Deck 2: Strategy and Technology: Concepts and Frameworks for Understanding What Separates Winners From Losers

Question 1

According to Porter, strategy is fundamentally about being _____.

A) different
B) efficient
C) superior
D) scalable
E) profitable

Answer 1

A

Question 2

Startup firms can struggle to gain lower prices from rivals, but FreshDirect seems to have found several ways to gain lower supplier prices. FreshDirect buys direct from suppliers, eliminating any markup from a middleman. In addition to this, the firm employs other methods to get lower prices from suppliers. Which of the following is not a way FreshDirect helps suppliers in exchange for supplier agreement to offer it better pricing terms?

A) FreshDirect carries a greater selection of supplier products
B) FreshDirect will cobrand products from suppliers
C) FreshDirect pays suppliers faster than rivals
D) FreshDirect shares warehouse space with farmers and livestock producers
E) FreshDirect shares data on customer insights with suppliers

Answer 2

D

Question 3

When technology can be matched quickly, it is rarely a source of competitive advantage.

Answer 3

True

Question 4

_____ refers to performing different tasks than rivals or the same tasks in a different way.

A) Straddling
B) Operational effectiveness
C) Strategic positioning
D) Vertical integration
E) Scale advantage

Question 5

Cisco's acquisition of Pur Digital, makers of the Flip video camera line, was largely considered a flop because comparable technology soon became a feature in other popular consumer electronics products.

Question 6

The resource-based view of competitive advantage states that for a firm to maintain sustainable competitive advantage it must control a set of exploitable resources that have four critical characteristics. What are these characteristics?

A) inventory turns, high margins, long account payable periods, brand building relationships
B) operational effectiveness, strategic positioning, scale, distribution channels
C) rareness, value, imperfect imitability, non substitutability
D) a web site, an app, cloud-based systems, a savvy technology staff

Question 7

Many telecom firms began digging up the ground and laying webs of fiberglass to meet the growing demand for Internet connectivity. However, rivals and startups began to imitate these firms and soon these new assets were not so rare and each day they seemed to be less valuable. It can be inferred from this example that:

A) resource-based thinking can help avoid the trap of carelessly entering markets simply because growth is spotted.
B) the telecommunications market is only big enough to support one or two major players.
C) the immense scale advantages enjoyed by major firms can help them fight off competition from newer entrants.
D) technology assets that require high investment and maintenance are liable to becoming obsolete much quicker than others.
E) the scale of technology investment required to run a business is not a huge enough factor to act as a barrier to entry for new, smaller competitors.

Question 8

Operational effectiveness refers to:

A) the implementation of technology in a business context.
B) performing the same tasks better than rivals perform them.
C) the number of times inventory is sold or used during the course of a year.
D) performing different tasks or the same tasks in different ways.
E) matching the benefits of a successful position while maintaining an existing position.

Question 9

A firm's financial performance that consistently outperforms its industry's peers is known as _____.

A) comparative advantage
B) absolute advantage
C) sustainable competitive advantage
D) first mover advantage
E) operational efficiency advantage

Question 10

Sometimes technology can sound geeky and so technical that executives might think that it doesn't require managerial or investor attention. However many investing in the telecom sector suffered from a lack of insight on how a key technology was impacting their industry. Telecom firms failed to anticipate the impact of a technology known as ____________, which enabled existing fiber to carry more transmissions than ever before.

A) radio frequency identification (RFID)
B) dense wave division multiplexing (DWDM)
C) cloud computing
D) open source software

Question 11

Fast growing Groupon was able to dissuade rivals from entering its market because the firm's technology was so difficult to replicate.

Question 12

According to Michael Porter, the reason many firms suffer margin-eroding competition is because they have defined themselves according to strategic positioning rather than operational effectiveness.

Question 13

A firm's financial performance that consistently outperforms its industry's peers is known as operational effectiveness.

Question 14

In _____, the light inside fiber is split into different signal-carrying wavelengths in a way similar to how a prism splits light into different colors.

A) polarization
B) time-division multiplexing
C) space-division multiplexing
D) frequency hopping spread spectrum
E) dense wave division multiplexing

Question 15

The _____ problem exists when rivals watch a pioneer's efforts, learn from their successes and missteps, and then enter the market quickly with a comparable or superior product at a lower cost.

A) late entrant
B) early starter
C) first mover
D) intellectual property
E) fast follower

Question 16

A firm is said to be _____ when it attempts to match the benefits of a successful position while maintaining its existing position.

A) switching
B) straddling
C) dovetailing
D) streamlining
E) vertically integrating

Question 17

What are Porter's views in relation to operational effectiveness and strategic positioning? Contrast the two concepts.

Question 18

Which of the following statements about technology is true?

A) Technology alone is enough to provide sustainable competitive advantage to a firm.
B) Technology plays a marginal role in creating strategic differences.
C) Technological improvements are not important in strengthening a firm's strategic advantages.
D) Technological improvements can often be copied by rivals, leading to a profit-eroding arms race.
E) Technology cannot be used by late entrants to gain a share of the industry.

