We can work on Bus 187 Chapter 12 Multiple Choice

_____ is a support activity.A. Research and developmentB. ProductionC. Marketing and salesD. LogisticsE. Customer serviceThe rate of return that a firm makes on its invested capital is referred to as _____.A. stakeholder returnB. profitabilityC. profit growthD. process valueE. strategic fitProfit growth is measured by:A. dividing the net profits of the firm by total invested capital.B. subtracting the previous years gross profit from the current year’s gross profit.C. calculating the difference between the previous year’s profitability and the current year’s profitability.D. the percentage increase in net profits over time.E. adding the profitability of the last two fiscal years.Managers are most likely to increase the profitability of their firm by pursuing strategies that:A. add value to the firm’s products.B. increase costs.C. enable the firm to reduce the depth of its product line.D. allow the firm to sell less products in existing markets.E. allow the firm to exit from relatively new markets.The amount of value a firm creates is measured by:A. the difference between the previous year’s profitability and the current year’s profitability.B. dividing the market price of its products by the price that customers are actually willing to pay.C. the difference between its costs of production and the value that consumers perceive in its products.D. dividing the net profits of the firm by total invested capital.E. the sum of the profitability of the last two fiscal years.In general, the more value customers place on a firm’s products:A. the lesser the profitability of the firm.B. the higher the competitive pressure from other firms.C. the lesser the quality of the product.D. the lesser the consumer surplus for those products.E. the higher the price the firm can charge for those products.Typically, the price a firm charges for a good or service is:A. less than the value placed on that good or service by the customer.B. more than what customers assume it would be.C. more than the market price for similar goods or services.D. the same as the value placed on that good or service by the customer.E. less than the lowest priced similar good or service in the market.The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because the consumer captures some of that value in the form of what economists call a _____.A. firm valueB. consumer surplusC. customer loyaltyD. firm deficitE. profit growthAs a result of consumer surplus, a firm typically charges less price for a good or service than the value placed on it by customers because:A. the value creation results in a corresponding reduction in costs of production.B. it is highly unlikely that the same good or service will be available to the customers from other firms.C. the firm is competing with other firms for the customer’s business.D. the firm charges a price that reveals a consumer’s assessment of the product’s value.E. the firm creates value for the customer by producing a wide range of productsOne of the reasons why a firm typically charges for a good or service less than the value placed on that good or service by the customer is because:A. the firm attempts to create value for the consumers by providing them a wide range of productsB. it is normally impossible to segment a market based on each customer’s reservation price.C. the value creation results in a corresponding reduction in costs of production.D. the firm frequently modifies its products to compete with the products introduced by other firms.E. it is highly unlikely that the same good or service will be available to the customers from other firms.The price that reflects an individual’s assessment of the value of a product is referred to as:A. the market price.B. the customer’s negotiated price.C. the base value of the product.D. the customer’s reservation price.E. the profit growth price.The value of a product to an average consumer is V, the average price that the firm can charge aconsumer for that product is P, and the average unit cost of producing that product is C. For this scenario, which of the following is true?A. The firm makes a profit so long as C is greater than P.B. The higher C is relative to P, greater will be the profit.C. The consumer surplus per unit is equal to V – P.D. The higher the intensity of competitive pressure, the higher the price charged relative to V.E. The lower the consumer surplus the greater the value for the money the consumer gets.The _____ of a firm is measured by the difference between the value of a product to an average consumer and the average unit cost of producing that product.A. customer surplusB. value creationC. cost curveD. value efficiencyE. customer reservationA company can create more value for a product by:A. charging a higher price for the product.B. raising production costs.C. generating more profits.D. making the product more attractive.E. increasing the profitability of the product.A strategy that focuses primarily on increasing the attractiveness of a product is referred to as a _____ strategy.A. standardizationB. differentiationC. target-identificationD. low-costE. profitabilityAccording to Michael Porter, _____ and _____ are