Managing in Complex Environments QUIZ 2 Forms A B Name Last First ANSWERS Spring Semester 2013 Professor Atkin PeopleSoft My lecture time is This closed book closed note quiz has 35 3 point questions to be answered on optical scan sheets To get a grade you must return a the quiz b the answer sheet and c the completed peer evaluation Please take your time and read questions carefully Good luck PLEASE SEE NOTES AT END a a c 1 Assume the firm chooses to pursue a long term project in which the expected benefits exactly equal the expected costs where both are adjusted for the time value of money etc Other things equal this project would be expected to generate economic profit a The time value of money refers to a d insufficient information to determine c switching costs positive b zero c negative 2 d revenue generated by the firm b exit costs inflation effects 3 A vertically integrated firm is most likely a diversified firm b profitable c both of these d none of these 4 When we say an industry is attractive we mean industry rivals all earn positive NI b the average profitability in the industry is strongly positive customer power is low d all of these 5 All other things equal a supply side industry definition d none of these some industries are chronically more profitable than other industries some industries oscillate between being highly attractive and highly unattractive both of the above d none of these a is done from the perspective of the suppliers to the industry b identifies more rivals than a demand side definition c both of the above Empirical evidence suggests that a b c In an unrelated diversified firm situations which negatively affect one business likely positively affect the firm s other businesses a The boundaries of an industry allow us identify a The aggregate capacity of an industry can be well estimated from the a c observed aggregate demand of customers both of the above b industry substitutes c both of thesed none of these b relative market share of rivals d none of the above industry rivals b false true 6 7 8 9 10 Assume we do a Porter analysis of the PC industry and determine the industry is currently unattractive We then do a second analysis on the chip industry which is a supplier to the PC industry Given the first analysis on the PC industry the second analysis will likely conclude that the chip industry is a more unattractive b similarly unattractive c more attractive d insufficient information to tell d all of these 11 In 2011 2012 many players entered the tablet market From this we can infer that a entry barriers were low b branding was important c the tablet industry was attractive 12 Assume we learn the following about an industry Entry is inexpensive exit is expensive there are no economies of scale demand is shrinking there is overcapacity and existing customers are not brand loyal Given just this information a b most rivals in the industry are the industry is probably unattractive unprofitable the industry is probably in the growth phase c d all of these 13 Assume we conduct a Porter type analysis and determined the industry of interest was very unattractive From this finding we can conclude that a barriers to entry are low there is excess capacity c 14 Problems of the Porter model include b switching costs are low d none of the above 1 problems a a little or no concern with industry dynamics b not very good at analyzing newly developing industries both of the above d none of the above 15 A firm s unique competitive advantages are dependent on b its investment decisions c both of these d none of a c a its resources these 16 Licensing is an agreement between the owner firm X of intellectual property and some other firm firm Y which allows firm Y to firm X s intellectual property a d extend b sell c use buy 17 Compared to focused firms we would expect diversified firms to experience agency fewer b about the same number determine c more d insufficient information to 18 An offering by one party to a transaction that can satisfy a need of the other party is called a product b brand c marketing channel d merchandising strategy 19 Assume A and B are head to head rivals Also assume both earn excess rent Given just this information our best guess is that both firms are competing in BAD QUESTION a b an oligopoly c a monopolistic competition d a perfect competition monopoly 20 Which of the following affects the firm s marketing mix a product extension b price c promotion d all of these 21 Consumer Reports describes itself as the world s largest independent consumer product testing organization In a recent issue it identified the Samsung PN43E450 TV as a Best Buy Most probably Best Buy means a lowest price b highest overall quality c best value d none of these 22 The incentive to product differentiate is that most products introduced by first movers succeed true a b false 23 A few years ago Jet Blue was in the news due to their stranding of a large number of caused a reduction in the firm s brand loyalty caused a reduction in the firm s brand equity d none of the above both of the above passengers on the runway at JFK during bad weather This situation probably a b c In practice buyers usually search most or all alternatives before BAD QUESTION due to item b a making a purchase decision c d none of the above 24 Many years ago original Coca Cola was replaced by New Coke This is an example of b making a transfer transaction both of the above 24 a product refinement b product extension c diversification d all of these DELETED 25 Since niche markets tend to be narrow segments a c they are unlikely to be profitable both of the above d none of the above 26 The trigger for slow second movers to enter the market is the standardization of product in the market market both of the above a c d none of the above b they are difficult to defend b the standardization of price in the 27 As the number of SKUs sold by a firm increases we are reasonably certain to observe b an increase in economic profit c both of these d none a an increase in NI of these 28 Evidence reviewed in the text suggests that in the long run fast second mover tend to 29 true dominate both first movers and slow second movers a In a monopoly shopping on price a c is equivalent to shopping on status both of the above b false d none of the above b is equivalent to shopping on value 30 During the growth period price tends to increase monotonically over time a true b false 31 When a firm identifies all or most