Question 19

One of the key questions posed by 21st century managers is "How can we possibly compete when everyone can copy our technology and the competition is a click away?" One path to take involves creating a resource or set of resources for sustainable competitive advantage. List the four characteristics that such resources must have for the possibility of sustainable competitive advantage to exist. Why is it important to have all four simultaneously?

Question 20

According to the resource-based view of competitive advantage, if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that are valuable and can be substituted easily.

Question 21

A(n) _____ is the symbolic embodiment of all the information connected with a product or service.

A) trademark
B) copyright
C) patent
D) brand
E) advertisement

Question 22

Dell, previously the world's number one PC manufacturer, has seen its market share shrink because of rivals copying its value chain and reducing the price advantage it enjoyed over rivals. Dell's present struggles:

A) underscore the importance of continually assessing a firm's strategic position among changing market conditions.
B) are a result of rivals adopting supply chain management of software products that have yielded competitive advantages.
C) imply that publicly traded firms are at a disadvantage in the technology sector.
D) highlight the fact that scale advantages of an established firm are a huge factor in discouraging newer entrants to a market.
E) demonstrate that resource-based thinking can help firms avoid the trap of carelessly entering markets simply because growth is spotted.

Question 23

Businesses benefit from economies of scale when the cost of an investment can be used in serving a niche customer base.

Question 24

Network externalities exist when a product or service becomes less expensive as more people use it.

Question 25

The scale of technology investment required to run a business can act as a barrier to entry by discouraging new, smaller competitors.

Question 26

Metcalfe's Law is used to explain the concept of switching costs.

Question 27

How did Apple trump Google to become the dominant mapping platform on iOS?

A) Apple's control of iOS gave it control of the distribution channel to reach its users, kicking Google out as the default mapping app and capturing the majority of user engagement.
B) Apple sued Google for copyright infringement related to the look and feel of Apple Maps.
C) Apple sued Google for privacy violations related to the collection of map data.
D) Apple hasn't trumped Google Maps. Google's Map app is used by the majority of iOS customers, whereas most users ignore Apple Maps.

Question 28

A trademark is the symbolic embodiment of all the information connected with a product or service of a firm.

Question 29

A firm can benefit from high switching costs, even when rivals offer free products.

Question 30

Startup firms can struggle to gain lower prices from rivals, but FreshDirect seems to have found several ways to gain lower supplier prices. FreshDirect buys direct from suppliers, eliminating any markup from a middleman. What else did FreshDirect offer suppliers in exchange for better pricing terms?

Question 31

The set of activities through which a product or service is created and delivered to customers is known as a(n) _____.

A) marketing plan
B) value chain
C) inventory turnover
D) strategic position
E) pure play

Question 32

TiVo was a high-flying firm, whose name was synonymous with digital video recording. Why has the firm struggled to achieve consistent profitability?

Question 33

Benefits related to a firm's size are referred to as _____.

A) network effects
B) brand recall
C) scale advantages
D) vertical integration
E) disintermediation

Question 34

Commodities are products or services that vary across multiple vendors.

Question 35

Which of the following represents one of the primary components of the value chain?

A) Outbound logistics
B) Firm infrastructure
C) Human resource management
D) Research and development
E) Procurement

Question 36

Firms that build an imitation-resistant value chain develop a way of doing business that others struggle to replicate.

Question 37

A strong brand can be an exceptionally powerful resource for competitive advantage by lowering ________, proxying _____ and inspiring _____.

A) price; strategy; innovation
B) switching costs; quantity; performance
C) expenses; marketing; respect
D) search costs; quality; trust
E) customer concern; investment; profits

Question 38

Many firms choose not to implement operational components of ERP software and instead elect to create their own propriety solutions in part because they see their uniqueness in certain operations areas as key to creating difficult-to-imitate competitive advantages.

Question 39

A salesperson's ability to effectively bargain with his/her consumers is called viral marketing.

Question 40

Leveraging consumers to promote a product or service is known as _____.

A) straddling
B) affiliating
C) long tailing
D) crowdsourcing
E) viral marketing

Question 41

_____ hold intellectual property not with the goal of bringing novel innovations to market but instead in hopes that they can sue or extort large settlements from others.

Question 42

_____ exist when a product or service becomes more valuable as more people use it.

Question 43

The paths through which products or services get to customers are known as _____.

A) information pathways
B) vertical markets
C) distribution channels
D) proxy networks
E) horizontal markets

Question 44

Moving first pays off when the time lead is used to create:

A) the latest technology at a firm's production plant.
B) operational effectiveness to harness maximum profitability.
C) critical resources for competitive advantage.
D) high stock value to generate funds for expansion.
E) market entry to ensure sustainable competitive advantage.

Question 45

_____ are products or services that are nearly identically offered from multiple vendors.

Question 46

Diagram and label the value chain, listing all primary and secondary components.

Question 47

If a new entrant hopes to attract customers from an established incumbent, the new entrant must ensure that the value they offer exceeds the incumbents' value in addition to any perceived _____.

