Deck 3: Organisational Strategy, Information Systems and Competitive Advantage

Question 1

Porter's five competitive forces can be grouped into two types: forces related to ________ and forces related to supply chain bargaining power.

A)consumers
B)competition
C)labour
D)pricing

Answer 1

B

Question 2

Competitive strategy determines an organisation's value chain.

Answer 2

True

Question 3

Briefly describe how organisational strategy determines the functions of information systems.

Answer 3

Organisations examine the structure of their industry and,from that,develop a competitive strategy.That strategy determines value chains,which,in turn,determine business processes.The nature of business processes determines the requirements and functions of information systems.

Question 4

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

Question 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 bargaining power of the City Football Club who are Simpson's customers
C)the power held by the landlord of the Simpson's office space
D)the threat posed by Roger's Landscapes,a new competitor

Question 6

The bargaining power of a customer is weak if ________.

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

Question 7

The two strength factors that relate to all three competitive forces are ________ and customer loyalty.

A)customer satisfaction
B)switching costs
C)nature of products
D)employee unions

Question 8

Which of the following statements describes a scenario in which the bargaining power of a supplier is strong?

A)There are many suppliers providing the same raw materials for comparable prices.
B)The availability of raw materials is less.
C)The supplier has excess inventory.
D)Competitors' have decreased demand for raw materials.

Question 9

A competitive strategy followed by an organisation is derived from the ________ of its industry.

A)structure
B)profits
C)function
D)goals

Question 10

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 utilisation

Question 11

Organisations analyse the structure of their industry and use that analysis to formulate a competitive strategy.

Question 12

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 size of the employee union
C)the production capacity
D)the relative size of the firm

Question 13

Which of the following is true if the threat from substitutes is strong?

A)Competitors' products are of a lower quality.
B)Competitors are yet to overcome the entry barriers.
C)Customers are likely to switch to competitors' products.
D)Prices of competitors' products are higher.

Question 14

Which of the following groups' bargaining power is considered as one of the five competitive forces in Porter's five forces model?

A)customers
B)investors
C)competitors
D)employees

Question 15

In Porter's five factor model,each of the three competitive forces concerns the danger of ________.

A)suppliers favouring rival companies
B)customers taking their business elsewhere
C)employees not working toward organisational goals
D)investors refusing to back new projects

Question 16

A competitive strategy of an organisation determines its ________.

A)value chains
B)short-term goals
C)industry rivals
D)structure

Question 17

Which of the following statements describes suppliers in a position of strong bargaining power?

A)wholesalers declaring end-of-season sales
B)companies negotiating supplier contracts after taxes on raw materials have been reduced
C)coffee planters during a season of frost that decreases production
D)providers of logistic support when fuel prices have been reduced

Question 18

Which of the following is true of new entrants?

A)They will have records on customers' purchase habits.
B)They have strong customer loyalty.
C)They can lock in suppliers to gain a competitive advantage.
D)They are yet to develop relationships with suppliers.

Question 19

In which of the following cases is the strength of competitive forces low?

A)when rival products are priced relatively low
B)when switching costs are high
C)when finding rival products is easy
D)when customer loyalty to the brand or company is low

Question 20

Porter originally developed the five forces model in order to understand organisations' competitive environment.

Question 21

Which of the following is true of a value chain?

A)Support activities facilitate the primary activities.
B)It nullifies the importance of support activities.
C)It consists of only primary activities.
D)It is specific to manufacturing industries.

Question 22

Typically,as an individual,a customer has substantial bargaining power over a large manufacturing industry.

Question 23

An organisation responds to the structure of its industry by choosing a ________ strategy.

A)diversification
B)leadership
C)growth
D)competitive

Question 24

The bargaining power of competitors is one of the competitive forces identified by Porter.

Question 25

Availability of substitutes plays a role in determining the bargaining power of suppliers.

Question 26

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 differentiation
B)focus differentiation
C)industry-wide low cost
D)focus low cost

Question 27

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)industry-wide low cost
B)focus differentiation
C)focus low cost
D)industry-wide differentiation

Question 28

According to Porter's five forces model,a company is profitable if all five competitive forces are strong.

Question 29

Focus differentiation is a strategy in which a product is unique and is used by a wide range of consumers.

Question 30

Describe Porter's five forces model.

Question 31

An organisation can choose to either minimise cost or maximise differentiation to gain a competitive advantage.

Question 32

The strength of bargaining power forces does not depend on the availability of substitutes.

Question 33

According to Porter,to be effective,an organisation's goals and activities must be consistent with the organisation's strategy.

Question 34

Vendor knowledge and vendor relationships serve as a barrier to entry for new competitors.

