Exam 1

Time: total 2 hours March 5 from 10 am to 12 noon (GMT-5), with part 1 from 10 to 10:15 and Part 2 from 10:30 to 12 PM.

The format of the practice problem is similar to that of part 1. It includes multiple choice, true/false, and matching questions.

Time is limited. You will be given 15 minutes to answer the 15 questions. The questions are random and asked in order, meaning that once you’ve answered one question and moved on to the next, there’s no going back. Therefore, you need to manage your time carefully.

These two short answer questions are from past exams. Fyi, not the topic of March 5th. The number of short answer questions is usually 4-5, depending on the specific test situation

Multiple choice:

1.Which of the following does not represent one of the sources of cost advantage that is independent of scale emphasized in the textbook?

a.Learning-curve cost advantages

b.Costly-to-imitate resources

c.Managerial know-how

d.Favorable access to raw materials

e.Proprietary technology

2.True or false? The only type of economies of scope that can be realized by shareholders on their own are risk reduction economies of scope

3.True or false? One implication of the RBV is that competitive advantage in a firm is every employee’s responsibility

4.Which of the following is least likely to implemented if you were thinking about organizing to realize the full potential of a low-cost strategy?

a.A policy of experimentation

b.Small corporate staff

c.Few layers of reporting structure

d.Tight cost control systems

e.Rewards for cost reduction

5.Something that firms must be able to do well to avoid being “stuck in the middle” between a cost-based and a differentiation-based strategy is:

a.Search for Blue Oceans

b.Manage organizational contradictions

c.Add to its product features or product mix

d.Avoid diseconomies of scale

e.Implement a tight cost-control system

6.If you think about industry structure, which of the following is suggested to be the environmental opportunity of choice in a fragmented industry?

a.Process innovation

b.Product refinement



e.First-mover advantage

7.True or False? The term ‘Economies of Scale’ refers to the observation that a firm’s costs will always fall as its volume of production increases.

8.If you think about VRIO analysis and imitation, the textbook suggests all the following are sources of costly imitation except:

a.Social complexity


c.Valuable resources

d.Unique historical conditions

e.Causal ambiguity

9.Identify the best possible matches from among the following:

RBV assumptions Choose…?

Enhanced perception of value Choose…?

Mission Choose…?

Competitive advantage Choose…?

a Resource heterogeneity

b Long-term

c Economic value creation

d Complementors,

10. Some sources of cost advantage are easier to duplicate than others. From among the following, which is most likely to be costly to duplicate?

a.Economies of scale

b.Learning-curve economics

c.Policy choices

d.Technological software

e.Technological hardware

11. Which of the following can generally not be said about a firm’s strategy?

a.Following the ‘strategic management process’ can increase the firm’s chances of choosing a good strategy

b.It is a theory about how to gain competitive advantage

c.It is likely based, in part, on a set of assumptions

d.It represents the firm’s ‘best bet’ about how its industry will evolve

e.It is inevitably based more on external analysis than internal analysis

12. Which of the following does not represent one of the environmental threats mentioned in the textbook that might reduce the profits a firm is able to generate (You might also think Porter’s 5-forces)?

a.Competition among existing companies

b.Barriers to entry

c.Low-cost substitute products

d.Buyers and their influence

e.Suppliers and their influence

13. True or false? The threat of direct competition tends to increase as industry growth quickens

14. Which of the following is not captured in the S-C-P model?

a.The strategies that firms in an industry implement

b.The performance of the economy

c.Industry structure

d.Organizational structure

e.The performance of individual firms

15. Which of the following is not a type of economies of scope?

a.Shared activities as an economy of scope

b.Corporate competencies as an economy of scope

c.Risk reduction economies of scope

d.Multipoint competition as an economy of scope

e.Production volume economies of scope

16. As they pertain to business and corporate-level strategy, identify the best possible matches from among the following:

Cost leadership choose?

Differentiation choose?

Diversification choose?

Vertical integration choose?

A Learning-curve economies

B Product attributes

C.Reduced opportunism

D Economic of scope

Answer 4

Sample short-answer question #1

McDonald’s used to rely on food suppliers for raw materials of its best-selling items, like Burgers, French Fries, Ice cream. As the number of McDonald restaurants keeps on rising, McDonald’s has switched to raise its own agricultural products in order to maintain the quality and ensure the same products are being offered to its customers across the globe. These owned farms help McDonald’s achieve a globally successful food chain but also deliver value to its loyal customers. Compare the pros and cons of vertical integration for McDonald’s with respect to setting up its own farms.

Sample short-answer question #2

4. In 2014, Google launched its first wearable smartphone-like, hands-free format headset device” Google Glass”. Shortly after its release, the product received a great deal of criticism, including privacy and safety concerns, and a high price tag of $1,500. Within less than one year, Google announced it would stop producing the product indefinitely. Using the case of Google Glass, describe some of the risks associated with product differentiation.


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