Archive for May 2017

When channels of distribution, or final users are larger than their suppliers, they may drive hard bargains. This makes buyers more resistant to price increases and increases their consumer surplus at the firm's expense. This statement is:

When channels of distribution, or final users are larger than their suppliers, they may drive hard bargains. This makes buyers more resistant to price increases and increases their consumer surplus at the firm's expense. This statement is:




a) True
b) False





Answer: A

Potential new entrants often face high entry costs due to the economics of the industry. They are important part of the market process. Since they reflect the existence of real scarcities they provide a market test for potential entrepreneurs. These are known as:

Potential new entrants often face high entry costs due to the economics of the industry. They are important part of the market process. Since they reflect the existence of real scarcities they provide a market test for potential entrepreneurs. These are known as:



a) Structural barriers to entry
b) Obstacles to new competition
c) Behavioral barriers to entry
d) Shared monopolies.






Answer: A

To achieve and sustain a competitive advantage, effective executives build and maintain strong competitive positions, create barriers to entry, or take advantage of naturally high costs of entry. This describes the means to create sustainable competitive advantage according to:

To achieve and sustain a competitive advantage, effective executives build and maintain strong competitive positions, create barriers to entry, or take advantage of naturally high costs of entry. This describes the means to create sustainable competitive advantage according to:





a) The Industry (external) approach to competitive advantage

b) The Five Forces Model

c) The resource-based approach to competitive advantage

d) The Resource (internal) view.




Answer: A

To achieve a sustainable competitive advantage, effective executives build and maintain strong competitive positions, invest and re-invest in unique and valuable resources and capabilities that are difficult to:

To achieve a sustainable competitive advantage, effective executives build and maintain strong competitive positions, invest and re-invest in unique and valuable resources and capabilities that are difficult to:




a) Imitate
b) Import
c) Reverse engineer
d) Purchase in the underground economy.




Answer: A

Making scanning the environment a habit for all key associates, managing in group settings, and levering the unique attributes of new hires are strategies working managers can employ to deal with:

Making scanning the environment a habit for all key associates, managing in group settings, and levering the unique attributes of new hires are strategies working managers can employ to deal with:




a) The complexities of related diversification
b) The Waving Hand Equilibrium
c) The Paradigm Effect
d) Managerial dis-economies of scale.





Answer: C

A sudden increase in the market demand in a competitive industry leads to

A sudden increase in the market demand in a competitive industry leads to 





a) Losses in the short-run and average profits in the long-run
b) Above average profits in the short-run and average profits in the long-run
c) New firms being attracted to the industry
d) Demand creating supply





Answer: C

When management and staff cannot say for sure which individual or combination of resources or capabilities account for their competitive advantage, rivals and potential new entrants may find it difficult duplicate this resource. This attribute of resources or capabilities is known in economics as:

When management and staff cannot say for sure which individual or combination of resources or capabilities account for their competitive advantage, rivals and potential new entrants may find it difficult duplicate this resource. This attribute of resources or capabilities is known in economics as:




a) Path dependence
b) First-mover advantages
c) Causal ambiguity
d) Moral hazard.





Answer: C

Which of the following types of firms a guaranteed to make above-normal returns?

Which of the following types of firms a guaranteed to make above-normal returns?





a) Both perfectly competitive and monopoly firms
b) Neither perfectly competitive nor monopoly firms
c) A perfectly competitive firm, but not a monopolist.
d) A monopoly firm but not a perfectly competitive firm.




Answer: B

According to the economist Joseph Schumpeter. the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one" is known as:

According to the economist Joseph Schumpeter. the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one" is known as:





a) The process of creative destruction
b) The Law of Nemesis
c) The Paradigm Effect
d) The Myth of Sisyphus.




Answer: A

According to D. S. Landes, "every situation bears the seed of its own reversal. Nothing good lasts indefinitely, because others will want to share in it." This is known as:

According to D. S. Landes, "every situation bears the seed of its own reversal. Nothing good lasts indefinitely, because others will want to share in it." This is known as:





a) The process of creative destruction
b) The Law of Nemesis
c) The Paradigm Effect
d) The Myth of Nescience.






Answer: B

Competition exists where there is a large number of buyers and sellers dealing in homogeneous goods and services and where entry and exit are easy and information flows freely. This statement accurately reflects:

Competition exists where there is a large number of buyers and sellers dealing in homogeneous goods and services and where entry and exit are easy and information flows freely. This statement accurately reflects:




a) The Neoclassical Restatement
b) The Industry (External) View or I/O Perspective
c) The Resource (Internal) or Resource-Based View
d) The Five Forces of Competitive Advantage Approach.





