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exam 2 part 1
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Questions in this quiz (200)
11. A firm’s financial performance that consistently outperforms its industry’s peers is known as operational effectiveness.
- ATrue
- BFalse
22. According to Michael Porter, the reason many firms suffer margin-eroding competition is because they have defined themselves according to strategic positioning rather than operational effectiveness.
- ATrue
- BFalse
33. When technology can be matched quickly, it is rarely a source of competitive advantage.
- ATrue
- BFalse
44. According to the resource-based view of competitive advantage, if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that are valuable and can be substituted easily.
- ATrue
- BFalse
55. Fast growing Groupon was able to dissuade rivals from entering its market because the firm’s technology was so difficult to replicate.
- ATrue
- BFalse
66. Cisco’s acquisition of Pur Digital, makers of the Flip video camera line, was largely considered a flop because comparable technology soon became a feature in other popular consumer electronics products.
- ATrue
- BFalse
77. A firm’s financial performance that consistently outperforms its industry’s peers is known as _____.
- Aa. comparative advantage
- Bb. absolute advantage
- Cc. sustainable competitive advantage
- Dd. first mover advantage
- Ee. operational efficiency advantage
88. Which of the following statements about technology is true?
- Aa. Technology alone is enough to provide sustainable competitive advantage to a firm.
- Bb. Technology plays a marginal role in creating strategic differences.
- Cc. Technological improvements are not important in strengthening a firm’s strategic advantages.
- Dd. Technological improvements can often be copied by rivals, leading to a profit-eroding arms race.
- Ee. Technology cannot be used by late entrants to gain a share of the industry.
99. Technology that that super-imposes content, such as images and animation on top of real world images is called:
- Aa. Alternative imaging
- Bb. Strategic design
- Cc. Illustration editing
- Dd. Augmented reality
- Ee. Product placement
1010. Operational effectiveness refers to:
- Aa. the implementation of technology in a business context.
- Bb. performing the same tasks better than rivals perform them.
- Cc. the number of times inventory is sold or used during the course of a year.
- Dd. performing different tasks or the same tasks in different ways.
- Ee. matching the benefits of a successful position while maintaining an existing position.
1111. The _____ problem exists when rivals watch a pioneer’s efforts, learn from their successes and missteps, and then enter the market quickly with a comparable or superior product at a lower cost.
- Aa. late entrant
- Bb. early starter
- Cc. first mover
- Dd. intellectual property
- Ee. fast follower
1212. _____ refers to performing different tasks than rivals or the same tasks in a different way.
- Aa. Straddling
- Bb. Operational effectiveness
- Cc. Strategic positioning
- Dd. Vertical integration
- Ee. Scale advantage
1313. A firm is said to be _____ when it attempts to match the benefits of a successful position while maintaining its existing position.
- Aa. switching
- Bb. straddling
- Cc. dovetailing
- Dd. streamlining
- Ee. vertically integrating
1414. According to Porter, strategy is fundamentally about being _____.
- Aa. different
- Bb. efficient
- Cc. superior
- Dd. scalable
- Ee. profitable
1515. The resource-based view of competitive advantage states that for a firm to maintain sustainable competitive advantage it must control a set of exploitable resources that have four critical characteristics. What are these characteristics?
- Aa. inventory turns, high margins, long account payable periods, brand building relationships
- Bb. operational effectiveness, strategic positioning, scale, distribution channels
- Cc. rareness, value, imperfect imitability, non substitutability
- Dd. a website, an app, cloud-based systems, a savvy technology staff
1616. Many telecom firms began digging up the ground and laying webs of fiberglass to meet the growing demand for Internet connectivity. However, rivals and startups began to imitate these firms and soon these new assets were not so rare and each day they seemed to be less valuable. It can be inferred from this example that:
- Aa. resource-based thinking can help avoid the trap of carelessly entering markets simply because growth is spotted.
- Bb. the telecommunications market is only big enough to support one or two major players.
- Cc. the immense scale advantages enjoyed by major firms can help them fight off competition from newer entrants.
- Dd. technology assets that require high investment and maintenance are liable to becoming obsolete much quicker than others.
- Ee. the scale of technology investment required to run a business is not a huge enough factor to act as a barrier to entry for new, smaller competitors.
1717. In _____, the light inside fiber is split into different signal-carrying wavelengths in a way similar to how a prism splits light into different colors.
- Aa. polarization
- Bb. time-division multiplexing
- Cc. space-division multiplexing
- Dd. frequency hopping spread spectrum
- Ee. dense wave division multiplexing
1818. Startup firms can struggle to gain lower prices from rivals, but FreshDirect seems to have found several ways to gain lower supplier prices. FreshDirect buys direct from suppliers, eliminating any markup from a middleman. In addition to this, the firm employs other methods to get lower prices from suppliers. Which of the following is not a way FreshDirect helps suppliers in exchange for supplier agreement to offer it better pricing terms?
- AFreshDirect carries a greater selection of supplier products
- BFreshDirect will cobrand products from suppliers
- CFreshDirect pays suppliers faster than rivals
- DFreshDirect shares warehouse space with farmers and livestock producers
- EFreshDirect shares data on customer insights with suppliers
1919. Sometimes technology can sound geeky and so technical that executives might think that it doesn’t require managerial or investor attention. However many investing in the telecom sector suffered from a lack of insight on how a key technology was impacting their industry. Telecom firms failed to anticipate the impact of a technology known as ____________, which enabled existing fiber to carry more transmissions than ever before.
- Aradio frequency identification (RFID)
- Bdense wave division multiplexing (DWDM)
- Ccloud computing
- Dopen source software
2024. Firms that build an imitation-resistant value chain develop a way of doing business that others struggle to replicate.
- ATrue
- BFalse
2125. A trademark is the symbolic embodiment of all the information connected with a product or service of a firm.
- ATrue
- BFalse
2226. A salesperson’s ability to effectively bargain with his/her consumers is called viral marketing.
- ATrue
- BFalse
2327. Businesses benefit from economies of scale when the cost of an investment can be used in serving a niche customer base.
- ATrue
- BFalse
2428. The scale of technology investment required to run a business can act as a barrier to entry by discouraging new, smaller competitors.
