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Chapter 3 Review Questions: Organizational Strategy, Information Systems, and Competitive Advantage 1) The competitive strategy followed by an organization

is derived from its ________. A) function B) structure C) profits ) goals !) The competitive strategy of an organization determines its ________. A) industry rivals B) short"term goals C) value chains ) structure #) $n which of the following situations would the suppliers have the strongest bargaining power% A) coffee planters during a season of frost that decreases production B) companies negotiating compensation during a booming economy C) providers of logistic support during an economic slowdown ) a wholesaler declaring a stoc&"clearance sale ') (orter originally developed the five forces model to determine ________. A) the potential profitability of an industry B) the nature of competitive industrial environments C) the reason why certain industries collapse ) the means by which to improve industrial viability )) *impson+s ,awn *ervices decides to offer two free mowing services for all customers who boo&ed garden landscaping in the fall. By doing this- which of the following forces is *impson+s addressing% A) the control e.ercised by Acme Corp. who supplies *impson with lawn mowers B) the power held by the landlord of the *impson office space C) the threat posed by /oger+s ,andscapes- a new competitor ) the bargaining power of the City 0ootball Club who are their customers 1) (orter+s five competitive forces can be grouped into two types2 forces related to ________ and forces related to supply chain bargaining power. A) pricing B) labor C) competition ) consumers 3) (orter+s model includes the bargaining power of which of the following groups as one of the five factors% A) investors B) competitors C) employees ) customers 4) $n (orter+s five factor model- each of the three competitive forces concerns the danger of ________. A) suppliers favoring rival companies B) customers ta&ing their business elsewhere C) investors refusing to bac& up new pro5ects ) employees not wor&ing towards organizational goals

6) Two strength factors that relate to all three competitive forces are ________ and customer loyalty. A) mar&et forces B) nature of products C) customer satisfaction ) switching costs 17) $n which of the following cases is the strength of competitive forces low% A) when switching costs are high B) when rival products are priced low C) when customer loyalty is low ) when the product is uni8ue 11) $f customers perceive the benefits of a substitute to be similar to that of a product then ________. A) the threat of the substitute is wea& B) the price should be increased to retain mar&et C) the threat from the substitute is strong ) there is no threat from the substitute 1!) The strength of bargaining power forces depends on the availability of substitutes and ________ compared to the size of suppliers or customers. A) the amount of profit made annually B) the relative size of the firm C) the presence of competitors in the mar&et ) the threat of new competitors 1#) An organization responds to the structure of its industry by choosing a ________ strategy A) competitive B) growth C) leadership ) operational 1') $f a company produces a uni8uely formulated anti"ageing face cream targeted at women above the age of fortywhich of the following competitive strategies is it following% A) industry"wide low cost B) industry"wide differentiation C) focused low cost ) focused differentiation 1)) 9hich of the following is an e.ample of a competitive strategy employed by a firm% A) increasing the price of its product when raw material prices increase B) laying off staff in order to cut down costs during a recession period C) advertising its products nationwide li&e its competitor organizations ) launching a uni8ue product targeted at a section of consumers 11) According to (orter- to be effective the organization+s goals- ob5ectives- culture- and activities must be consistent with the ________. A) organization+s structure B) organization+s competitors C) organization+s strategy ) organization+s wor&force

13) (orter defined ________ as the amount of money that a customer is willing to pay for a resource- product- or service. A) margin B) profit C) price ) value 14) 9hich of the following is true of a value"chain% A) $t is a networ& of value"creating activities. B) $t consists of only primary activities. C) $t is specific to manufacturing industries. ) $t nullifies the importance of support activities. 16) A business that selects a differentiation strategy would ________. A) add cost to an activity provided it has a positive margin B) provide essential functions at lowest costs C) imitate rival companies+ strategy and products ) aim to please stoc&holders with highest dividends !7) The difference between the value that an activity generates and the cost of the activity is called the ________. A) e8uity B) liability C) overhead ) margin !1) Collecting- storing- and physically distributing the product to buyers describes which of the following primary activities% A) inbound logistics B) sales and mar&eting C) outbound logistics ) operations:management !!) $nducing buyers to purchase the product and providing a means for them to do so describes which of the following primary activities% A) inbound logistics B) sales and mar&eting C) outbound logistics ) operations:management !#) ;ach stage of the value chain not only adds value to the product but also ________. A) attracts buyers B) accumulates costs C) devalues the final product ) attracts competitors !') 9hich of the following is a primary activity in the value chain% A) processes of finding vendors B) setting up contractual arrangements C) negotiating prices ) delivering products to consumers

!)) ________ includes general management- finance- accounting- legal- and government affairs. A) <uman resources B) /esearch and development C) 0irm infrastructure ) =perations management !1) (orter+s model of business activities includes ________- which are interactions across value activities. A) lin&ages B) evaluations C) support ) operations !3) >anufacturing systems that include lin&ages- use ________ to plan production. A) prior profits and losses B) sales forecasts C) competitor+s information ) software pac&ages !4) >anufacturing systems use ________ to reduce inventory costs. A) lin&ages B) margins C) value chains ) support activities !6) As (orter says- the processes and systems in an organization pursuing differentiation must ________. A) create sufficient value to cover their costs B) provide products at lowest costs to customers C) ma&e it easy for products to be duplicated ) give stiff competition to other similar products #7) $f a value chain+s margin is positive- the company must ________. A) try to increase the value B) reduce the cost of the value chain C) retain its present practices ) change its present practices #1) =rganizations gain a competitive advantage by creating new products or services- ________ and by differentiating their products and services from those of their competitors. A) advertising products and services B) imitating e.isting products and services C) promoting products and services ) enhancing products and services #!) 9hich of the following is a product implementation principle of competitive advantage% A) /aise barriers to mar&et entry. B) ;nhance goods or services. C) ;stablish alliances with firms. ) ,oc& in customers and buyers. ##) 9hich of the following strategies is also called establishing high switching costs% A) establishing alliances B) loc&ing in suppliers C) reducing costs ) loc&ing in customers