the two basic strategies for improving creating value and attaining a competitive advantage in an industry.A. differentiation; low-costB. value creation; generalizationC. one-size-fits-all; zero-sumD. comparison; standardizationE. profitability; strategic fitAccording to Michael Porter, superior portability goes to a firm that:A. creates similar products as their competitors.B. keeps the gap between value and cost of production smaller than the gap attained by competitors.C. drives down the cost structure of its business.D. has the highest cost structure in the industry.E. has the least valuable product in the industry.Superior value creation relative to rivals requires that the firm:A. creates similar products as its competitors so that consumers do not have to pay a premium price.B. has the highest cost structure in the industry.C. creates the least valuable product in the eyes of consumers.D. ensures that the gap between value and cost of production is greater than the gap attained by competitors.E. drives up the cost structure of its business.The _____ shows all of the different positions that a firm can adopt with regard to value creation and low cost assuming that its internal operations are configured adequately to support a particular position.A. demand-value modelB. experience curveC. efficiency frontierD. optimal output modelE. surplus curveThe efficiency frontier has a convex shape because of:A. a high-cost structure.B. diminishing returns.C. a significantly low product value.D. low production costs.E. high profit growth.Which of the following statements is true of the efficiency frontier?A. To maximize its profitability, a firm should avoid a position that lies on the efficiency frontier.B. Not all positions on the efficiency frontier are viable.C. The efficiency frontier is a function of the cost and revenue of a product.D. Positions inside the frontier are more efficient than the positions that are located on the frontier.E. It is always concave in shape because of diminishing returns.For a firm to maximize its profitability, it is necessary that it:A. creates products similar to the products of its competitors.B. does not configure its internal operations to reduce costs.C. minimizes the value of the consumer surplusD. picks a position on the efficiency frontier that is viable.E. strips all the value out of its product offering.A firm maximizes its profitability when it:A. creates products similar to the products of its competitors.B. minimizes the value provided by its products.C. picks a position on the efficiency frontier that is not viable.D. strips all the value out of its product offering.E. configures its internal operations to support the position selected by it on the efficiency frontier.A firm’s profitability maximizes when it:A. creates products similar to the products of its competitors.B. strips all the value out of its product offering.C. ensures that it has the right organization structure in place to execute its strategy.D. picks a position on the efficiency frontier that is not viable.E. does not configure its internal operations to reduce costs.The value creation activities of a firm are categorized as _____ and _____.A. primary activities; support activitiesB. strategic activities; functional activitiesC. ancillary functions; tertiary functionsD. primary activities; core activitiesE. goal-oriented activities; organizational activitiesThe _____ activities of a firm have to do with the design, creation, and delivery of the product; its marketing; and its support and after-sale service.A. supportB. tertiaryC. ancillaryD. primaryE. secondaryWhich of the following is a primary activity in the operations of a firm?A. Logistics functionB. Research and developmentC. Information systemsD. Human resource functionE. Company infrastructureWhich of the following operations of a firm is concerned with the design of products and production processes?A. Human resourcesB. Research and developmentC. Marketing and salesD. Materials managementE. Company infrastructureFor services such as banking or health care, “production” typically occurs when:A. the customer specifies the service requirements.B. the service is paid for by the customer.C. the service is designed in-house.D. the service is delivered to the customer.E. the customer gives a feedback.Which of the following is a support activity in the operations of a firm?A. Research and developmentB. Customer serviceC. Marketing and salesD. Creation and maintenance of information systemsE. ProductionOf all the value creation activities in a firm, _____ create(s) 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.A. productionB. marketing and salesC. human resourcesD. logisticsE. information systemsWhich of the following functions creates a perception of superior value in the minds of consumers by solving consumer problems and by supporting them after they have purchased the product?A. ProductionB. Marketing and salesC. Human resourcesD. Customer serviceE. LogisticsThe _____ of a value chain provide inputs that allow the primary activities to occur.A. lateral functionsB. support activitiesC. core activitiesD. central activitiesE. secondary activities_____ is a value creation