- ATrue
- BFalse
2529. Commodities are products or services that vary across multiple vendors.
- ATrue
- BFalse
2630. Network externalities exist when a product or service becomes less expensive as more people use it.
- ATrue
- BFalse
2731. Metcalfe’s Law is used to explain the concept of switching costs.
- ATrue
- BFalse
2832. Many firms choose not to implement operational components of ERP software and instead elect to create their own propriety solutions in part because they see their uniqueness in certain operations areas as key to creating difficult-to-imitate competitive advantages.
- ATrue
- BFalse
2933. When firms see distribution partners as rivals, this is known as Channel Conflict
- ATrue
- BFalse
3034. A firm can benefit from high switching costs, even when rivals offer free products.
- ATrue
- BFalse
3135. The set of activities through which a product or service is created and delivered to customers is known as a(n) _____.
- Aa. marketing plan
- Bb. value chain
- Cc. inventory turnover
- Dd. strategic position
- Ee. pure play
3236. How did Apple trump Google to become the dominant mapping platform on iOS?
- Aa. Apple’s control of iOS gave it control of the distribution channel to reach its users, kicking Google out as the default mapping app and capturing the majority of user engagement.
- Bb. Apple sued Google for copyright infringement related to the look and feel of Apple Maps.
- Cc. Apple sued Google for privacy violations related to the collection of map data.
- Dd. Apple hasn’t trumped Google Maps. Google’s Map app is used by the majority of iOS customers, whereas most users ignore Apple Maps.
3337. Which of the following represents one of the primary components of the value chain?
- Aa. Outbound logistics
- Bb. Firm infrastructure
- Cc. Human resource management
- Dd. Research and development
- Ee. Procurement
3438. Dell, previously the world’s number one PC manufacturer, has seen its market share shrink because of rivals copying its value chain and reducing the price advantage it enjoyed over rivals. Dell’s present struggles:
- Aa. underscore the importance of continually assessing a firm’s strategic position among changing market conditions.
- Bb. are a result of rivals adopting supply chain management of software products that have yielded competitive advantages.
- Cc. imply that publicly traded firms are at a disadvantage in the technology sector.
- Dd. highlight the fact that scale advantages of an established firm are a huge factor in discouraging newer entrants to a market.
- Ee. demonstrate that resource-based thinking can help firms avoid the trap of carelessly entering markets simply because growth is spotted.
3539. A(n) _____ is the symbolic embodiment of all the information connected with a product or service.
- Aa. trademark
- Bb. copyright
- Cc. patent
- Dd. brand
- Ee. advertisement
3640. A strong brand can be an exceptionally powerful resource for competitive advantage by lowering ________, proxying _____ and inspiring _____.
- Aa. price; strategy; innovation
- Bb. switching costs; quantity; performance
- Cc. expenses; marketing; respect
- Dd. search costs; quality; trust
- Ee. customer concern; investment; profits
3741. Leveraging consumers to promote a product or service is known as _____.
- Aa. straddling
- Bb. affiliating
- Cc. long tailing
- Dd. crowdsourcing
- Ee. viral marketing
3842. Benefits related to a firm’s size are referred to as _____.
- Aa. network effects
- Bb. brand recall
- Cc. scale advantages
- Dd. vertical integration
- Ee. disintermediation
3943. Businesses benefit from economies of scale when the cost of an investment can be:
- Aa. spread across increasing units of production.
- Bb. used in serving a niche and loyal customer base.
- Cc. used to build a brand image for products through advertising.
- Dd. leveraged to recruit consumers to promote a product or service.
- Ee. diverted to implementing technology upgrades in the business model.
4044. _____ exist when consumers incur an expense to move from one product or service to another.
- Aa. Network effects
- Bb. Switching costs
- Cc. Economies of scale
- Dd. Competitive advantages
- Ee. Profit margins
4145. Apple’s dominance of smartphone and tablet markets has allowed the firm to lock up 60 percent of the world’s supply of advanced touch-screen displays, and to do so with better pricing than would be available to smaller rivals. This is an example of:
- Anetwork externalities that make Apple valuable.
- Bhigh switching costs for suppliers.
- Ca complex tech product establishing itself as a killer brand.
- Da growing firm gaining bargaining power with its suppliers.
- Elow search costs associated with a famous brand.
4246. The acronym API stands for:
- AAccess Programming Interface
- BApplication Processing Inquiry
- CAccess Processing Interface
- DApplication Programming Inquiry
- EApplication Programming Interface
4347. Netscape, which once controlled more than 80 percent of the market share in Web browsers, lost its dominant position when customers migrated to Internet Explorer, Microsoft’s Web browser. Internet Explorer was easy to install and had no significant differences in terms of usability. This example serves to illustrate that:
- Aa. fast-following smaller firms are always ready with newer and possibly superior products.
- Bb. customers of technology companies are becoming increasingly savvy and more demanding.
- Cc. the open source nature of technology ensures that no firm can expect to monopolize a market.
- Dd. firms need to employ increasingly stringent intellectual property norms to guard against infringements from smaller, competitive rivals.
- Ee. firms with low switching costs can sometimes be rapidly overtaken by strong rivals with additional competitive advantages.
4448. Which of the following is not highlighted as a source of switching costs?
- Aa. Learning costs
- Bb. Information and data
- Cc. Search costs
- Dd. Viral marketing
- Ee. Loyalty programs
45
49. If a new entrant hopes to attract customers from an established incumbent, the new entrant must ensure that the value they offer exceeds the incumbents’ value in addition to any perceived _____.- Aa. switching costs
- Bb. market depreciation
- Cc. brand benefits
- Dd. advertising expenses
- Ee. scale advantages
4650. Consumers buying commodities are highly _____ since they have so many similar choices.
- Aa. quality-conscious
- Bb. price-focused
- Cc. brand-driven
- Dd. technologically discriminating
- Ee. loyal
4751. The acronym NPE stands for:
- Aa. Non-Practicing Entities
- Bb. Non-Practicing Exhibits
- Cc. Normal Practicing Entities
- Dd. Neo-Practicing Entities
- Ee. Normal-Practicing Exhibits
4852. _____ Law is said to be at play when the value of a product or service increases as its number of users expands.
