Chapter 3 Review MIS

1) A competitive strategy followed by an organization is derived from the ________ of its industry.
A) function
B) structure
C) profits
D) goals

B

2) A competitive strategy of an organization determines its ________.
A) industry rivals
B) short-term goals
C) value chains
D) structure

C

3) Porter originally developed the five forces model to determine the ________.
A) potential profitability of an industry
B) nature of competitive industrial environments
C) reason why certain industries collapse
D) means by which to improve resource utilization

A

4) Which of the following statements describes suppliers in a position of strong bargaining power?
A) coffee planters during a season of frost that decreases production
B) companies negotiating supplier contracts after taxes on raw materials have been reduced
C) providers of logistic support when fuel prices have been reduced
D) wholesalers declaring end-of-season sales

A

5) Simpson’s Lawn Services decides to offer two free mowing services for all customers who booked garden landscaping in the fall. Which of the following forces is Simpson’s Lawn Services addressing?
A) the control exercised by Acme Corp., who supplies Simpson’s with lawn mowers
B) the power held by the landlord of the Simpson’s office space
C) the threat posed by Roger’s Landscapes, a new competitor
D) the bargaining power of the City Football Club who are Simpson’s customers

C

6) Porter’s five competitive forces can be grouped into two types: forces related to ________ and forces related to supply chain bargaining power.
A) pricing
B) labor
C) competition
D) consumers

C

7) Which of the following groups’ bargaining power is considered as one of the five competitive forces in Porter’s five forces model?
A) investors
B) competitors
C) employees
D) customers

D

8) In Porter’s five factor model, each of the three competitive forces concerns the danger of ________.
A) suppliers favoring rival companies
B) customers taking their business elsewhere
C) investors refusing to back new projects
D) employees not working toward organizational goals

B

9) The two strength factors that relate to all three competitive forces are ________ and customer loyalty.
A) employee unions
B) nature of products
C) customer satisfaction
D) switching costs

D

10) In which of the following cases is the strength of competitive forces low?
A) when switching costs are high
B) when rival products are priced relatively low
C) when customer loyalty to the brand or company is low
D) when finding rival products is easy

A

11) If customers perceive the benefits of an alternative to be similar to that of a product, then the ________.
A) switching cost is high
B) price of the product should be increased to retain market share
C) threat from the substitute is strong
D) customers’ bargaining power decreases

C

12) Which of the following is true if the threat from substitutes is strong?
A) Customers are likely to switch to competitors’ products.
B) Competitors’ products are of a lower quality.
C) Competitors are yet to overcome the entry barriers.
D) Prices of competitors’ products are higher.

A

13) Which of the following is true of new entrants?
A) They have strong customer loyalty.
B) They will have records on customers’ purchase habits.
C) They are yet to develop relationships with suppliers.
D) They can lock in suppliers to gain a competitive advantage.

C

14) The strength of bargaining power 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 production capacity
D) the size of the employee union

B

15) Which of the following statements describes a scenario in which the bargaining power of a supplier is strong?
A) Competitors’ have decreased demand for raw materials.
B) The availability of raw materials is less.
C) The supplier has excess inventory.
D) There are many suppliers providing the same raw materials for comparable prices.

B

16) The bargaining power of a customer is weak if ________.
A) the availability of a rival product is limited
B) the cost of switching to a substitute is low
C) competitors offer products with same benefits at lower prices
D) new entrants are offering a product that uses more recent technology

A

17) An organization responds to the structure of its industry by choosing a ________ strategy.
A) competitive
B) growth
C) leadership
D) diversification

A

18) Which of the following competitive strategies does a company follow if it produces a uniquely formulated anti-ageing face cream targeted at women above the age of forty?
A) industry-wide low cost
B) industry-wide differentiation
C) focus low cost
D) focus differentiation

D

19) A firm introduces a new range of laptops that concentrate on delivering good graphics performance. Which of the following competitive strategies has the firm adopted if these laptops have relatively low prices?
A) focus differentiation
B) focus low cost
C) industry-wide differentiation
D) industry-wide low cost

B

20) Which of the following is an example 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 like its competitor organizations
D) launching a unique product targeted at a section of consumers

D

21) According to Porter, to be effective, the organization’s goals and activities must be consistent with the organization’s ________.
A) structure
B) competitors
C) strategy
D) workforce

C

22) Porter 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
D) value

D

23) Which of the following is true of a value chain?
A) Support activities facilitate the primary activities.
B) It consists of only primary activities.
C) It is specific to manufacturing industries.
D) It nullifies the importance of support activities.