Answer: B

When a valuable resource or capability is founded on such things as interpersonal relationship, culture and other organizational phenomena, they will not be able to imitate that resource in real time, those resources or capabilities can be the foundation of sustainable competitive advantage due to:

When a valuable resource or capability is founded on such things as interpersonal relationship, culture and other organizational phenomena, they will not be able to imitate that resource in real time, those resources or capabilities can be the foundation of sustainable competitive advantage due to: 





a) Causal ambiguity
b) Rent seeking behavior
c) Social complexity
d) Behavioral barriers to entry (BTE).





Answer: C

Where rivals or potential new entrants cannot understand how resources or capabilities enable a firm to gain an advantage, that advantage may be sustained over time. This attribute of resources or capabilities is known in economics as:

Where rivals or potential new entrants cannot understand how resources or capabilities enable a firm to gain an advantage, that advantage may be sustained over time. This attribute of resources or capabilities is known in economics as:





a) Path dependence
b) First-mover advantages
c) Causal ambiguity
d) Moral hazard.




Answer: C

Which one of the following is a term used to explain how the set of opportunities one faces at the current time is influenced by decisions or actions predecessor took in the past: "history matters."?

Which one of the following is a term used to explain how the set of opportunities one faces at the current time is influenced by decisions or actions predecessor took in the past: "history matters."?



a) Path dependence
b) First-motion advantage
c) Historical competitive advantage
d) Causal ambiguity.





Answer: A

The top firms in an oligopoly selling environment swill naturally attempt to gain a sustainable competitive advantage over their rivals. Unfortunately for them, the firms that lack distinctive, immobile resources and capabilities will jockey for position over time. This is known as:

The top firms in an oligopoly selling environment swill naturally attempt to gain a sustainable competitive advantage over their rivals. Unfortunately for them, the firms that lack distinctive, immobile resources and capabilities will jockey for position over time. This is known as:



a) Oligopolistic Dynamic
b) The Waving Hand Equilibrium
c) Monopolistic rivalry
d) Monopolistic competition.





Answer: B

The combination of buyer power, supplier power, the availability of substitutes, and the threat of new entry contribute to the:

The combination of buyer power, supplier power, the availability of substitutes, and the threat of new entry contribute to the:



a) The determination of management compensation

b) The performance of individual firms in a given industry

c) The average profitability of firms in an industry

d) The duration of the Waving Hand Equilibrium.






Answer: C

The value (in the VRIO Framework) of a given resource and capability must be re-assessed periodically to ascertain if the firm's business model and strategy is still relevant. If the firm has to change its theory of the business, a once valuable resource or capability may have lost its value. This is necessary in order to:

The value (in the VRIO Framework) of a given resource and capability must be re-assessed periodically to ascertain if the firm's business model and strategy is still relevant. If the firm has to change its theory of the business, a once valuable resource or capability may have lost its value. This is necessary in order to:




a) Convert temporary competitive advantage to long run economic profit
b) Avoid moral hazard and adverse selection
c) Determine the firm's most appropriate generic strategy
d) Avoid value migration.





Answer: D

Competition is a process by which two or more parties attempt to gain the custom of third parties by offering them more favorable terms. This approach to competition is consistent with:

Competition is a process by which two or more parties attempt to gain the custom of third parties by offering them more favorable terms. This approach to competition is consistent with:



a) Industry (External) View or I/O Perspective
b) Resource (Internal) View or Resource-Based View
c) Porter's Five Forces of Competition Model
d) The Neoclassical Revision.






Answer: B

Positive profit attracts entry, and negative profit leads to exit. The ability of an asset to move from lower- to higher-valued uses is the force that moves an industry toward long-run equilibrium. Such asset mobility leads to:

Positive profit attracts entry, and negative profit leads to exit. The ability of an asset to move from lower- to higher-valued uses is the force that moves an industry toward long-run equilibrium. Such asset mobility leads to:



a) Competitive disadvantage
b) The Indifference Principle
c) The Waving Hand Equilibrium
d) Below-normal returns.






Answer: B

In the video featuring Max Boot, the author of "War Made New," the author argued that the key to sustainable competitive advantage in both military and civilian organization is:

In the video featuring Max Boot, the author of "War Made New," the author argued that the key to sustainable competitive advantage in both military and civilian organization is:




a) New technology
b) Choosing the right enemy or rivals
c) Superior organization and management
d) The German General Staff Model of strategy implementation.





