2. Decrease in the per unit cost with an increase in the number of units produced is known as

a) specialization

b) production advantage

c) economies of scale

d) economies of scope

3.If an industry earns a return on capital in excess of its cost of capital:

a) Incumbents will earn abnormal profit, and build entry barriers

b) The government will intervene to make sure that competition increases

c) It will attract firms outside the industry, but the incumbents will have erected entry barriers

d) It is likely to attract the attention of firms looking to enter the industry, which may eventually lead to the return on capital falling

4. In the game-theoretic framework seen in the Airbus-Boeing case, what was the Nash equilibrium concerning whether to build the VLCT?

a) Airbus and Boeing both build the VLCT

b) Airbus builds the VLCT, and Boeing does not

c) Boeing builds the VLCT, and Airbus does not

d) Neither Boeing nor Airbus build the VLCT

5. When suppliers are large and few their bargaining power is

a) high

b) low

c) nonexistent

d) irrelevant

6. Walmart decided to enter groceries in spite of these having lower profit margins because:

a) their cost leadership strategy enabled them to sell groceries more efficiently than supermarket chains

b) they sought to grow larger at the expense of competitors

c) they were looking to leverage economies of scope

d) none of the above

7. XYZ Company operates on a remote interstate highway. It provides premium services to truckers en route to remote locations. It has numerous competitors that offer lower prices, but it meets the demands of discerning clients with its high-quality services. Therefore, XYZ Company can be characterized as a firm with a

a) narrow market appeal to a price-sensitive niche that demands quality, service, and value

b) value proposition based on differentiation and a niche clientele that is willing to pay for added value

c) broadly targeted scope and price points aimed for the masses

d) niche clientele and business model that meets the needs of truckers in general

8. The Cola Wars between Coke and Pepsi were fought predominantly by:

a) both firms aggressively leveraging economies of scale to cut the cost to pursue greater margins

b) the systematic elimination of smaller competitors to turn the market into an oligopoly

c) securing as many exclusive contracts with local bottlers as possible

d) competing marketing and advertising campaigns

9. Zara's response to very fast-changing fashion demands was:

a) to fight on price by cutting costs to the absolute minimum

b) to have thousands of products in stock at all times

c) to cut the product launch cycle from concept to store to three weeks

d) to hire the best designers and decide new fashions in advance

10. Which of the following is NOT part of Netflix's business model?

a) Hop on technology curve early

b) Internet payment

c) Bring into the long tail

d) Focus on new releases

11. Under what conditions is industry analysis NOT as powerful?

a) in times of stagnation

b) in fast-changing industries

c) in mature industries

d) none of the above

12. Which strategy does Airbnb follow?

a) IP strategy

b) Architectural strategy

c) Value chain strategy

d) Disruption strategy

13. Which of the following is least likely to be an effective isolating mechanism to sustain competitive advantage?

a) Learning and experience

b) Path dependence

c) Causal ambiguity

d) Social complexity

14. Cost leadership means a firm must:

a) exploit all sources of cost advantage before tailoring the product to each customer

b) exploit all sources of cost advantage in providing customers with a standardized product

c) exploit all sources of cost advantage in providing each customer with their minimum requirements

d) exploit all sources of cost advantage while providing every customer an individual service

15. Suppose A is the only aircraft manufacturer in the aviation industry. How much should A charge for its aircraft to maximize its profits?

a) Equal to cost

b) A little bit higher than willing-to-pay

c) A little bit lower than willing-to-pay

d) Equal to willing-to-pay

16. Which of the following statements about strategic activity system is least likely to be true:

a) Strategic activity system can produce an interlocking system that is difficult to imitate.

b) Sustainability of advantage is determined by fit between individual activities.

c) Complementarity between activities means more effort towards one activity leads to less effort in the other activity

d) Competitive advantage rests on all rather than one particular activity choice.

17. In which of the following scenarios, competitive dynamics is most likely to influence performance?

a) Many players in the industry

b) Infinite number of players in the industry

c) One player in the industry

d) Two dominant players in the industry

18. What type of strategy does Wal-Mart pursue in the brick-and-mortar retailing business?

a) diversification

b) cost leadership

c) differentiation

d) corporate-level strategy

19. Which of the following arguments is most likely to hold?

a) Coming up with good ideas is of primary importance in entrepreneurship.

b) Value creation is more important than value capture in entrepreneurial strategy.

c) Entrepreneurs should pursue multiple potential strategies at the same time to increase the odds of success.

d) The specific value enabled by a given strategy, as well as the range of possible values, is uncertain ex ante.

20. Which of the following statements about architectural strategy is NOT true?

a) Value creation depends on coordinating and integrating entire value chain.

b) Firms should invest in control over the platform.

c) When growing an existing platform, the firm can add any two sides onto the platform as long as there is a market between them.

d) Firms could leverage technology to shape the ecosystem.