- Aa. Amdahl’s
- Bb. Turing’s
- Cc. Zuckerberg’s
- Dd. Metcalfe’s
- Ee. Moore’s
4953. The paths through which products or services get to customers are known as _____.
- Aa. information pathways
- Bb. vertical markets
- Cc. distribution channels
- Dd. proxy networks
- Ee. horizontal markets
5054. The patent system is often considered to be unfairly stacked against startups because:
- Aa. bigger multinational firms enjoy patent protection in all countries as opposed to startups, which are domestic firms that do not get such protection for the most part.
- Bb. the intellectual property laws are not adequate to protect the interests of smaller firms from infringements.
- Cc. the patent system grants patents for innovations on a differential basis, with bigger firms getting precedence over start-ups.
- Dd. high litigation costs coupled with a few months of litigation can sink an early stage firm.
- Ee. patents are granted by the patent system on an ad hoc basis wherein firms that have been in business longer get patent protection for longer periods of time.
5164. Timing and technology alone will not yield sustainable competitive advantage.
- ATrue
- BFalse
5265. Market entry is the same as building a sustainable business.
- ATrue
- BFalse
5366. Moving first pays off when the time lead is used to create:
- Aa. the latest technology at a firm’s production plant.
- Bb. operational effectiveness to harness maximum profitability.
- Cc. critical resources for competitive advantage.
- Dd. high stock value to generate funds for expansion.
- Ee. market entry to ensure sustainable competitive advantage.
5469. If a firm’s goods are highly differentiated, the Internet typically lessens the firm’s bargaining power as a supplier.
- ATrue
- BFalse
5570. If there is the availability of a wide variety of undifferentiated commodity goods in a given market, and these products are available online, then bargaining power typically shifts to the buyer.
- ATrue
- BFalse
5671. The internet is largely seen as lowering the entry barrier for new entrants, but firms that enter may have little chance of success unless they have a competitive advantage over existing rivals
- ATrue
- BFalse
5772. Uber is an example of a business model that has strengthened the bargaining power of suppliers (cab drivers) with respect to middlemen who took a cut of their services (e.g. cab companies).
- ATrue
- BFalse
5873. Which of the following is one of Porter’s five forces?
- Aa. Availability of competitors in the market
- Bb. Total cost of ownership
- Cc. Purchasing power parity of consumers
- Dd. Threat of new entrants
- Ee. Strength of intellectual property laws
5974. Which of the following is a source of bargaining power of buyers?
- Aa. Greater choice of products
- Bb. High switching costs
- Cc. Loyalty programs
- Dd. Network effects
- Ee. Unique and highly differentiated products
6075. The degree to which complete information is available is known as _____.
- Aa. information assurance
- Bb. data proximity
- Cc. operational alertness
- Dd. price transparency
- Ee. data consolidation
6176. How does the Internet typically impact price transparency and information asymmetry?
- Aa. Both price transparency and information asymmetry increase
- Bb. Both price transparency and information asymmetry decrease
- Cc. Price transparency increases while information asymmetry decreases
- Dd. Price transparency decreases while information asymmetry increases.
621. The U.S. Department of Justice needed to provide a special exemption to the Fair Factories Clearinghouse, and before doing so, had to be convinced that the effort wouldn’t be used by buyers to collude and further squeeze prices from competitors.
- ATrue
- BFalse
632. The Fair Factories Clearinghouse is subject to network effects.
- ATrue
- BFalse
643. Making seasonal apparel decisions is a challenge because it often involves making predictions on what customers will be interested in, months in advance of clothing appearing on store shelves.
- ATrue
- BFalse
654. Zara’s dominance in the fashion industry is due to its horizontally integrated structure accompanied by a globally dispersed production model.
- ATrue
- BFalse
665. Zara’s clothing look like high fashion, but are comparatively inexpensive.
- ATrue
- BFalse
676. Most fashion retailers place orders for a seasonal collection a few days before these lines make an appearance in stores.
- ATrue
- BFalse
687. Maintaining large inventories is highly essential for the viability of the fashion industry.
- ATrue
- BFalse
698. In an industry where nearly every major player outsources manufacturing to low-cost countries, Zara is highly _____, keeping huge swaths of its production process in-house.
- Aa. privatized
- Bb. vertically integrated
- Cc. publicly traded
- Dd. subsidized
- Ee. autonomous
709. What was considered the source of Mickey Drexler’s inventory problems at Gap?
- Aa. He personally approved sweatshop-affiliated contract manufacturers
- Bb. He wrote the code for Gap’s disastrously broken inventory system
- Cc. The firm guessed wrong about fashion, placing big bets on trends that consumers didn’t want
- Dd. He led a botched merger with Disney in the hopes that combining technology with the Disney Store would create a super-efficient set of shopping mall destination stores.
7110. Zara holds a competitive advantage over its rivals in spite of:
- Aa. refusing to implement technology in its operational model.
- Bb. conducting business only through online storefronts.
- Cc. its globally distributed contract manufacturing model.
- Dd. operating through fewer stores across the world than its closest rivals.
- Ee. Keeping large portions of its production processes in-house.
7211. _____ involves outsourcing production to third-party firms.
- Aa. Vertical integration
- Bb. Long tailing
- Cc. Peer production
- Dd. Contract manufacturing
- Ee. Viral production
7312. In retail in general and fashion in particular, having _____ is considered the kiss of death.
- Aa. excess inventory
- Bb. storefronts in expensive districts with costly rents
- Cc. a large labor force
- Dd. limited production runs
- Ee. dispersed production facilities
7413. Contract manufacturers used by the apparel industry are often criticized because:
- Aa. they hike up the costs of producing goods.
- Bb. firms cannot maintain high profit margins by employing them.
- Cc. they charge exorbitant labor costs that drive down sales.
- Dd. they are known to grossly overprice their services.
- Ee. of poor working conditions.
7514. _____ is a non-profit organization that shares audit information on contract manufacturers among members of the apparel industry and other industries.