Answer: C

In business, the tendency of a critical mass of managers and associates to resist changes in their strategies and organizational structure and practices despite senior management's efforts to change the firm theory of the business is known as:

In business, the tendency of a critical mass of managers and associates to resist changes in their strategies and organizational structure and practices despite senior management's efforts to change the firm theory of the business is known as:




a) The limits to growth
b) Managerial dis-economies of scope
c) Competitive disadvantage
d) Organizational inertia.





Answer: D

Changes in technology, cultural norms or consumer preferences suggest that a firm should change its theory of the business (value proposition, business model and generic business strategy). When key organizational members find no compelling reason to implement these changes, the firm experiences:

Changes in technology, cultural norms or consumer preferences suggest that a firm should change its theory of the business (value proposition, business model and generic business strategy). When key organizational members find no compelling reason to implement these changes, the firm experiences:



a) Organizational inertia
b) Stasis
c) Waving-hand equilibrium
d) The Malthusian Trap.






Answer: A

A fellow firm's (or potential new entrant's) resources or capabilities that effectively supplant or neutralize the incumbent's resource-based competitive advantage is known as:

A fellow firm's (or potential new entrant's) resources or capabilities that effectively supplant or neutralize the incumbent's resource-based competitive advantage is known as:




a) Substitutes in consumption
b) Support activities
c) Valuable resources and capabilities
d) Substitutes in production.






Answer: D

Normal returns means zero economic profit. Normal returns are "normal" in that this is the long-run performance equilibrium of:

Normal returns means zero economic profit. Normal returns are "normal" in that this is the long-run performance equilibrium of:



a) Firms producing normal goods

b) Most of the firms in implementing cost leadership strategy

c) The vast majority of businesses in the economy

d) Firms participating in cartels or trusts.






Answer: C

Which one of the following defines a fellow firm's (or potential new entrants) resources or capabilities that effectively supplant or neutralize the incumbent's resource-based competitive advantage:

Which one of the following defines a fellow firm's (or potential new entrants) resources or capabilities that effectively supplant or neutralize the incumbent's resource-based competitive advantage:




a) Resources or capabilities that are mobile

b) Resources or capabilities that are non-tradable

c) Resources or capabilities that support temporary competitive advantage

d) Resources or capabilities that are substitutes in production.




Answer: D

Like perfectly competitive firms, monopolistic competitors not only face strong rivals, but fairly free entry and exit as well. So they tend compete away economic profits by:

Like perfectly competitive firms, monopolistic competitors not only face strong rivals, but fairly free entry and exit as well. So they tend compete away economic profits by:




a) Engaging in "creative destruction"

b) Adding features and benefits cutting prices

c) Eliminating features and benefits that consumers won't notice

d) Engaging in price wars.






Answer: B

In the great game of business, both producers and consumers accept the fact that in policy, "You win some, lose some." The result is that markets tend to oscillate between competitive parity and

In the great game of business, both producers and consumers accept the fact that in policy, "You win some, lose some." The result is that markets tend to oscillate between competitive parity and




a) Temporary competitive advantage
b) Sustained competitive advantage
c) Normal returns
d) Zero economic value added.





Answer: B

A competitive firm can earn positive or negative profit in the short run until entry or exit occurs. In the long run, competitive firms are condemned:

A competitive firm can earn positive or negative profit in the short run until entry or exit occurs. In the long run, competitive firms are condemned:




a) To shut down their operations as price falls to below breakeven price.

b) To make an early appearance in bankruptcy court

c) To earn only an average rate of return

d) To earn a negative economic value added (EVA).





Answer: C

One of the famous Parkinson's Laws is that an organization, once it has built its edifice, begins to decline. This is an example of the general problem the systems over time come to lack of order or predictability, they gradually decline into disorder. This is known as:

One of the famous Parkinson's Laws is that an organization, once it has built its edifice, begins to decline. This is an example of the general problem the systems over time come to lack of order or predictability, they gradually decline into disorder. This is known as:




a) Entropy
b) Return to mean performance
c) Organizational decline
d) Managerial dis-economies of scale.




Answer: A

Although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. This apparent logical contradiction is known as:

Although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. This apparent logical contradiction is known as:




a) The hard as diamonds syndrome
b) The paradigm effect
c) Value migration
d) The paradox of value.




Answer: D

Examples of resources or capabilities that are under the exclusive control of the incumbent firm include Patents & Copyrights, Exclusive licenses, and Valuable relationships and:

Examples of resources or capabilities that are under the exclusive control of the incumbent firm include Patents & Copyrights, Exclusive licenses, and Valuable relationships and:





a) Access to the court system
b) Membership in trade associations
c) Strong values, attitudes and beliefs
d) Customer goodwill.




Answer: C
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