Question 35

According to Porter,to be effective,the organisation's goals and activities must be consistent with the organisation's ________.

A)competitors
B)workforce
C)strategy
D)structure

Question 36

What are the four competitive strategies based on Porter's five forces model?

Question 37

If the costs of switching to another vendor are high,then the strength of the competitive forces is low.

Question 38

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)launching a unique product targeted at a section of consumers
C)laying off staff in order to cut down costs during a recession period
D)advertising its products nationwide like its competitor organisations

Question 39

Porter defined ________ as the amount of money that a customer is willing to pay for a resource,product,or service.

A)profit
B)value
C)margin
D)price

Question 40

The three competitive forces in Porter's model concern the danger of customers taking their business elsewhere.

Question 41

The support activities in the generic value chain facilitate the primary activities and contribute only indirectly to a product's value.

Question 42

Support activities are business functions that relate directly to the production of the organisation's products or services.

Question 43

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)outbound logistics
C)sales and marketing
D)operations/management

Question 44

Which of the following statements describes a customer service activity?

A)inducing buyers to purchase the product
B)assisting with the use of the product
C)receiving and storing materials
D)transforming inputs into the final product

Question 45

Porter's model of business activities includes ________,which are interactions across value activities.

A)iterations
B)linkages
C)operations
D)evaluations

Question 46

A business with a cost strategy will add cost to an activity only as long as the activity has a positive margin.

Question 47

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)support activities
D)competitive strategy

Question 48

Which of the following is a primary activity in the value chain?

A)setting up contractual arrangements
B)process of finding vendors
C)negotiating prices
D)delivering products to consumers

Question 49

Each stage of the value chain not only adds value to the product but also ________.

A)improves supplier relationships
B)devalues the final product
C)attracts competitors
D)accumulates costs

Question 50

A business that selects a differentiation strategy would ________.

A)imitate rival companies' strategy and products
B)provide essential functions at lowest costs
C)always try to price its products' higher than its competitors' products
D)add cost to an activity provided it has a positive margin

Question 51

Procurement falls under the category of primary activities in a value chain.

Question 52

Which of the following is true of supporting activities?

A)Customer service is considered a supporting activity.
B)Their contribution toward a product's value is negligible.
C)Their contributions to margin can be calculated easily.
D)Negotiation of prices is considered a supporting activity.

Question 53

Customer service falls under the category of supporting activities in a value chain.

Question 54

Each stage of the generic value chain accumulates costs and subtracts value from the product.

Question 55

A business that selects a differentiation strategy will always structure itself around least-cost activities.

Question 56

Which of the following primary activities describes collecting,storing,and physically distributing products to buyers?

A)operations/management
B)customer service
C)outbound logistics
D)sales and marketing

Question 57

The difference between the value that an activity generates and the cost of the activity is called the margin.

Question 58

Porter's definition of technology is narrow because it only includes research and development.

Question 59

The difference between the value that an activity generates and the cost of the activity is called the ________.

A)margin
B)liability
C)overhead
D)equity

Question 60

________ includes general management,finance,accounting,legal,and government affairs.

A)Firm infrastructure
B)Operations management
C)Research and development
D)Human resources

Question 61

Differentiate between value and margin.

Question 62

How did Porter define technology,human resources,and firm infrastructure?

Question 63

Manufacturing systems avoid linkages to reduce inventory costs.

Question 64

Distinguish between a primary and a support activity in the value chain.

Question 65

Describe the primary activities in a value chain using an example.

Question 66

Value chains exist in service-oriented companies.

Question 67

Explain value chain linkages.

Question 68

Which of the following statements is true of business processes?

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

Question 69

According to Porter,the processes and systems in an organisation pursuing differentiation strategy must ________ to avoid negative margins.

A)develop new technologies
B)create sufficient value to cover their costs
C)increase procurement
D)provide products at lowest costs to customers

Question 70

Receiving,storing,and disseminating inputs to a product is an operations function.

Question 71

Business processes implement value chains or portions of value chains.

Question 72

Value chain analysis has a direct application to manufacturing businesses.

Question 73

Firm infrastructure excludes general management,finance,accounting,legal,and government affairs.

Question 74

Porter's model of business activities includes linkages,which are interactions across value activities.

Question 75

Supporting activities are easier to calculate than primary activities.

Question 76

How does competitive strategy determine value chain structure?

Question 77

Describe the support activities in a value chain.

Question 78

What is a value chain? List the primary activities in a value chain.

Question 79

A company uses the outbound logistics activity to deliver the finished product to a customer.

Question 80

Inbound and outbound logistics are the primary value generators in a service-oriented company.