- Aa. Fair Factories Clearinghouse
- Bb. Pricewaterhouse Coopers
- Cc. Amnesty International
- Dd. Klynveld Main Goerdeler
- Ee. Transparency International
7620. Zara’s high fashion styles are inspired by customer tastes, with technology used to gather data on preferences at given store locations.
- ATrue
- BFalse
7721. Elaborate customer surveys help Zara designers predict fashion trends months into the future and design products accordingly.
- ATrue
- BFalse
7822. Limited production runs ensure customers do not have to visit Zara’s stores as often as they visit other stores, allowing the firm to save money through staff reductions when compared to peers.
- ATrue
- BFalse
7923. Zara’s IT expenditure, measured by IT workers as a percentage of total employees, is only slightly higher than the industry average.
- ATrue
- BFalse
8024. Zara's use of technology across the value chain allows the firm to manufacture more unique items than rivals H&M and Gap.
- ATrue
- BFalse
8125. Zara encourages employee use of technology by tying employee salaries to sales performance.
- ATrue
- BFalse
8226. Goods to be further customized based on designer/manager collaboration are called greige.
- ATrue
- BFalse
8327. RFID tags allow Zara staff to take in-store inventory less frequently than rivals, saving money on staffing.
- ATrue
- BFalse
8428. An information system consists of hardware, software, data, procedures, and the people who interact with and are impacted by the system.
- ATrue
- BFalse
8529. Personal digital assistants are:
- Aa. transaction processing systems that capture customer purchases.
- Bb. small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to.
- Cc. systems that provide rewards and usage incentives, typically in exchange for a method that provides a more detailed tracking and recording of customer activity.
- Dd. handheld computing devices meant largely for mobile use outside an office setting.
- Ee. artificial intelligence systems that leverage rules or examples to perform a task in a way that mimics applied human expertise.
8630. Zara’s staff members regularly collect data from customers at its stores. This data is used to:
- Aa. decide the designs and styles of Zara’s products for the next few seasons.
- Bb. determine the in-store soundtrack and layout.
- Cc. inform designers on customer preferences and staff on store sales results.
- Dd. determine where future Zara stores should be located.
- Ee. identify the products that customers would like to buy through discounted sales.
8731. _____ are critical for capturing sales data, and are usually linked to systems which manager a firm’s inventory.
- Aa. Point-of-sale systems
- Bb. Legacy systems
- Cc. CRM systems
- Dd. Server farms
- Ee. Data aggregators
8832. Many firms have developed and deployed innovative information systems, only to see these systems go unused by key staff members. How has Zara helped ensure its systems will be used by staff?
- Aa. employees are monitored by in-store cameras
- Bb. employee time on information systems is recorded each time the system is engaged
- Cc. system use drives store success and as much as 70 percent of salaries are tied to sales performance
- Dd. all employees must have a Fair Factories Clearinghouse account, which is used to log and report employee activity
- Ee. systems were designed by employees, who feel a sense of ownership in the technology deployed
8933. Zara’s clothing lines are designed:
- Aa. by star designers like Stella McCartney.
- Bb. in collaboration with celebrities and pop artists.
- Cc. by design school graduates to suit customer demand.
- Dd. by designers who win talent shows sponsored by Zara.
- Ee. mostly by foreign designers in European design hotspots of Paris and Milan.
9034. How does Zara differ from its competitors in converting ideas into products?
- Aa. Zara concepts appear in stores in fifteen days on average compared to rivals who receive new styles once or twice a season.
- Bb. Zara’s ideas are inspired by social media, compared to the intrinsic design processes followed by its competitors.
- Cc. Zara’s design and concept teams use data from customers to predict fashion trends many months into the future and stock up inventory accordingly, as opposed to its rivals.
- Dd. Collaborations with celebrities help Zara churn out a limited, yet profitable, volume of items every year, while rivals produce a higher volume of less fashionable items.
- Ee. By focusing on a smaller number of products than rivals like Gap, Zara manages to limit exposure to wrong guesses.
9135. A value chain is a set of:
- Aa. similarly profitable firms competing against each other in any given industry.
- Bb. large firms that are vertically integrated.
- Cc. activities through which a product or service is created and delivered to customers.
- Dd. a large number of small firms that dominate a given market.
- Ee. robotically controlled conveyor belts that deliver product quickly from manufacturing stations to shipping containers.
9236. Which of the following is not a benefit achieved through Zara’s integration of technology throughout the firm?
- A. limited product runs of many unique products
- Bhigher markdowns
- Cfewer write-offs
- Dless need for advertising
9337. Zara store staff gain as much as three hours in prime selling time to assist customers at stores. Which of Zara’s practices is instrumental in these time savings?
- Aa. Concepts going from ideas to appearances in stores in fifteen days on an average.
- Bb. Three hundred member-strong design teams churning out up to thirty thousand items a year.
- Cc. Distribution centers ironing clothes in advance and packing them on hangers, with security and price tags affixed.
- Dd. Collecting data from customers on what kind of clothes to stock in stores, using PDAs.
- Ee. Tweaking shipping models through Air France–KLM Cargo to coordinate outbound shipments with return legs loaded with raw materials.
9438. Due to limited production runs, Zara’s customers:
- Aa. tend to delay their shopping until the products go on sale.
- Bb. visit the stores more often.
- Cc. buy products at discounted rates after a few weeks.
- Dd. visit stores less often.
- Ee. create a greater opportunity for increased markdowns and write-offs.
9539. According to an independent study, Zara books some 85 percent of its products at full price compared to the industry average markdown ratio of 50 percent. This is made possible by:
- Aa. keeping a major part of the production processes under direct proprietary control.
- Bb. coordinating the outbound shipments of all Inditex brands with return legs loaded with return materials and half-finished items.
- Cc. applying data analytics to purchase trends.
- Dd. the practice of having limited production runs of its designs.
- Ee. leveraging contract manufacturers to produce only staple items with longer shelf-lives, which account for one-eighth of dollar volume.
9640. Zara’s IT expenditure is low by fashion industry standards and is also highly effective. Which of the following makes this possible?
- Aa. Targeting technology investment at points in the value chain where it has the most significant impact.
- Bb. Utilizing the money spent on IT infrastructure to improve the IT skills of its employees through training programs.