activity which falls into the category of primary activities.A. Creation and maintenance of information systemsB. Customer serviceC. Human resourcesD. LogisticsE. Company infrastructure maintenanceThe _____ function of a value chain controls the transmission of physical materials through the value chain, from procurement through production and into distribution.A. human resourceB. financeC. marketingD. logisticsE. research and developmentThe _____ function of a value chain ensures that the company has the right mix of skilled people to perform its value creation activities effectively.A. financeB. marketingC. human resourceD. logisticsE. marketing and salesWhich of the following support functions is most likely to involve dealing with the organizational structure, control systems, and culture of the firm?A. Human resource functionB. LogisticsC. Information systemsD. Company infrastructureE. Inventory managementWho among the following should be viewed as part of a firm’s infrastructure?A. Procurement managerB. Top managementC. Production managerD. Research and development scientistE. Marketing personnelThe term _____ refers to the totality of a firm’s organization, including its organizational structure, control systems, incentives, processes, and people.A. primary structureB. organization architectureC. organizational hierarchyD. organizational modelE. management structureWhich of the following is a part of the organization architecture that consists of the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits?A. ReportsB. ControlsC. RewardsD. Knowledge flowsE. Dominions_____ are considered a part of an organization architecture and are used to reward appropriate managerial behavior.A. Knowledge flowsB. ReportsC. ProcessesD. IncentivesE. ControlsProcesses are:A. the manner in which decisions are made and work is performed within the organization.B. the metrics used to measure the performance of subunits.C. the devices used to reward appropriate managerial behavior.D. the metrics used to make judgments about how well managers are running the subunits.E. the norms and value systems that are shared among the employees of an organization.Which of the following terms best represents the norms and value systems that are shared among the employees of an organization?A. Process scenarioB. Organizational structureC. Business structureD. Organizational cultureE. Management structureA firm’s ability to increase its profitability and profit growth by expanding globally is constrained:A. by the imperative of localization.B. by the economies of scale.C. due to customer surplus.D. due to the leveraging of skills developed in foreign operations.E. due to the dispersion of individual value creation activities.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:A. the product is already being offered by local companies in the nations that the company enters.B. the product is a generic product that requires little differentiation.C. indigenous competitors in the nations that the company enters lack comparable products.D. there is a high inflation in the nations that the company enters.E. the product is perceived to be very costly in the home country of the company.Skills within a firm that competitors cannot easily match or imitate are referred to as _____.A. core competenciesB. barriers to entryC. internalitiesD. externalitiesE. premium skillsHow does possessing a core competence help a firm?A. It helps a firm to create value in such a way that premium pricing is impossible.B. It reduces a firm’s dependence on its logistics function.C. It enables a firm to reduce the costs of value creation.D. It reduces the scope of transfer of skills to foreign markets.E. It reduces the need to replicate a business model in a foreign market.If a value creation activity of a firm can take place in Mexico most effectively, then that activity of the firm must be based in Mexico. Firms that pursue such a strategy are most likely to realize:A. a position inside the efficiency frontier.B. the experience curve.C. economies of scale.D. location economies.E. demographic advantages._____ are the economies that arise from performing a value creation activity in the optimal place for that activity, wherever in the world that might be.A. Diversification economiesB. Value-building economiesC. Location economiesD. Support economiesE. Core economiesWhich of the following is most likely to be the advantage of locating a value creation activity in the optimal location for that activity?A. It increases the costs of value creation.B. It decreases consumer surplus.C. It helps the firm to achieve a high-cost position.D. It nullifies all trade barriers.E. It enable a firm to differentiate its product offering from those of competitors.A firm creates a(n) _____ 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.A. integral circleB. dispersal chainC. global webD. international meshE. worldwide circleIn theory, which of the following advantages can be realized by a firm by implementing a global web of operations?A. It will be able to raise the perceived value of its goods and services.B. It will be able to decrease consumers’ reservation price for its products.C. It will be able to