A

24) 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
D) always try to price its products’ higher than its competitors’ products

A

25) The difference between the value that an activity generates and the cost of the activity is called the ________.
A) equity
B) liability
C) overhead
D) margin

D

26) Which of the following primary activities describes collecting, storing, and physically distributing products to buyers?
A) customer service
B) sales and marketing
C) outbound logistics
D) operations/management

C

27) Which of the following primary value chain activities induce buyers to purchase a product and provide a means for them to do so?
A) inbound logistics
B) sales and marketing
C) outbound logistics
D) operations/management

B

28) Which of the following statements describes a customer service activity?
A) receiving and storing materials
B) transforming inputs into the final product
C) inducing buyers to purchase the product
D) assisting with the use of the product

D

29) Which of the following is true of supporting activities?
A) Their contribution toward a product’s value is negligible.
B) Their contributions to margin can be calculated easily.
C) Customer service is considered a supporting activity.
D) Negotiation of prices is considered a supporting activity.

D

30) Each stage of the value chain not only adds value to the product but also ________.
A) improves supplier relationships
B) accumulates costs
C) devalues the final product
D) attracts competitors

B

31) Which of the following is a primary activity in the value chain?
A) process of finding vendors
B) setting up contractual arrangements
C) negotiating prices
D) delivering products to consumers

D

32) ________ includes general management, finance, accounting, legal, and government affairs.
A) Human resources
B) Research and development
C) Firm infrastructure
D) Operations management

C

33) Porter’s model of business activities includes ________, which are interactions across value activities.
A) linkages
B) evaluations
C) iterations
D) operations

A

34) A manufacturing system uses sales forecasts to plan production. It uses the production plan to determine raw material needs and then uses the material needs to schedule purchases. This ultimately leads to reduced inventory costs. Which of the following is being used to reduce the inventory cost?
A) linkages
B) margins
C) competitive strategy
D) support activities

A

35) According to Porter, the processes and systems in an organization pursuing differentiation strategy must ________ to avoid negative margins.
A) create sufficient value to cover their costs
B) provide products at lowest costs to customers
C) develop new technologies
D) increase procurement

A

36) Which of the following statements is true of business processes?
A) Value chains are designed to implement business processes.
B) Value chain activities differ based on the business processes being used.
C) If a value chain’s margin is negative, the costs of the value chain should be increased.
D) The processes implementing a value chain must create sufficient value to cover their costs.

D

37) Which of the following is a product implementation principle of competitive advantage?
A) raise barriers to market entry
B) enhance products or services
C) establish alliances
D) lock in customers and buyers

B

38) Which of the following strategies is also called establishing high switching costs?
A) increasing production
B) locking in suppliers
C) reducing costs
D) locking in customers

D

39) Which of the following is a process implementation principle of competitive advantage?
A) creating a new product
B) enhancing a service
C) establishing alliances
D) differentiating a service

C

40) Which of the following is least likely to be an outcome of organizations forming alliances with each other?
A) promotion of product awareness
B) development of market size
C) establishment of standards
D) increase in purchasing costs

D

41) Jupiter Shop is an online store. Customers have to create an online account to purchase products. The purchased products are delivered free of cost. The address of delivery is stored, so that customers can choose the same address for future purchases. Jupiter Shop features seasonal discounts and exchange offers. It also accumulates redeemable points for regular shoppers. Which of the following statements describes the use of IS by Jupiter Shop to lock-in customers?
A) providing free home delivery
B) saving the delivery addresses
C) offering seasonal discounts
D) collecting feedback online

B