Question 1

What is a support activity in the operations of a firm?

Accepted Answer

Creation and maintenance of information systems is a support activity in the operations of a firm because it provides the infrastructure and tools that enable the firm to operate efficiently and effectively.

Question 2

Of all the value creation activities in a firm, ________ creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs.

Accepted Answer

Marketing and sales create value by identifying consumer needs and preferences and communicating this information to the R&D department, which can then develop products that align with those needs.

Question 3

The concept of ________ suggests that when a company has built significant value into its product offerings, trying to increase the value of the products by even a small amount requires a significant financial investment.

Accepted Answer

The concept of diminishing returns suggests that as a company continues to invest in adding value to its products, the additional value gained from further investment becomes smaller, requiring increasingly larger investments to achieve the same level of value increase.

Question 4

StickyGlue Corp. creates adhesives used in the construction business. A primary activity in the operations of StickyGlue Corp. would be

Accepted Answer

Research and development is a primary activity for StickyGlue Corp. as it directly relates to creating and improving the adhesives they produce, which is central to their business operations.

Question 5

Who should be considered as part of a firm's infrastructure because of the considerable influence associated with the position?

Accepted Answer

Top management has considerable influence over the firm's infrastructure because they make decisions that affect the firm's overall strategy and direction.

Question 6

Midwest Sports produces in-house all the products that it sells through its network of stores. It has a function in its value chain that controls sending the physical materials through the value chain, from procurement through production and into distribution. This function is called

Accepted Answer

Logistics is the function in the value chain responsible for managing the flow of physical materials from procurement, through production, and into distribution.

Question 7

A company can increase its growth rate by taking goods or services developed at home and selling them internationally. The returns from such a strategy are likely to be greater if

Accepted Answer

If indigenous competitors lack comparable products, the company can capitalize on the lack of competition and potentially capture a larger market share, leading to greater returns.

Question 8

Lindsey works at Lincoln Office Furniture Group. She fields calls from people who purchase their ready-to-build products and need assistance during the process. Which primary activity is Lindsey involved with?

Accepted Answer

Lindsey is involved in customer service as she assists customers who need help with the company's products.

Question 9

At the beginning of the year, Marissa created three goals for each sales person on her staff and she uses those goals as a way to measure their performance throughout the year. These goals are an example of

Accepted Answer

Goals used to measure performance are an example of controls, as they help manage and assess the performance of employees against set objectives.

Question 10

AR Supply locates its global manufacturing in Mexico, its global distribution in Indonesia, and its design in Italy. By dispersing different stages of its value chain to those locations around the world where the value added is maximized or where the costs of value creation are minimized, AR Supply has created a(n)

Accepted Answer

AR Supply has created a global web by strategically locating different stages of its value chain in various countries to maximize value added or minimize costs.

Question 11

How does possessing a core competency help a firm?

Accepted Answer

Possessing a core competency allows a firm to perform certain activities more efficiently or effectively than competitors, thereby reducing the costs of value creation.

Question 12

Processes are defined as the

Accepted Answer

Processes refer to the methods and procedures used to make decisions and carry out tasks within an organization.

Question 13

WeShop4You has created a grocery delivery service that is unmatched by its competition. The value the company has created now makes it difficult to implement new ideas without spending more money than it originally took to start the business. This demonstrates the idea of

Accepted Answer

Diminishing returns refer to the point at which the level of benefits gained is less than the amount of money or energy invested, making it harder to implement new ideas without incurring higher costs.

Question 14

GreenFresh Food Products believes that as far as its products are concerned, tastes vary worldwide and so it has to customize its products, marketing strategy, and business strategy to allow for differing national conditions. What is affecting the company's ability to increase its profitability and profit growth by expanding globally?

Accepted Answer

GreenFresh Food Products is focusing on localization, which involves customizing products and strategies to fit local tastes and conditions, affecting its global expansion strategy.

Question 15

When Nathan accepted his new job, his manager explained that each employee who demonstrated at least two ideas that could lead the company to a competitive advantage received a $5,000 bonus at the end of the year. This bonus is an example of a(n)

Accepted Answer

The bonus is an example of an incentive, as it is a reward offered to employees to motivate them to come up with ideas that could benefit the company.

Question 16

According to the basic strategy paradigm, a firm maximizes its profitability when it

Accepted Answer

A firm maximizes its profitability by configuring its internal operations to support the position it has selected on the efficiency frontier, ensuring that it can deliver value efficiently and effectively.

Question 17

The value creation activities of a firm are categorized as

Accepted Answer

Value creation activities in a firm are categorized into primary activities, which are directly involved in creating and delivering a product or service, and support activities, which assist and enhance the efficiency and effectiveness of primary activities.

Question 18

For Bank of America, the "production" activity typically occurs when the

Accepted Answer

The "production" activity for a service like banking typically occurs when the service is delivered to the customer, as this is when the service is actually being "produced" or executed.

Question 19

The 2,500 people working in Saturn Inc.'s corporate office deal with the organizational structure, control systems, and culture of the firm. These three things comprise which support function of Saturn Inc.?

Accepted Answer

The organizational structure, control systems, and culture are elements of a company's infrastructure, which is a support function that encompasses the overall management framework of the firm.

Question 20

Kitchen-Rite believes that by producing its small appliances in Canada, they can take advantage of lower wage rates in that country. By pursuing such a strategy, Kitchen-Rite hopes to realize

Accepted Answer

By producing in Canada to take advantage of lower wage rates, Kitchen-Rite aims to benefit from location economies, which involve optimizing production costs by choosing favorable geographic locations.

Quiz 12: The Strategy of International Business