Deck 3: Organizational Strategy, Information Systems

Question 1

Competitive strategy determines an organization's value chain.

Answer 1

True

Question 2

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

A)when switching costs are high
B)when the prices of rival products are relatively high
C)when customers are not loyal to the existing company or brand
D)when finding rival products is difficult

Answer 2

A

Question 3

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

Answer 3

Organizations examine the structure of their industry and determine a competitive strategy.This strategy determines value chains, which, in turn, determine business processes.The structure of business processes determines the design of supporting information systems.

Question 4

In Porter's five forces model, the intensity of each of the five forces determines the characteristics of the industry, how profitable it is, and ________.

A)the power held by employee unions
B)the quality and the nature of products sold
C)how competent the customer services will be
D)how sustainable that profitability will be

Question 5

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

A)coffee planters during a season of frost that decreases production
B)domestic suppliers of corn in the event of removal of import duties on corn
C)providers of logistic support when fuel prices have been reduced
D)temporary part-time gym instructor at a well-known gym

Question 6

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

Question 7

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 limited.
C)The supplier has excess inventory.
D)There are many suppliers providing the same raw materials for comparable prices.

Question 8

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 can capture the market with new and innovative services.
D)They can lock in suppliers to gain a competitive advantage.

Question 9

Which of the following is true if the threat from a substitute 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.

Question 10

Porter's five competitive forces can be grouped into forces related to competition and forces related to supply chain ________ power.

A)rivalry
B)labor
C)bargaining
D)consumers

Question 11

If the price of an alternative is lower than the price of an existing product, and customers perceive similar benefits from both the products, 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 12

The bargaining power of a customer is weak if ________.

A)the availability of a substitute 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

Question 13

The competitive strategy of an organization determines its ________.

A)industry rivals
B)global functions
C)value chains
D)strategic alliances

Question 14

In Porter's five forces model, the threat of new entrants 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

Question 15

Porter developed the five forces model to help organizations determine the ________.

A)potential profitability of an industry
B)services of an industry
C)reason for the collapse of certain industries
D)means for improving resource utilization

Question 16

The bargaining power of ________ is one of the five competitive forces in Porter's five forces model.

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

Question 17

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., which 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

Question 18

The competitive strategy followed by an organization is derived from the ________ of its industry.

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

Question 19

Substitutions may not be viable options for some industrial clients due to ________ or physical distance limitations.

A)the lack of rival suppliers
B)the lack of internal technical expertise
C)the loss of customers
D)the loss of investors

Question 20

Porter originally developed the five forces model in order to understand organizations' workforce.

Question 21

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

Question 22

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

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

Question 23

According to Porter, all information systems in the organization must facilitate the organization's competitive strategy to be effective.

Question 24

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

Question 25

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

Question 26

If the costs of switching to another vendor are high, then the bargaining power of the customer is low.

Question 27

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

Question 28

Which of the following competitive strategies does a company follow if it produces a uniquely formulated anti-aging face cream targeted at women above the age of forty?

A)providing the lowest cost across the industry
B)providing a better product across the industry
C)focusing on lowering the cost within an industry-segment
D)focusing on product differentiation within an industry-segment

Question 29

According to Porter, to be effective, an organization's goals, objectives, culture, and activities must be consistent with the organization's ________.

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

Question 30

Which of the following is true of a value chain?

A)It is a network of value-creating activities.
B)It consists of only primary activities.
C)It is specific to manufacturing industries.
D)It nullifies the importance of support activities.

Question 31

An organization can choose to either minimize cost or maximize differentiation to gain a competitive advantage.

Question 32

A business that selects a differentiation strategy ________.

A)adds cost to an activity, provided it has a positive margin
B)provides essential functions at lowest costs
C)imitates rival companies' strategy and products
D)always tries to price its products' higher than its competitors' products

Question 33

Describe Porter's five forces model.

Question 34

The threat of substitution in Porter's model concerns the danger of customers taking their business elsewhere.

Question 35

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

Question 36

Surplus of a product serves as an example of weak force for the bargaining power of suppliers.

Question 37

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

Question 38

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

Question 39

The availability of substitutes plays a role in determining the bargaining power of suppliers for industrial clients.

Question 40

Porter identified the bargaining power of competitors as one of the forces in his five forces model.

Question 41

Organizations analyze the structure of their industry and use that analysis to formulate a competitive strategy.

Question 42

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

Question 43

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

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

Question 44

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

Question 45

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

Question 46

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

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

Question 47

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

Question 48

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

Question 49

Which of the following statements describes a customer service activity?

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

Question 50

Each stage of the generic value chain reduces the value of the product.

Question 51

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

Question 52

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

Question 53

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

Question 54

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 as a supporting activity.
D)Negotiation of prices is considered as a supporting activity.

Question 55

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

Question 56

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

Question 57

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

Question 58

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

Question 59

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

Question 60

The support activities in the generic value chain facilitate the primary activities and contribute only indirectly to the production, sale, and service of the product.

Question 61

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

Question 62

Value chains exist in service-oriented companies.

Question 63

Business processes implement value chains or portions of value chains.

Question 64

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

Question 65

Value chain analysis has a direct application to manufacturing businesses.

Question 66

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

Question 67

Explain value chain linkages.

Question 68

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

Question 69

Manufacturing systems avoid linkages to reduce inventory costs.

Question 70

Which of the following statements is true of business processes?

A)If a value chain's margin is negative, the value should be decreased.
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.

Question 71

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 and adopt new technologies
D)increase procurement

Question 72

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

Question 73

How does competitive strategy determine value chain structure?

Question 74

It is easier to calculate the margin of supporting activities than primary activities.

Question 75

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

Question 76

Describe the support activities in a value chain.

Question 77

Differentiate between value and margin.

Question 78

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

Question 79

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

Question 80

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