Deck 3: Organizational Strategy, Information Systems, and Competitive Advantage

Question 1

A major drawback of Porter's five forces model is that it ignores the rivalry among firms in the industry.

Answer 1

False

Question 2

In the context of Porter's five forces model, the bargaining power of grain farmers in a surplus year is an example of a weak market force.

Answer 2

True

Question 3

A business that selects a differentiation strategy would invariably structure itself around low-cost activities.

Answer 3

False

Question 4

In the context of Porter's five forces model, the bargaining power of customers of medicinal drugs is enhanced when pharmaceutical companies patent their products.

Question 5

Focused differentiation refers to providing a better product or service within an industry segment.

Question 6

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

Question 7

The competitive strategy of an organization is determined by the value chain.

Question 8

A generic value chain consists of five primary activities and four support activities.

Question 9

According to Porter's five forces model, the intensity of each of the forces determines the characteristics of the industry, how profitable it is, and how sustainable that profitability will be.

Question 10

Providing the lowest cost for a product or service across an industry can be referred to as focused cost-leadership.

Question 11

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

Question 12

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

Question 13

A telecom service provider focusing on high-end users is following an industry-wide differentiation strategy.

Question 14

Activities such as collecting, storing, and physically distributing the products to buyers are considered as primary activities in a value chain.

Question 15

In the context of Porter's five forces model, the bargaining power of suppliers is a weak force when considering the example of students purchasing gasoline.

Question 16

A furniture dealer offering a wide variety of designs to premium customers exclusively is following an industry-wide cost leadership strategy.

Question 17

An organization's goals and objectives are determined by its competitive strategy.

Question 18

Inbound logistics constitute a support activity in the value chain of a manufacturing firm.

Question 19

An organization responds to the structure of its industry by choosing a competitive strategy.

Question 20

A major drawback of Porter's five forces model is that it does not analyze the threat of substitutes when forming a corporate strategy.

Question 21

The primary activity of sales and marketing is the collection, storage, and physical distribution of the products to the buyers.

Question 22

The central idea of business process design is that organizations should automate or improve their existing functional systems.

Question 23

Each activity in a business process is a business function that receives inputs and produces outputs.

Question 24

Outbound logistics refers to transforming inputs into the final product.

Question 25

An inventory of raw materials is an example of a repository.

Question 26

Unlike the primary activities, the support activities in the generic value chain do not contribute to the production, sale, and service of the product.

Question 27

In a manufacturing business, the materials ordering process transforms cash into a raw materials inventory.

Question 28

In the inbound logistics activity of a value chain, the manufacturer receives, stores, and disseminates inputs to a product.

Question 29

Support activities in a value chain include the processes of finding vendors, setting up contractual arrangements, and negotiating prices.

Question 30

Most of the value in a service company is generated by inbound logistics.

Question 31

The sales process involves sales and marketing as well as outbound logistics activities.

Question 32

Operations refer to transforming inputs into the final product.

Question 33

A linkage is a network of activities that generate value by transforming inputs into outputs.

Question 34

Most process design initiatives require people to work in new ways and to follow different procedures.

Question 35

Organizations choose a competitive strategy after designing business processes that span value-generating activities.

Question 36

The cost of the business process is the cost of the inputs plus the cost of the outputs.

Question 37

A furniture manufacturer delivers products to its customers' houses. This is an example of inbound logistics.

Question 38

In the value chain, the primary activity of customer service is concerned with inducing buyers to purchase the product and providing a means for them to do so.

Question 39

Streamlining of business processes to increase margin is key to obtaining competitive advantage.

Question 40

Each stage of the generic value chain accumulates costs and adds value to the product. The net result of this process is the total margin of the chain.

Question 41

Porter's five forces model is used to assess ________.

A) industry structure
B) market share
C) internal competition
D) lifecycles of products

Question 42

Information systems create competitive advantage by providing support to a product rather than by becoming a part of the product.

Question 43

Business processes that span value-generating activities determine the scope and requirements of each organization's information systems.

Question 44

The competitive strategy of locking in customers by making it difficult for them to move to another product is called establishing high switching costs.

Question 45

According to Porter's five forces model, which of the following firms would be least affected by the threat of substitutes?

A) a used car dealership in New York
B) a convenience store that sells retail products
C) a firm that sells the only drug for a disease
D) a corner latte shop in Atlanta

Question 46

To determine if an information system delivers net savings in costs, the cost of developing and operating the information system will need to be offset against the gains in reduced errors and paper, ink, and printing costs.

Question 47

According to Porter's five forces model, which of the following would be most affected by the threat of substitutes?

A) Microsoft Windows OS
B) Boeing jets
C) Southwest Airlines
D) Google Adwords

Question 48

A new drug that has shown promise in curing skin cancer has been discovered by a famous chemical laboratory. This is the only known drug effective for treatment of this disease. The laboratory obtains a patent for the product and decides to sell it. This situation is characterized by ________.

A) low threat of substitutions
B) high bargaining power of customers
C) high threat of new entrants
D) low bargaining power of the laboratory

Question 49

The automobile industry is characterized by many manufacturers and intense competition among them. According to Porter's five forces model, this statement illustrates ________.

A) low threat of substitutions
B) high bargaining power of suppliers
C) high levels of rivalry
D) low bargaining power of customers

Question 50

An organization reducing operational costs is using product implementation to achieve competitive advantage.

Question 51

Organizations can lock in customers by making it difficult or expensive for them to move to another product.

Question 52

Bargaining power of customers is likely to be the highest for markets involving ________.