- Cc. Using the best and most expensive software and hardware in the market, as it lowers any maintenance costs later.
- Dd. Outsourcing IT management to third-party firms which provide IT services at lower costs.
- Ee. Investing IT funding in improving the infrastructure and cutting down employee overhead costs.
9741. Small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to are called _____.
- Aa. Personal Digital Assistants
- Bb. Smart adaptors
- Cc. Trackbacks
- Dd. Legacy labels
- Ee. RFID tags
9842. High-end fashion house Prada’s experiment of implementing the latest technology in its flagship store failed because:
- Aa. Prada targeted technology investment only at points in its value chain where it would have the most significant impact.
- Bb. Prada managers were enamored with technology and failed to consider implications across all components of the new information systems.
- Cc. the effort was unlike Prada’s signature style, being more functional than fashionable.
- Dd. Prada skimped on spending with its IT expenditure being lesser than one-fourth the fashion industry average.
- Ee. the RFID technology used on items in the store were not state of the art and suffered from legacy system problems.
9943. _____ represents an integrated solution that combines hardware, software, data, procedures, and the people who interact with and are impacted by the system.
- Aa. A neural network
- Bb. Artificial intelligence
- Cc. An information system
- Dd. Supercomputing
- Ee. Cloud computing
10044. ROI is a term used to represent the:
- Aa. return on information
- Bb. rate of information-generated
- Cc. regular order intake
- Dd. return on investment
- Ee. relay-ordered inventory
10145. The e-commerce strategy that blends online and offline sales is called_____________.
- Aa. sales channel
- Bbetterline
- Comnichannel
- Dblended sales
- Eomniline
10246. At Zara, clothes are ironed in advance and packed on hangers, with security and price tags affixed. This system means that employees in Zara stores simply move items from shipping box to store racks, spending most of their time on:
- Aoutsourcing their sales activities.
- Bvalue-added functions like helping customers find what they want.
- Cwrestling with inventory during busy periods.
- Dpacking unsold merchandise that need to be returned to the distribution center.
- Ewhisking items from their stores to the staging areas.
10360. The strengthening of the euro relative to the dollar has insulated Zara against financial vulnerabilities.
- ATrue
- BFalse
10461. Rising fuel costs are likely to make Zara’s model of twice-weekly deliveries more expensive to maintain.
- ATrue
- BFalse
10562. Zara also saves money by simplifying pricing. An item sold in Bangkok is likely to cost the same as a similar item sold in Barcelona.
- ATrue
- BFalse
10663. Zara’s vertically integrated model is easier for rivals to copy compared to Dell’s, as computing is more complex than clothing in terms of number of new models offered.
- ATrue
- BFalse
10764. Factors such as weather, natural disaster, terrorism, labor strife, or political unrest can shut down a firm’s operations. Which of the following is one of the measures taken by firms to hedge such risks?
- Aa. Driving up profitability by increasing prices of market goods
- Bb. Spreading productions facilities across the globe
- Cc. Requesting government intervention in the form of subsidies or nationalization
- Dd. Sourcing raw materials from countries with low labor costs
- Ee. Diverting marketing and advertising budgets to accommodate greater production
10865. Zara is susceptible to any disruption in northern Spain because:
- Aa. it moves all of its deliveries through just two locations, both in Spain.
- Bb. it conducts its trade operations based on the American dollar rather than the stronger euro.
- Cc. most of Zara’s products are sold in markets outside Spain and Europe.
- Dd. Zara’s products are sold at much lower costs around the world than in Spain, and this harms profitability.
- Ee. Zara’s production facilities in Asia and Central America are threatening employment in Spain.
10966. Zara’s production costs could rise at higher rates than its competitors because many of the firm’s costs are tied to the _____.
- Aa. euro
- Bb. dollar
- Cc. yen
- Dd. pound
- Ee. franc
11067. The Zara experience involves a regular supply of new stock on the shelves, because of which customers tend to visit Zara’s stores more often than they visit other retailers’ stores. However, such a policy will become more expensive to maintain if:
- Astar designers demand a higher fee for its designs.
- BPDAs are not used.
- Cfuel costs rise.
- DZara’s horizontal integration fails.
- EZara outsources its production process.
1111. Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-by-mail service in its base-price product.
- ATrue
- BFalse
1122. Netflix’s initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.
- ATrue
- BFalse
1133. Although sometimes referred to as “rental,” Netflix’s model is really a substitute good for conventional use-based media rental.
- ATrue
- BFalse
1144. A major factor in Netflix’s success is competitive advantage.
- ATrue
- BFalse
1155. The business of streaming video is radically different from DVD-by-mail in several key ways, including content costs, content availability, revenue opportunities, rivals and their motivation.
- ATrue
- BFalse
1166. Today the Netflix is so focused on _____________ that it offers its streaming-only subscription as the default option for consumers.
- Aa. special promotions
- Bb. viewer feedback
- Cc. rating content
- Dd. digital distribution
- Ee. none of the above
1177. Which of the following is true of Netflix?
- Aa. It started as two separate services but is now viewed as a single subscription.
- Bb. It began as a DVD subscription model and then simultaneously introduced a video streaming subscription while maintaining the legacy business.
- Cc. It isn’t a substitute good for conventional use-based media rental.
- Dd. It got its start offering a DVD-by-mail service for an annual, per-disc rate subscription fee.
- Ee. It started out as an IPO.
11811. Physical retailers are limited by shelf space and geography (meaning the density of customers around a particular location).
- ATrue
- BFalse
11912. Durable brands are built through customer experience.
- ATrue
- BFalse
12013. Once Netflix became a public company, the firm was required to disclose its financial position and reveal it was on a profit march.
- ATrue
- BFalse
12114. At Netflix, the majority of the DVD titles shipped are from back-catalog titles, not new releases.
- ATrue
- BFalse
12215. Brand and advertising are synonyms for the same concept.
- ATrue
- BFalse
12316. Netflix gets to retain the entire subscription revenue for every disc sent out to a customer.
- ATrue
- BFalse
12417. The Netflix customer experience was always weaker than the in-store experience of DVD rental firms, which had human staff. However, consumers were willing to overlook their dissatisfaction given Netflix’s other benefits.
