicates an improvement in cash flow.
True

False

200.Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations.
True

False

201.When using industry norms as a standard of comparison, managers must be sure that the firms used in
the comparisons are representative of all sizes and strategies within the industry.
True

False

202.Historical comparisons are most appropriate during periods of recession or economic boom.
True

False

203.A primary benefit of the "balanced scorecard" is that it complements financial indicators with
operational measures of customer satisfaction, internal processes, and the organization's innovation and
improvement activities.
True

False

24


204.The balanced scorecard enables managers to evaluate their business from only two perspectives:
customer and financial.
True

False

205.An important implication of the balanced scorecard is that managers need not look at their job as
primarily balancing stakeholder demands.
True

False

206.Inbound logistics include
A. machining and packaging.
B. warehousing and inventory control.
C. repair and parts supply.
D. promotion and packaging.
207.___________ are associated with collecting, storing, and distributing the product or service to buyers.
They consist of warehousing, material handling, delivery operation, order processing, and scheduling.
A. Services
B. Inbound logistics
C. Outbound logistics
D. Operations
208.A marketing department that promises delivery faster than the production department's ability to produce
is an example of a lack of understanding of the
A. interrelationships among functional areas and firm strategies.
B. need to maintain the reputation of the company.
C. organizational culture and leadership.
D. synergy of the business units.
209.Advertising is a ______ activity. Supply of replacement parts is a _________ activity.
A. primary; primary
B. support; primary
C. support; secondary
D. primary; support
210.Which of the following is not an advantage of Just-In-Time inventory systems?
A. reduced raw material storage costs
B. minimized idle production facilities and workers
C. reduced work-in-process inventories
D. reduced dependence on suppliers
211.In assessing its primary activities, an airline would examine
A. employee training programs.
B. baggage handling.
C. criteria for lease versus purchase decisions.
D. the effectiveness of its lobbying activities.

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