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| 1.
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The return that a firm makes on its invested capital is its profitability. |
| | A) | True |
| | B) | False |
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| 2.
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According to Michael Porter, firms that achieve superior profitability create superior value by either driving down the cost of doing business or differentiating the product in some way that generates the perception of greater value. |
| | A) | True |
| | B) | False |
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| 3.
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Support activities involve the design, creation, and delivery of the product; its marketing; and its after-sale service. |
| | A) | True |
| | B) | False |
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| 4.
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A firm's support activities may be a critical factor in a firm's competitive advantage. |
| | A) | True |
| | B) | False |
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| 5.
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The skills within a firm that competitors cannot easily match or imitate are the firm's core competencies. |
| | A) | True |
| | B) | False |
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| 6.
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To increase profitability a firm |
| | A) | must have higher sales |
| | B) | must lower costs |
| | C) | must create more value |
| | D) | must raise prices |
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| 7.
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_______ is the rate of return that a firm makes on its invested capital. |
| | A) | capital return |
| | B) | profitability |
| | C) | net profits |
| | D) | profit growth |
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| 8.
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According to Michael Porter, the two basic strategies for creating value and attaining a competitive advantage in an industry are |
| | A) | differentiation and low cost |
| | B) | differentiation and production |
| | C) | low cost and focus |
| | D) | focus and production |
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| 9.
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Which of the following is not a primary activity? |
| | A) | production |
| | B) | customer service |
| | C) | logistics |
| | D) | marketing and sales |
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| 10.
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Customer service is a ______ activity in the value chain. |
| | A) | ordinary |
| | B) | basic |
| | C) | primary |
| | D) | support |
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| 11.
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The _______ includes the organizational structure, control systems, and culture of the firm. |
| | A) | information systems function |
| | B) | company infrastructure |
| | C) | human resources function |
| | D) | logistics function |
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| 12.
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A firm's competitive advantage is based on |
| | A) | its competitive advantage |
| | B) | its comparative advantage |
| | C) | its core competencies |
| | D) | its core advantages |
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| 13.
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Firms can _____ C and/or ______V by locating a value creation activity in the optimal location for that activity. |
| | A) | lower, lower |
| | B) | lower, increase |
| | C) | increase, increase |
| | D) | increase, fall |
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| 14.
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The systematic reduction in production costs that have been observed to occur over the life of a product is called |
| | A) | location economies |
| | B) | the value creation curve |
| | C) | the experience curve |
| | D) | learning effects |
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| 15.
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Serving a global market from _______ is consistent with moving down the experience curve and establishing a low-cost position. |
| | A) | a single |
| | B) | two |
| | C) | three |
| | D) | four or more |
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| 16.
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To successfully leverage skills developed at the subsidiary level, firms should do all of the following except |
| | A) | have the humility to recognize that value skills that lead to lead to competencies can arise anywhere within the firm's global network. |
| | B) | develop skills at the headquarters and transfer them to the subsidiary level |
| | C) | act as facilitators to transfer valuable skills within the firm |
| | D) | have a process for identifying when valuable new skills have been created in a subsidiary |
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| 17.
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If a firm is in the lower, left hand quadrant of the cost reduction/local responsiveness grid, the firm is facing ______ pressure for cost reduction and _____ pressure for local responsiveness. |
| | A) | high, high |
| | B) | high, low |
| | C) | low, high |
| | D) | low, low |
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| 18.
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When a firm is in the lower, right quadrant of the cost reduction/local responsiveness grid, the firm is facing ______ pressure for cost reduction, and _____ pressure for localization. |
| | A) | low, low |
| | B) | low, high |
| | C) | high, low |
| | D) | high, high |
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| 19.
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_______ exist(s) when the tastes and preferences of consumers in different nations are similar, if not identical. |
| | A) | homogenous needs |
| | B) | global consumers |
| | C) | globalization |
| | D) | universal needs |
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| 20.
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Personal computers, petroleum, handheld calculators, and sugar are all examples of products meeting |
| | A) | homogenous needs |
| | B) | local needs |
| | C) | universal needs |
| | D) | global needs |
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| 21.
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Where major competitors are based in low-cost locations, where there is persistent excess capacity, and where consumers are powerful and face low switching costs |
| | A) | there is intense pressure for cost reductions |
| | B) | there is minimal pressure for cost reductions |
| | C) | there is moderate pressure for cost reductions |
| | D) | pressure for cost reductions is non-existent |
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| 22.
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A firm that is in the upper right quadrant of the cost reduction/local responsiveness chart is following |
| | A) | a global standardization strategy |
| | B) | an international strategy |
| | C) | a localization strategy |
| | D) | a transnational strategy |
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| 23.
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When a firm tries to simultaneously achieve low costs and differentiate its product offering across geographic markets the firm is following a(n) _______ strategy. |
| | A) | international |
| | B) | global standardization |
| | C) | localization |
| | D) | transnational |
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| 24.
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A firm that is selling a product that serves universal needs, but that does not face significant competition is probably following a(n) _______ strategy. |
| | A) | international |
| | B) | localization |
| | C) | global standardization |
| | D) | transnational |
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| 25.
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If a firm has low pressure for global responsiveness and low competition, the firm should probably pursue a(n) _________ strategy. |
| | A) | transnational |
| | B) | global standardization |
| | C) | localization |
| | D) | international |
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