- ATrue
- BFalse
12518. Cinematch develops a map of user ratings and steers users toward titles preferred by people with tastes that are most like theirs.
- ATrue
- BFalse
12619. The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm’s sized-based advantages.
- ATrue
- BFalse
12720. Firms with high churn rates are likely to be more profitable.
- ATrue
- BFalse
12821. One challenge that Netflix faced was that Blockbuster and Walmart were able to quickly extend their strong brands to also become synonymous with a DVD-by-mail subscription service.
- ATrue
- BFalse
12922. Within the DVD-by-mail segment, Netflix remained bigger than both Wal-Mart and Blockbuster.
- ATrue
- BFalse
13023. The yearly cost to run a Netflix-comparable nationwide delivery infrastructure is about $300 million.
- ATrue
- BFalse
13124. Collaborative filtering is a technology that allows customers to meet and select titles for viewing parties.
- ATrue
- BFalse
13225. While it may be possible for rivals to match technology, the true exploitable resource created and leveraged through collaborative filtering technology is the data asset.
- ATrue
- BFalse
13326. Netflix offered its subscribers a selection of over one hundred thousand DVD-by-mail titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals.
- Aa. marginal cost
- Bb. price advantage
- Cc. variable cost
- Dd. studio preference
- Ee. scale advantage
13427. By going public, Netflix encountered competition from the large, established firms Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms into the market?
- Aa. By going public, Netflix was required to disclose its financial position.
- Bb. By going public, Netflix was forced to reveal the Cinematch algorithm used to classify user ratings.
- Cc. Netflix’s model of flat-rate monthly subscriptions was found to be more profitable than a per-disc rental fee model.
- Dd. Netflix’s plan to enter the online movie streaming market alerted rivals to the possibility of losing their market share.
- Ee. The migration of Netflix services to cover the Blu-ray disc market opened up opportunities for rivals.
13528. Which of the following represents an advantage enjoyed by the Netflix DVD-by-mail business over traditional video stores?
- Aa. Lower technology overhead
- Bb. Lower shipping expenses
- Cc. Larger entertainment selection
- Dd. Higher energy costs
- Ee. Higher churn rates
13629. For traditional retailers selling physical goods, _____ is the biggest constraint limiting a firm’s ability to offer customers what they want and when they want it.
- Aa. shelf space
- Bb. video piracy
- Cc. shipping costs
- Dd. distribution rights
- Ee. disintermediation
13730. Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____.
- Aa. churn-prone
- Bb. asymptotic
- Cc. capitalized
- Dd. vertically integrated
- Ee. scalable
13831. The long tail is a phenomenon whereby firms can make money by:
- Aa. selling the same product at different prices with only minor tweaks in their design.
- Bb. leveraging customers to promote their products or services.
- Cc. reselling multiple versions of a single product under different brand names.
- Dd. offering a selection of products or services vastly greater than conventional retailers.
- Ee. sell the same product to virtually every customer the Internet can reach.
13932. While the size of the tail in the long tail phenomenon is disputable, one fact that is critical to remain above this debate is that:
- Aa. traditional brick and mortar retailers offer selections that cannot be rivaled by Internet pure-plays.
- Bb. energy costs and worker wages drive up the costs of running stores like Netflix.
- Cc. selection attracts customers, and the Internet allows large-selection inventory efficiencies that offline firms can’t match.
- Dd. the turnover rate of obscure titles in traditional video rental stores is only slightly higher than those for Internet pure-plays.
- Ee. the cost of store maintenance and real estate makes stores such as Netflix unattractive.
14033. Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm’s long-tail offerings?
- Aa. Discounted fees for marketing some of the less-popular titles from the studios
- Bb. A cut of the subscription revenue from every disk sent out by Netflix
- Cc. Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart
- Dd. Lower costs related to screening movies in cinemas by releasing them straight on DVD
- Ee. An equal share of revenue from the digital distribution model through online streaming
14134. In exchange for a percentage of the DVD-by-mail subscription revenue for every disk sent out by Netflix, movie studios offer Netflix:
- Aa. online streaming rights free of cost.
- Bb. higher fees for marketing less-popular movies.
- Cc. DVD titles at a discounted or wholesale price.
- Dd. distribution rights to certain movies free of cost.
- Ee. strong bargaining power in negotiations for digital distribution rights.
14235. Brands are built through _____.
- Aa. customer awareness
- Bb. data assets
- Cc. excessive advertising
- Dd. customer profiling
- Ee. customer experience
14336. Collaborative filtering is a classification of software that:
- Aa. is used to gather user ratings and calculate a gross average user rating for each movie.
- Bb. provides Netflix users with parental controls and other options while streaming movies online.
- Cc. selectively sorts movies based on their censor ratings and delivers age-appropriate search results.
- Dd. monitors trends among customers to personalize an individual customer’s experience.
- Ee. collates user ratings for a movie and creates a ranked list of movies most liked by users.
14437. How does the Cinematch recommendation system work?
- Aa. Cinematch develops a map of user ratings and steers users toward titles preferred by people with similar tastes.
- Bb. Cinematch gathers user ratings to calculate a gross average user rating which is continually updated with each subsequent user rating.
- Cc. Cinematch requests users to create profiles detailing their interests and preferences and serves recommendations accordingly.
- Dd. Cinematch uses a team of professional movie critics to create a comprehensive ranking system for each movie in its inventory.
- Ee. Cinematch ranks movies in two separate lists based on their critical and box office ratings, and subsequently alters user preferences.
14538. Even if Netflix gave Cinematch away to its rivals, they would still not be able to make the same kind of accurate recommendations as Netflix. This is because of Netflix’s _____.
- Aa. technological superiority
- Bb. customer loyalty
- Cc. movie expertise
- Dd. data advantage
- Ee. large inventory
14639. User ratings act as _____ for Netflix’s customers.
- Aa. marginal costs
- Bb. fixed costs
- Cc. switching costs
- Dd. variable costs
- Ee. barriers to entry
14740. Churn rate is a term that refers to the:
- Aa. average number of recommended titles in a user’s queue.
- Bb. rate at which the demand for a product or service fluctuates with price change.
