Question 1

"Factor conditions" refers to a country's endowment with resources which may have been created or inherited.

Accepted Answer

A) True 
 B)False  True

Question 2

Competitive advantage exists when there is a match between a firm's distinctive competencies and the factors critical for success within its industry.

Accepted Answer

A) True 
 B)False  True

Question 3

When company management decides that it is unwilling to follow the "conventional wisdom" and instead finds a new way to gain competitive advantage, it might be said to be:

Accepted Answer

A)  searching for loose bricks.
B)  changing the rules of engagement.
C)  collaborating.
D)  building layers of advantage.
E)  innovating. B

Question 4

Maytag has been called "the Rolls-Royce of washers and dryers." Maytag markets Neptune, a high-tech machine, at a substantially higher than regular washer price. This is an example of:

Accepted Answer

A)  cost leadership.
B)  differentiation.
C)  cost focus.
D)  focused differentiation.
E)  consumer focus.

Question 5

Competition in an industry tends to drive rates of return on invested capital up towards the level of "perfect competition."

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not one of the four arenas in which dynamic strategic interactions are played out in hypercompetitive industries?

Accepted Answer

A)  cost/quality
B)  timing and know-how
C)  entry barriers
D)  deep pockets
E)  buyer and supplier power

Question 7

Established firms do not enjoy cost advantages independent of scale economies that present a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 8

Microsoft's extensive base of Windows operating systems and applications presented a formidable entry barrier for many years.

Accepted Answer

A) True 
 B)False

Question 9

The strong rivalry in the U.S. market between Dell, Gateway, Hewlett-Packard, Apple, and other computer companies has helped make the United States a world leader in personal computers.

Accepted Answer

A) True 
 B)False

Question 10

What does the phrase factor condition refer to? How can these factors be inherited or created? Describe Porter's categories of factor conditions.

Accepted Answer

The answer of What does the phrase factor condition refer...

Question 11

Suppose you are a sales representative for Advanced Micro Devices (AMD)in Japan. You are trying to convince Toshiba to buy your company's superfast Opteron microprocessor for its new laptop computer. Toshiba's representative seems interested, but eventually does not actually place an order. Confidentially, the representative tells you that he is afraid that Intel will withhold shipments of its Pentium 4 if he does business with AMD. Thinking about Intel's role in this scenario, which of the following elements of the five forces model is evident here?

Accepted Answer

A)  barriers to entry
B)  bargaining power of suppliers
C)  bargaining power of buyers
D)  threat of substitute products
E)  threat of new entrants

Question 12

In addition to the five forces model of industry competition, Michael Porter has developed a framework of so-called generic business strategies. Explain these generic strategies, describing their aims and application.

Accepted Answer

The answer of In addition to the five forces model...

Question 13

Taiwan's Acer prospered by following founder Stan Shih's strategy of approaching the world computer market from the periphery. By the time Acer was ready to target the United States in earnest, it was already the number one PC brand in key countries in Latin America, Southeast Asia, and the Middle East. This is an example of which component of competitive innovation?

Accepted Answer

A)  collaboration
B)  layers of advantage
C)  loose bricks
D)  generic
E)  supplier power

Question 14

A firm that has the skills to be a "first mover" and arrive first in the market has achieved a know-how advantage.

Accepted Answer

A) True 
 B)False

Question 15

The automobile industry has become fiercely competitive on a global basis. The initial success of foreign automakers in the United States was due to all of the following reasons except:

Accepted Answer

A)  reluctance of U.S. manufacturers to design high-quality cars.
B)  inability of U.S. manufacturers to manufacture high-quality cars.
C)  reluctance of U.S. manufacturers to make inexpensive small cars.
D)  bigger cars meant bigger profits for U.S. manufacturers.
E)  U.S. manufacturers did not realize drivers' preferences.

Question 16

Product differentiation and brand loyalty "raise the bar" for would-be industry entrants who would be required to make minimal investments in research or advertising.

Accepted Answer

A) True 
 B)False

Question 17

The development of the MP3 file format for music was accompanied by the increased popularity of peer-to-peer (p-to-p)file swapping among music fans.

Accepted Answer

A) True 
 B)False

Question 18

Hundreds of small companies such as Martin-Logan and Mark Levinson compete in the high-end audiophile segment of the consumer electronics industry. If analyzed in terms of Porter's generic strategies framework, such companies might be said to be pursuing competitive advantage via:

Accepted Answer

A)  cost leadership.
B)  differentiation.
C)  cost focus.
D)  focused differentiation.
E)  consumer differentiation.

Question 19

Intel's focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices. In the strategic intent model of competitive advantage, this is an example of:

Accepted Answer

A)  building layers of advantage.
B)  loose bricks.
C)  changing the rules of engagement.
D)  collaborating.
E)  none of the above

Question 20

"Hypercompetition" is a term that describes a business environment of escalating rivalry characterized by rapid product innovation and short product life cycles.

Accepted Answer

A) True 
 B)False

Exam 16: Strategic Elements of Competitive Advantag

"Factor conditions" refers to a country's endowment with resources which may have been created or inherited.

Competitive advantage exists when there is a match between a firm's distinctive competencies and the factors critical for success within its industry.

When company management decides that it is unwilling to follow the "conventional wisdom" and instead finds a new way to gain competitive advantage, it might be said to be:

Maytag has been called "the Rolls-Royce of washers and dryers." Maytag markets Neptune, a high-tech machine, at a substantially higher than regular washer price. This is an example of:

Competition in an industry tends to drive rates of return on invested capital up towards the level of "perfect competition."

Which of the following is not one of the four arenas in which dynamic strategic interactions are played out in hypercompetitive industries?

Established firms do not enjoy cost advantages independent of scale economies that present a barrier to entry.

Microsoft's extensive base of Windows operating systems and applications presented a formidable entry barrier for many years.

The strong rivalry in the U.S. market between Dell, Gateway, Hewlett-Packard, Apple, and other computer companies has helped make the United States a world leader in personal computers.

What does the phrase factor condition refer to? How can these factors be inherited or created? Describe Porter's categories of factor conditions.

In addition to the five forces model of industry competition, Michael Porter has developed a framework of so-called generic business strategies. Explain these generic strategies, describing their aims and application.

A firm that has the skills to be a "first mover" and arrive first in the market has achieved a know-how advantage.

The automobile industry has become fiercely competitive on a global basis. The initial success of foreign automakers in the United States was due to all of the following reasons except:

Product differentiation and brand loyalty "raise the bar" for would-be industry entrants who would be required to make minimal investments in research or advertising.

The development of the MP3 file format for music was accompanied by the increased popularity of peer-to-peer (p-to-p)file swapping among music fans.

Hundreds of small companies such as Martin-Logan and Mark Levinson compete in the high-end audiophile segment of the consumer electronics industry. If analyzed in terms of Porter's generic strategies framework, such companies might be said to be pursuing competitive advantage via:

Intel's focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices. In the strategic intent model of competitive advantage, this is an example of:

"Hypercompetition" is a term that describes a business environment of escalating rivalry characterized by rapid product innovation and short product life cycles.