Prototype of Exam Questions (Answers in Yellow)

The number of steps in a firm's value chain that it accomplishes within its boundaries describes
the firm's level of
A) product differentiation.
B) diversification.
C) vertical integration.
D) competitive dynamics.

When Apple, Inc. opened retail stores to sell its computers and iPods, this was an example of
A) forward vertical integration.
B) backward vertical integration.
C) forward horizontal integration.
D) backward horizontal integration.

In the COVID vaccine industry:

 The power of suppliers is high

 The power of suppliers does not depend on the demand for vaccines
 The power of buyers is low
 The power of buyers is high and the power of suppliers depends on the demand for vaccines

The power of suppliers is largest when:

 There are many substitute products

 Switching costs are low
 Suppliers can threaten to compete directly with buyers by entering their industry

A firm's marketing skills and teamwork as well as its cooperation among managers are examples
of
A) financial resources.
B) human resources.
C) physical resources.
D) capabilities.

Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and
implementing their strategies may enjoy a period of
A) temporary competitive advantage.
B) competitive disadvantage.
C) competitive parity.
D) sustained competitive advantage.
A firm that chooses a ________ focuses on gaining advantages by reducing its cost below all of
its competitors.
A) diversification strategy
B) product-differentiation business strategy
C) corporate strategy
D) cost-leadership business strategy

The best example of a firm following a cost-leadership business strategy is

A) Mercedes Benz.
B) Ferrari.
C) Ryanair.
D) Rolls Royce.

________ are said to exist when the increase in firm size (measured in terms of volume of
production) are associated with lower costs (measured in terms of average costs per unit of
production).
A) Sustainable competitive advantages
B) Economies of scale
C) Temporary competitive advantages
D) Economies of scope

________ is a business strategy whereby firms attempt to gain a competitive advantage by

increasing the perceived value of their products or services relative to the perceived value of
other firms' products or services.
A) Product differentiation
B) Related diversification
C) Cost leadership
D) Best-cost provider

By increasing the perceived value of a firm's products or services, a firm will be able to
A) charge a lower price than it would otherwise be able to do.
B) charge a higher price than it would otherwise be able to do.
C) sell its products at lower prices than firms pursuing a cost-leadership strategy.
D) gain significantly more market share than firms pursuing a cost-leadership strategy.

The ability of companies that produce complex software packages to tailor these packages to the
specific needs of their customers is an example of product differentiation through
A) complexity.
B) consumer marketing.
C) product customization.
D) timing.
Referring to the technology adoption model by Geoffrey Moore, between which consumer segments
does the most important “Chasm” lie?

a. Between early adopters and the early majority.

b. Between the late majority and the laggards.

c. Between the early majority and the late majority

d. None of the above is correct.

What is specific to disruptive innovators?

a. They are large companies with many resources.

b. They target the needs of the consumer segments overlooked by incumbents.

c. Their product is superior from the start.

d. They have a large consumer base