- Cc. number of movie titles that are difficult to assign reliable user ratings.
- Dd. rate at which customers leave a product or service.
- Ee. number of new users that each existing user attracts through word-of-mouth and social sharing.
14841. A low _____ is usually key to a firm’s profitability because acquiring a customer is more expensive than keeping one.
- Aa. subscription fee
- Bb. inventory size
- Cc. churn rate
- Dd. switching cost
- Ee. opportunity cost
14942. How does Cinematch offer Netflix additional operational advantages for the DVD-by-mail business?
- Aa. Cinematch offers alternate recommendations of movies based on critical acclaim and box office performance parameters.
- Bb. Cinematch is linked to warehouses and recommends movies that are likely to be in stock.
- Cc. Cinematch is often used by movie studios to plan movie scripts based on user preferences.
- Dd. Cinematch is a source of additional revenue to Netflix as a marketing tool for recommending newly-released movies.
- Ee. Netflix leases the Cinematch collaborative filtering software to smaller firms at a fee, withholding the valuable user ratings.
15043. When firms enjoy economies of scale they:
- Aa. have a greater share of liquid assets than rivals.
- Bb. have bigger production facilities than their competitors.
- Cc. have a wider employee base than their competitors.
- Dd. leverage the cost of an investment across increasing units of production.
- Ee. leverage investment costs to decrease their subscriber acquisition costs.
15144. Netflix enjoys the triple scale advantage of the largest customer base, the largest selection, and the largest network of distribution centers. This can be attributed to:
- Aa. Netflix’s specialized focus on advertising and marketing.
- Bb. Netflix’s first-mover advantage.
- Cc. Netflix going public to generate funds for expansion.
- Dd. Netflix’s effective and aggressive pricing strategy.
- Ee. the bargaining clout it exercises over movie studios and the government.
15256. By shifting to a streaming model, Netflix stands to eliminate shipping and handling costs.
- ATrue
- BFalse
15357. The shift from atoms to bits is realigning nearly every media industry.
- ATrue
- BFalse
15458. At Netflix, the marginal cost for digital goods is zero for all licensees.
- ATrue
- BFalse
15559. Fixed costs vary according to production volume.
- ATrue
- BFalse
15660. Netflix uses data to create tailored audience promotions.
- ATrue
- BFalse
15761. Netflix competitors in streaming are small and mostly unprofitable.
- ATrue
- BFalse
15862. The Netflix work culture is in many ways similar to its peers.
- ATrue
- BFalse
15963. The shift from atoms to bits does not stand to impact content creators, middlemen, and retailers.
- ATrue
- BFalse
16064. If fast-lane access or bandwidth caps become commonplace, Netflix could suffer.
- ATrue
- BFalse
16165. One of the benefits of Netflix moving internationally is that any title licensed from the United States also comes with the right to stream the title worldwide, regardless of customer geography.
- ATrue
- BFalse
16266. Original content is an investment in allowing a firm to provide differentiated goods, a way to entice and retain customers with exclusive programming not available anywhere else.
- ATrue
- BFalse
16367. Ownership of digital assets isn’t always as it appears to consumers. Many Netflix original series like “House of Cards” are actually not own by Netflix, and other firms can license these titles, while Netflix may need to acquire additional rights to stream these titles overseas.
- ATrue
- BFalse
16468. Netflix’s decision to unbundle the single fee for its $10 base service into two separate $8 plans for DVD-by-mail and streaming over the Internet proved to be a welcome surprise to most customers.
- ATrue
- BFalse
16569. Netflix is now crunching and comparing user preferences across 75 nations, worldwide - a level of profile detail and user preferences that no one can come close to matching.
- ATrue
- BFalse
16670. Crowdsourcing is:
- Aa. a phenomenon whereby firms can make money by offering a near-limitless selection.
- Bb. the act of taking a job traditionally performed by a designated agent and contracting it out to an undefined generally large group of people in the form of an open call.
- Cc. a classification of software that monitors trends among customers and uses this data to personalize an individual customer’s experience.
- Dd. the removal of an organization from a firm’s distribution channel.
- Ee. an industry practice whereby content is available to a given distribution channel for a specified time period or ‘window,’ usually under a different revenue model.
16771. Choose the correct answer: Why is the “First-Sale Doctrine,” including understanding when it does and doesn’t apply, relevant to Netflix?
- AIt means content acquisition costs for DVDs are more predictable than streaming costs.
- BIt means that content acquisition costs for streaming are more predictable than DVDs.
- CIn cases of streaming media, it facilitates a shift of bargaining power to content suppliers.
- DIn cases of streaming media, it facilitates a shift of bargaining power to firms paying to license content from suppliers.
- ENone of the above.
- Fa & d
- Gb & c
- Ha & c
- Ib & d
16872. A manager’s decision-making is often shaped by its perception of the competition. Which of the following does Netflix see as being in competition with the firm?
- Aa. Video games
- Bb. Magazines
- Cc. DVD watching
- Dd. Amazon Prime
- Ee. All of the above
16973. How is scale important to Netflix streaming business?
- Aa. A larger firm with more customers can spend more on content licenses
- Bb. The firm can build larger data centers as it competes with the likes of Amazon Prime
- Cc. Netflix can continue to expand its network of nationwide distribution centers to overseas locations
- Dd. It will allow the firm to improve the marginal cost of its titles, which will also improve profitability
- Ee. All of the above
17074. Which of the following is true of Netflix streaming?
- Aa. Its content acquisition cost is fixed.
- Bb. Its competitors have been mostly vanquished.
- Cc. It has little appeal for new entrants.
- Dd. Content providers enjoy greater bargaining power as the sole source for unique titles unavailable from any other source.
- Ee. It provides very little opportunity for innovation.
- Ff. None of the above
17175. Costs that do not vary according to production volume are called _____.
- Aa. total costs
- Bb. marginal costs
- Cc. switching costs
- Dd. variable costs
- Ee. fixed costs
17276. Marginal costs:
- Aa. are minor, insignificant costs.
- Bb. are associated with each additional unit produced.
- Cc. are the costs incurred as a result of choosing one option over another.
- Dd. are constant and do not vary according to production volume.
- Ee. are also known as overhead.