A) limited edition apparel
B) industrial products
C) patented drugs
D) vintage cars

Question 53

Creating a new product to increase margin is an example of using product implementations to achieve competitive advantage.

Question 54

Organizations cannot gain a competitive advantage by enhancing existing products or services.

Question 55

Which of the following factors determines the structure, features, and functions of an information system used in a company?

A) the competitive strategy
B) the value of its brands
C) the size of the company
D) the technology used by competitors

Question 56

According to Porter's five forces model, a group of grain farmers in a surplus year will have reduced ________.

A) bargaining power
B) threat of substitutes
C) risk of rivalry
D) threat of new entrants

Question 57

According to Porter's five forces model, in which of the following situations would a supplier have the highest bargaining power?

A) a Houston-based vendor is the only supplier of a patented material for many smartphone manufacturers
B) a fashion brand's outlet catering to a niche market
C) a restaurant that serves only army veterans
D) a large retailer buying finished goods from many small suppliers

Question 58

An organization that minimizes the costs associated with the delivery of its products uses a product implementation tactic to obtain competitive advantage.

Question 59

Establishing alliances with other organizations increases the cost of operations, though they do provide competitive advantages.

Question 60

According to Porter's five forces model, in which of the following examples would rivalry be considered as a weak force affecting the market?

A) Cancer drug manufacturers
B) used car dealers
C) book sellers
D) packaged food manufacturers

Question 61

Which of the following value chain activities involves transforming raw materials into a finished product or service?

A) operations
B) inbound logistics
C) marketing
D) maintenance

Question 62

Dynotrix Motors is a large car-manufacturing company. The company purchases raw materials from many small-sized sellers across the globe. In this case, Dynotrix Motors is characterized by ________.

A) very low threat of substitute products
B) high bargaining power over its suppliers
C) very low threat of new entrants in the market
D) very high bargaining power over its customers

Question 63

Lynn, the manager of a transportation company, is goes through the week's delivery schedule. She calls her team and assigns territories for each executive. She contacts the fleet supervisor to arrange trucks for transportation. Which activity of the value chain is Lynn executing?

A) inbound logistics
B) marketing
C) customer service
D) outbound logistics

Question 64

I-scream-4 Ice Cream recently faced competition against their flagship brand of "Orange peel ice cream." The competitor made significant in-roads into this market by offering three varieties of "Orange peel ice cream." I-scream-4 Ice Cream decided to counter this threat by introducing five new varieties of ice creams. Which competitive strategy is I-scream-4 implementing?

A) cost leadership
B) product differentiation
C) cost differentiation in the segment
D) service focus

Question 65

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

A) margin
B) turnover
C) revenue
D) value-addition

Question 66

Which of the following value chain activities involves inducing buyers to purchase a product and providing a means for them to do so?

A) inbound logistics
B) operations
C) sales and marketing
D) outbound logistics

Question 67

An automobile company decides to improve the quality of all its products and bring more variety into its product line. The company has decided to adopt ________.

A) focused cost leadership
B) industry-wide differentiation
C) industry-wide cost leadership
D) focused differentiation

Question 68

Focused differentiation occurs when ________.

A) a better product is provided within an industry segment
B) there is limited competition in an industry
C) the customers are highly price-sensitive
D) product quality improves across an entire industry

Question 69

Focused cost leadership is observed when a product has the lowest cost ________.

A) within an industry segment
B) across the product range offered by a company
C) within an industry
D) within the supply chain of a company

Question 70

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

A) receiving and distributing inputs to the product
B) negotiating prices with vendors
C) finding suitable vendors to supply raw materials
D) setting up contractual arrangements with various suppliers

Question 71

Which of the following value chain activities involves assisting users with handling of the products after sale, thus maintaining and enhancing the products' value?

A) inbound logistics
B) customer service
C) operations
D) outbound logistics

Question 72

The difference between the total value added and the total costs incurred is called the ________ of the value chain.

A) actual value
B) total margin
C) total revenue
D) gross turnover

Question 73

Cassandra runs a downtown boutique that sells customized clothes. One of her customers wishes to purchase a trench coat with a bejeweled clip. Cassandra contacts "Gems and Stones" and places an order for the clip. This activity can be classified under ________.

A) inbound logistics
B) operations
C) customer service
D) marketing

Question 74

According to Porter's model of business activities, interactions across value activities are called ________.

A) support activities
B) triggers
C) linkages
D) cross-functionalities

Question 75

A retail company sells products such as agricultural produce and consumer products. The company procures materials from farmers and local producers. This process of obtaining the inputs needed for a business is called ________.

A) outbound logistics
B) inbound logistics
C) operations
D) internal marketing

Question 76

Which of the following value chain activities involves collecting, storing, and physically distributing the product to buyers?

A) inbound logistics
B) operations
C) customer service
D) outbound logistics

Question 77

Which of the following is considered a support activity in the value chain of a business?

A) operations
B) customer service
C) contract negotiation
D) marketing

Question 78

Which of the following is a support activity in the value chain of a firm?

A) receiving inputs to operationalize the production
B) distributing the products to retailers or buyers directly
C) assisting customers in using the product or service
D) setting up contractual arrangements for procurement

Question 79

Identify the activity in the value chain that involves receiving and handling of raw materials and other inputs to the product.

A) inbound logistics
B) procurement
C) operations
D) outbound logistics

Question 80

Porter defined value as the ________.

A) amount of money that a customer is willing to pay for an offering
B) extent of after-sale service provided to customers
C) perceived satisfaction of the customers and sellers after a transaction
D) actual money exchanged in return of a product/service