A) switching costs
B) market depreciation
C) brand benefits
D) advertising expenses
E) scale advantages

Question 48

Which of the following is not highlighted as a source of switching costs?

A) Learning costs
B) Information and data
C) Search costs
D) Viral marketing
E) Loyalty programs

Question 49

List the various components of a value chain and give a brief description of each of them.

Question 50

Apple's dominance of smartphone and tablet markets has allowed the firm to lock up 60 percent of the world's supply of advanced touch-screen displays, and to do so with better pricing than would be available to smaller rivals. This is an example of:

A) network externalities that make Apple valuable.
B) high switching costs for suppliers.
C) a complex tech product establishing itself as a killer brand.
D) a growing firm gaining bargaining power with its suppliers.
E) low search costs associated with a famous brand.

Question 51

_____ exist when consumers incur an expense to move from one product or service to another.

A) Network effects
B) Switching costs
C) Economies of scale
D) Competitive advantages
E) Profit margins

Question 52

Timing and technology alone will not yield sustainable competitive advantage.

Question 53

The patent system is often considered to be unfairly stacked against start-ups because:

A) bigger multinational firms enjoy patent protection in all countries as opposed to start-ups, which are domestic firms that do not get such protection for the most part.
B) the intellectual property laws are not adequate to protect the interests of smaller firms from infringements.
C) the patent system grants patents for innovations on a differential basis, with bigger firms getting precedence over start-ups.
D) high litigation costs coupled with a few months of litigation can sink an early stage firm.
E) patents are granted by the patent system on an ad hoc basis wherein firms that have been in business longer get patent protection for longer periods of time.

Question 54

Market entry is the same as building a sustainable business.

Question 55

Netscape, which once controlled more than 80 percent of the market share in Web browsers, lost its dominant position when customers migrated to Internet Explorer, Microsoft's Web browser. Internet Explorer was easy to install and had no significant differences in terms of usability. This example serves to illustrate that:

A) fast-following smaller firms are always ready with newer and possibly superior products.
B) customers of technology companies are becoming increasingly savvy and more demanding.
C) the open source nature of technology ensures that no firm can expect to monopolize a market.
D) firms need to employ increasingly stringent intellectual property norms to guard against infringements from smaller, competitive rivals.
E) firms with low switching costs can sometimes be rapidly overtaken by strong rivals with additional competitive advantages.

Question 56

How does FreshDirect leverage an imitation-resistant value chain to repel rivals?

Question 57

_____ Law is said to be at play when the value of a product or service increases as its number of users expands.

A) Amdahl's
B) Turing's
C) Zuckerberg's
D) Metcalfe's
E) Moore's

Question 58

Consumers buying commodities are highly _____ since they have so many similar choices.

A) quality-conscious
B) price-focused
C) brand-driven
D) technologically discriminating
E) loyal

Question 59

The category of enterprise software known as ________________ is implemented in modules, offering the potential of automating an organization's entire value chain.

Question 60

Businesses benefit from economies of scale when the cost of an investment can be:

A) spread across increasing units of production.
B) used in serving a niche and loyal customer base.
C) used to build a brand image for products through advertising.
D) leveraged to recruit consumers to promote a product or service.
E) diverted to implementing technology upgrades in the business model.

Question 61

How does the Internet typically impact price transparency and information asymmetry?

A) Both price transparency and information asymmetry increase
B) Both price transparency and information asymmetry decrease
C) Price transparency increases while information asymmetry decreases
D) Price transparency decreases while information asymmetry increases.

Question 62

The degree to which complete information is available is known as _____.

A) information assurance
B) data proximity
C) operational alertness
D) price transparency
E) data consolidation

Question 63

_____, also known as the Industry and Competitive Analysis, is a popular framework for examining a firm's competitive environment.

Question 64

Which of the following is a source of bargaining power of buyers?

A) Greater choice of products
B) High switching costs
C) Loyalty programs
D) Network effects
E) Unique and highly differentiated products

Question 65

Which of the following is one of Porter's five forces?

A) Availability of coopetitors in the market
B) Total cost of ownership
C) Purchasing power parity of consumers
D) Threat of new entrants
E) Strength of intellectual property laws

Question 66

A decision situation where one party has more or better information than its counterparty is called a(n) _____.

Question 67

Uber is an example of a business model that has strengthened the bargaining power of suppliers (cab drivers) with respect to middlemen who took a cut of their services (e.g. cab companies).

Question 68

If there is the availability of a wide variety of undifferentiated commodity goods in a given market, and these products are available online, then bargaining power typically shifts to the buyer.

Question 69

If a firm's goods are highly differentiated, the Internet typically lessens the firm's bargaining power as a supplier.

Question 70

The internet is largely seen as lowering the entry barrier for new entrants, but firms that enter may have little chance of success unless they have a competitive advantage over existing rivals

Question 71

Diagram and label all components in the Porter Five Forces model (also known as the Industry and Competitive Analysis model)? Easy

Question 72

Relate your understanding of the Porter's Five Forces model to describe how the Internet affects the bargaining power of buyers and sellers according to whether offers commodity or differentiated products.