decrease consumer surplus.D. It will be able to increase the cost of value creation.E. It will be able to sell its products at a price which is below its cost price in its home country.Which of the following caveats is most likely to discourage global expansion of businesses?A. Economies of scaleB. High consumers’ reservation pricesC. Trade barriersD. Mass customizationE. Low transportation costsThe _____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product.A. experience curveB. learning effectsC. location economiesD. efficiency slopeE. economies of scaleA number of studies have observed that a product’s production costs decline by some quantity about each time _____ doubles.A. annual outputB. cumulative outputC. workforceD. fixed investmentE. foreign domestic investmentThe two phenomena that help explain the experience curve are:A. learning effects and economies of scale.B. technology inputs and wealth transfer.C. leveraging subsidiary and local responsiveness.D. standardized manufacturing and global web.E. efficiency frontier and location economies_____ refer to cost savings that come from acquiring knowledge from doing a task.A. Learning effectsB. Exponential effectsC. Ancillary effectsD. Economies of scaleE. Location economiesLabor productivity increases over time as individuals understand the most efficient ways to perform particular tasks. This is as a result of _____.A. diminishing returnsB. location economiesC. economies of timeD. learning effectsE. an efficiency frontier.In which of the following tasks will the learning effects be most significant?A. Pizza delivery for a fast-food majorB. Data entry for a loan recovery centerC. Assembly process involving 1,000 complex stepsD. Sewing buttons onto shirts in a garment factoryE. Delivering letters to different recipientsWhich of the following is true about learning effects?A. They tend to be more significant in non-repetitive tasks.B. They tend to be less significant when a task is technologically complex.C. They typically last a lifetime.D. They are important only during the start-up period of a new process.E. They do not have any effect on the cost of production.Learning effects tend to be more significant when:A. a task involves a few simple steps.B. a task is repeated for a period of over five years.C. the workforce consists of unskilled labor.D. the cumulative output becomes half of what it was originally.E. a technologically complex task is repeated._____ refer to the reductions in unit cost achieved by producing a large volume of a product.A. Location economiesB. Learning effectsC. Standardization economiesD. Core economiesE. Economies of scaleSpreading fixed costs over a large volume results in a cost-savings phenomenon which is referred to as:A. volume synergies.B. economies of scale.C. captured savings.D. size effects.E. location economies.Which of the following statements is true about economies of scale?A. Economies of scale lead to an increase in the average unit cost of a product.B. Attaining economies of scale increases a firm’s profitability.C. The ability to spread variable costs over a large volume is a source of economies of scale.D. Economies of scale result due to the increase in the perceived value of a product.E. Economies of scale refer to cost savings that come from learning by doing.Which of the following terms best represents the systematic reductions in production costs that have been observed to occur over the life of a product?A. Global webB. Dispersion linkageC. Economies of scaleD. Experience curveE. Efficiency frontierServing a global market from a single location is consistent with:A. establishing a high-cost position.B. taking advantage of location economies.C. moving down the experience curve.D. operating from a position which falls inside the efficiency frontier.E. going up the global web.that compete in the global marketplace typically face two types of competitive pressure: pressures for _____ and pressures to _____.A. increasing investment; minimize consumer surplusB. labor skill enhancement; minimize economies of scaleC. cost reductions; be locally responsiveD. global promotions; move down the efficiency frontierE. product standardization; move up the experience curveWhy do companies find dealing with high pressures for both, cost reductions and local responsiveness, a difficult strategic challenge?A. Cost reductions are inversely proportional to standardization.B. Being locally responsive tends to raise costs.C. Cost reductions negatively impact maximization of single-plant utilization.D. As the quantity produced goes on increasing, it becomes more difficult for a company to achieve economies of scale.E. Customer tastes are usually identical across global markets.Cost reduction pressures tend to be particularly intense in industries that:A. create products that serve universal needs.B. create customized products.C. are not involved in international business.D. produce products that have inelastic demand.E. serve different customers with different needs.Which of the following terms best represents the requirements that are the same all over the world, such as steel, bulk chemicals, and industrial electronics?A. Universal needsB. Efficiency