17377. Netflix can send out any DVD it buys because of a Supreme Court ruling known as the _____.
- Aa. clickwrap agreement
- Bb. Betamax ruling
- Cc. fair use law
- Dd. First Sale Doctrine
- Ee. Copyright Directive
17478. The practice of windowing involves:
- Aa. making content available to a distribution channel for a specified time period under a different revenue model.
- Bb. scheduling movies to be streamed online at primetime periods to pull in more revenue from advertising.
- Cc. relaying advertisements for limited time periods during online movie steaming, as opposed to frequent ad breaks.
- Dd. displaying content in apps and browser windows.
- Ee. streaming movies to customers’ computers beforehand and then relaying them on television.
17579. Which of the following is true about the Netflix streaming business?
- Aa. Its marginal cost for title acquisition is zero as it is currently focusing on distributing digital content.
- Bb. It has the support of major studios such as Fox and Warner that have allowed it to stream any content the firm buys on DVD.
- Cc. Its cost of acquiring streaming content has fallen in the recent past due to its long tail advantages.
- Dd. It has attempted to counter rivals with exclusive content by securing exclusive streaming rights for several popular shows.
- Ee. From the beginning it has experimented with various streaming revenue models, including pay-per-view, download-to-own, and ad-supported content.
17680. An internal team at Netflix developed a prototype set-top box to enable the direct streaming of content to customers’ television sets. However, the idea of offering it to Netflix customers was dropped because:
- Aa. the market for online streaming was nascent and unprofitable.
- Bb. all major US cable firms built Netflix streaming into their set-top boxes.
- Cc. the Blu-ray standard requires streaming features, as well.
- Dd. of the brutally competitive nature of the consumer electronics business.
- Ee. the entire software team was recruited by TiVo after LinkedIn made it easy to target and poach rival talent.
17781. Some 75 to 80 percent of what people watch on the service comes from Netflix _________.
- Aa. searches
- Bb. original content
- Cc. DVD viewer suggestions
- Dd. recommendations
- Ee. all of the above
17882. What solution has Netflix come up with to address the need to deliver content to customers’ televisions?
- Aa. Netflix has entered into a revenue sharing agreement with Apple to produce customized set-top boxes.
- Bb. Netflix makes custom chips for television makers so they can offer Netflix in a way that replicates Google Chromecast and Amazon Fire TV.
- Cc. Netflix launched a self-branded hardware division to build and market its own set-top boxes.
- Dd. Netflix has acquired Vudu, a firm that specializes in the online streaming business.
- Ee. Netflix provides tools to firms seeking to build Netflix access into their devices.
17983. _____ refers to removing an organization from a firm’s distribution channel.
- Aa. Disbarment
- Bb. Repudiation
- Cc. Annulment
- Dd. Disintermediation
- Ee. Revocation
1801. Initially, Amazon adopted the domain of a non-profit organization.
- ATrue
- BFalse
1812. Amazon went seven whole years without turning a profit.
- ATrue
- BFalse
1823. Amazon’s success strategy is based on the focus on its quarterly results.
- ATrue
- BFalse
1834. Amazon Prime Air is the name of Jeff Bezos’s commercial rocketry and aviation firm.
- ATrue
- BFalse
1845. Amazon became the fastest firm in history to reach $100 billion in sales.
- ATrue
- BFalse
1856. Tech-fueled operations cannot yield greater profits than off-line players.
- ATrue
- BFalse
1867. Many pundits assumed Amazon would fail. Why?
- Aa. the firm was losing money and competing against established, well known, offline brands who were going online.
- Bb. Amazon was too short-term focused.
- Cc. the firm was based in Seattle, rather than Silicon Valley.
- Dd. Amazon sales were not increasing.
- Ee. all of the above.
1878. Which of the following strategies was followed by Amazon’s founder?
- Aa. He focused more on Amazon’s quarterly results.
- Bb. He postponed profit harvesting.
- Cc. He reduced warehousing capacity.
- Dd. He consciously ignored cloud computing platforms.
- Ee. He built e-commerce operations only for Amazon’s customers in the United States.
1889. Which of the following is true of Amazon?
- Aa. Amazon made profits from the first year of its operation.
- Bb. It has limited its products to only electronic devices.
- Cc. Its cloud computing business is one of the largest players in that category.
- Dd. Its profitability has remained constant over the years and analysts continue to predict profits for the firm’s future.
- Ee. Amazon concentrates more on its quarterly results and is inflexible on details about its vision.
18910. Which of the following is not a firm that has received an investment from Jeff Bezos?
- AUber
- BTwitter
- CBlueOrigin
- DThe Washington Post
- EBezos has invested in all of the above businesses.
19011. The three pillars of Amazon’s business are large selection, convenience, and lower prices.
- ATrue
- BFalse
19112. Amazon got its start selling games online.
- ATrue
- BFalse
19213. Amazon does not open its website up to third-party sellers.
- ATrue
- BFalse
19314. In order to automate profit-pushing hyper-efficiency, Amazon warehouses are powered by at least as much code as the firm’s website.
- ATrue
- BFalse
19415. The use of Kiva robots has also allowed Amazon to radically reduce headcount, saving the firm additional money by cutting its workforce.
- ATrue
- BFalse
19516. In a set of steps called SLAM (scan, label, apply, manifest), and taking only about 2 minutes, packed boxes are weighed, and the software does an additional check to see if the weight is what’s expected.
- ATrue
- BFalse
19617. Accounts payable periods do not vary.
- ATrue
- BFalse
19718. Amazon owns the inventory that third-party sellers provide via the ‘Fulfillment by Amazon’ service.
- ATrue
- BFalse
19819. Amazon shelves are specifically stocked so that similar items are not placed next to each other.
- ATrue
- BFalse
19920. One of the reasons Amazon has struggled to achieve profitability is because the firm has a negative cash conversion cycle.
- ATrue
- BFalse
20021. While so many managers focus on what’s changing in tech-fueled industries, Bezos feels that building strategy based on factors that are NOT going to change is critically important.
- ATrue
- BFalse
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- Business/Economics Quiz on exam 2 part 1, created by Vladislav Tokhtaev on 18/10/2021.
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