frontierC. Global webD. Lateral requirementsE. Supreme needsPressures for cost reduction are intense in:A. firms which produce products that are well differentiated.B. firms whose major competitors are based in high-cost locations.C. firms with persistent low capacity.D. firms in which consumers face low switching costs.E. firms with no international competition.The liberalization of the world trade and investment environment in recent decades, by facilitating greater international competition, has generally:A. increased cost pressures.B. decreased the demand for local responsiveness.C. decreased pressures for cost reduction.D. increased consumer surplus.E. reduced the production of conventional commodity products.Which of the following conditions is most favorable to reap gains from global scale economies?A. Low demand for local responsivenessB. High pressures for cost reductionC. Lack of universal needsD. National differences in accepted business practicesE. High pressure to delegate production to domestic subsidiariesWhich of the following supports the argument that customer demands for local customization are on the decline worldwide?A. Local and indigenous industries are increasingly filling up available demand.B. High costs of local customization are deterring companies from doing so.C. Governments across the world are standardizing their legal procedures.D. Customer tastes have converged worldwide.E. Managers worldwide ignore the differences in consumer tastes and preferences.Which of the following is most likely to necessitate the delegation of marketing functions to national subsidiaries?A. Differences in distribution channelsB. Pressures for decreasing consumer surplusC. Lack of product customizationD. Pressures for increasing economies of scaleE. Pressures for increasing consumers’ reservation priceWhich of the following is most likely to require a firm to be locally responsive in a host-country?A. Similarity in distribution channelsB. Identical traditional practices among countriesC. Standard consumer tastes and preferences worldwideD. Declining demand for local customizationE. Host-government demandsFor an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country?A. Increase in the attractiveness of location economiesB. Pressure for localization of productionC. Requirement of standardization of products or servicesD. Pressure for cost reductionE. Decrease in the significance of local responsivenessThe appropriateness of the strategy that a firm chooses to use in an international market varies with the extent of pressures for _____ and _____.A. quality improvement; product standardizationB. customer surplus; quality improvementsC. customer surplus; product standardizationD. cost reductions; local responsivenessE. product standardization; cost reductionsFirms that pursue a(n) _____ strategy focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies.A. internationalB. transnationalC. localizationD. global standardizationE. nationalizationWhich of the following is true of a firm that pursues a global standardization strategy?A. It ensures that it pursues a high-cost strategy on a global scale.B. It has its production, marketing, and R & D activities in only one optimum location.C. It tries to customize its products to local conditions.D. It has shorter production runs.E. It reaps maximum benefits from economies of scale and learning effects.A firm is most likely to pursue a global standardization strategy when:A. it wants to implement a high-cost strategy on a global scale.B. it wants to reduce consumer surplus.C. there are no universal needs to be served.D. there are strong demands for local responsiveness.E. there are strong pressures for cost reduction.Which of the following strategies is most likely to pursued by a firm when there are strong pressures for cost reductions and demands for local responsiveness are minimal?A. Domestic strategyB. Global standardization strategyC. International strategyD. Transnational strategyE. Nationalization strategyWhich of the following strategies focuses on increasing profitability by customizing the firm’s goods or services so that they provide a good match to tastes and preferences in different national markets?A. International strategyB. Global standardization strategyC. Localization strategyD. Transnational strategyE. Nationalization strategyWhich of the following is true of a localization strategy?A. It allows a firm to capture the cost reductions of mass-producing a standardized product.B. It reduces duplication of functions.C. It involves longer production runs.D. It makes sense if the value added by customization supports higher pricing.E. It substantially reduces local demand.A global car manufacturer wants to start production in China. While catering to local responsiveness, what can the firm do to get scale economies?A. Increase costs whenever possibleB. Use common vehicle platforms and components across many different modelsC. Shorten the production runs for each componentD. Increase the duplication of functions required for each operationE. Manufacture only one type of car and sell it in all the international marketsWhich of the following strategies is a firm most likely to pursue when it simultaneously faces both strong cost pressures and strong pressures for local responsiveness?A. Global standardization strategyB. Localization strategyC. International strategyD. Transnational strategyE. Nationalization strategyWhich of the following is an observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises?A. Global logistics industry makes the concept of “location economies” redundant for international firms.B. Core competencies and skills can develop in any of the firm’s worldwide operations.C. Flow of skills between a firm and its global subsidiaries should be unidirectional.D. Differentiating across geographic markets helps a firm in reducing costs.E. Customer demands for local customization are on the decline worldwide.Firms that pursue a(n) _____ strategy differentiate their product offering across geographic markets to account for local differences.A. internationalB. global standardizationC. transnationalD. multidomesticE. nationalizationWhich of the following is true of a transnational strategy?A. It is easy to implement because it does not place any conflicting demands on a company.B. It is used when the pressures for cost reductions are low.C. It is usually used when the pressure for local responsiveness is relatively low.D. It enables the one-way flow of core competencies.E. It is used by firms that try to achieve low costs through location economies, economies of scale, and learning effects.Firms that pursue a(n) _____ strategy take products first produced for their domestic market and sell them across various markets with only minimal local customization.A. nationalizationB. transnationalC. global standardizationD. internationalE. localizationPursuing a(n) _____ strategy makes sense if a firm has a valuable core competence that indigenous competitors in foreign markets lack.A. global standardizationB. internationalC. nationalizationD. transnationalE. nationalizationXerox had a monopoly on photocopiers for several years as the technology underlying the photocopier was protected by strong patents. As it served a universal need, this favorable position led Xerox to pursue a(n) _____ strategy.A. global standardizationB. localizationC. internationalD. transnationalE. nationalizationMayer Life Systems, a manufacturer of surgical and medical appliances, invented and patented a new dialysis machine that radically reduced maintenance and operational issues. Responding to a global demand, it decided to sell the machines manufactured at its plant in the U.S. to various markets across the globe. Since the product features provided by Mayer were not provided by any other competitor, Mayer did not feel any pressure for cost reductions. Which of the following strategies is most likely being pursued by Mayer?A. International strategyB. Localization strategyC. Global standardization strategyD. Transnational strategyE. Nationalization strategyWhich of the following statements is true about an international strategy?A. International strategy typically involves taking products first produced for foreign markets and then customizing them for domestic markets.B. International strategy should be pursued by a firm if it manufactures a product that satisfies local, rather than universal, needs.C. When a firm pursues an international strategy, the head office of the firm retains fairly tight control over marketing and product strategy.D. Firms pursuing the international strategy tend to outsource their development functions such as R&D.E. International strategy should be pursued by a firm only if it faces strong competition in foreign markets.The term _____ refers to cooperative agreements between potential or actual competitors.A. tactical unionB. strategic allianceC. political affiliationD. economic associationE. nationalizationA _____ allows two or more firms to share the fixed costs (and associated risks) of developing new products or processes.A. franchising agreementB. global webC. free trade agreementD. strategic allianceE. dispersion linkageWhich of the following is a disadvantage of a strategic alliance?A. Entering into a strategic alliance, makes it difficult for a firm to enter into a foreign market.B. As a result of strategic alliance, fixed costs of developing new products tend to increase.C. Strategic alliance gives competitors a low-cost route to new technology and markets.D. Firms that enter into a strategic alliance with a foreign firm tend to face higher trade barriers.E. Strategic alliance always leads to a loss to either of the firms involved.One of the principal risks associated with a strategic alliance is that:A. it brings together the complementary skills of alliance partners.B. it makes it difficult for the partner firms to enter into a foreign market.C. a firm can give away more than it receives.D. it does not allow firms to share fixed costs.E. it almost always fails.Managing an alliance successfully requires building interpersonal relationships between the firms’ managers, or what is sometimes referred to as:A. relational capital.B. interorganizational synergy.C. power equilibrium.D. symbiotics.E. intraorganizational coordination.

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