1. Please consider the case by the U.S. Airline Industry.

Right after the

deregulation, the industry
a. Became more profitable due to more likely competition based on
differentiation
b. Incumbents struggled to capture value, although their factor load for passenger
was increasing and the unit cost for passenger was decreasing
c. Became more profitable due to more likely competition based on prices
d. Incumbents struggled to capture value, although their factor load for passenger
was decreasing and the unit cost for passenger was increasing
2. Which of the following statements is FALSE?
a. Value created = consumer surplus (B) + value captured by the firm (P)
b. Value created = B – C
c. If B > C entrepreneurs can strike Win-Win Deals with input suppliers and
customers
d. Firm’s profit = B – P
B is willingness to pay and C is cost
3. Harley Davidson is offering mainly
a. An experience product namely what it is offering is not only motorcycles,but a
lifestyle
b. An experience product namely what it is offering is the best performing
motorcycles in the industry
c. A search product namely what it is not only motorcycle but a lifestyle
d. An experience product namely what it is offering is the best performing
motorcycle in the industry
an experience product, namely what is supplying is not only motorcycles, but a
lifestyle.
4. According to Porter, cost leadership and differentiation are:
a. What leads a firm to be stuck in the middle
b. Two names for the same fundamental strategy
c. Distinct generic strategies
d. Strategies that can be pursued simultaneously
5. “When segmenting according to the characteristics of the buyers, the 4 main
segmentation variables that can be used are”
a. Industrial buyers, household buyers, price, geographical location
b. Industrial buyers, household buyers, price, size
c. Price, product features, geographical location, size
d. Industrial buyers, household buyers, distribution channel, geographical
location
6. The difference between barriers to entry and barriers to mobility is
a. Barriers to entry target more specifically the entry by aggressive would-be
incumbents
b. They are the same
c. Barriers to mobility protect a dynamic industry while barriers to entry protect
a static industry
d. Barriers to entry protect the industry as a whole whereas barriers to mobility
protect segments within the industry
7. Economies of learning increase
a. When the turnover rate is high
b. With the degree of specialisation of employees
c. When employees hold a university degree
d. All of the previous answers are correct
8. Which of the following statements about Harley Davidson’s success between
1990 and 2008 is correct?
a. HD’s growth during these years can be explained by its focus on
diversification
b. HD was the largest firm in the industry during these years allowing HD to
charge a higher price.
c. HD’s growth during these years can be explained by its focus on cost
leadership
d. HD managed to differentiate by a consistent set of relevant capabilities
9. A firm with a product specialization focus:
a. Offers a large variety of product to a limited set of customers
b. Seeks to serve all customer groups in the market with a portfolio of products
c. offers a limited set of products to an array of different customers.
d. Focuses on offering high-quality products
10. In the sectoral analysis of the US Airline industry
a. The costs components cover the highest importance even if thanks to hedging
the cost of fuel is not relevant
b. The cost components cover the highest importance especially the fixed costs
such as the fuel, labor, and transport-related costs.
c. The cost components cover the highest importance, especially the
d. All previous answers are false
11. In the Airline case, we discussed that industry rivalry in the airline industry is
high because:
a. There is a low number of airlines
b. There is a high level of differentiation
c. Firms have excess capacity
d. There are low exit barriers
12. If you are told that over the last 3-5 years firms of a generic industry X are
recording a decreasing Capital Turnover and an increasing Return on Sale
a. You can argue that there is a value creation problem for customers
b. You can argue that there is a value capture problem for the firm (most likely)
c. You can argue that B – C < 0
d. You can argue that (P – C) + (B – P) < 0
13. After the deregulation, new firms entered the US Airlines industry and therefore
a. The Herfindhal index of the industry increased
b. The industry became more concentrated
c. The industry became more fragmented
d. The concentration rate of the industry increased
14. If an employee would spin-off from Arrogant Bastard, what is the sole strategy
for Arrogant bastard?
a. Fat cat
b. Lean Hungry
c. Puppy dog
d. None of the strategies mentioned fits with the contingency described and
discussed by the case.
15. The car manufacturer Motor tries to reduce its costs for inputs to establish a cost
advantage over firm Race. Which of the following strategies will not support
Motor’s goal?
a. Increase bargaining power relative to suppliers.
b. Open a new plant in country with strong labor unions
c. Backward integrate
d. Standardize required inputs
16. A change in the external environment creates competitive advantage
a. Either because some firms by responding more effectively than others to the
firm or because the change differential effects upon competing firms
b. Because exogenous shocks create profitable discontinuities
c. All statements are true
d. All statements are false
17. Competitive advantage can emerge from:
a. The firm’s fit with the external environment
b. The firm’s ability to incrementally innovate
c. The firm’s fit with the external environment and the firm’s ability to innovate
d. The firm’s ability to use aggressive pricing
18. Which of the following statements about routines and processes is incorrect?
a. Routines are regular and repetitive patterns of activity
b. Routines and processes integrate individual actions to create organizational
capabilities
c. Processes are an uncoordinated sequences of actions
d. A regularly repeated process can transform into a routine.
19. Competitive advantage is always revealed
a. By a firm earning higher profit than its rivals
b. A firm earning higher economic and Ricardian rent than its rivals
c. All statements are true
d. All statements are false
20. Ikea and Southwest Airlines are example of firms that show
a. Success in independent of a firm’s production costs
b. Firms operating in an unattractive industry cannot make profits
c. New entrants are always more successful than established firms
d. A low-price strategy can be combined with elements of product differentiation
21. A Blue ocean strategy refers to...
a. The creation of entirely new industries, or the recreation of existing industries
b. The creation of new strategic trajectories
c. All statements are true
d. All statements are false

22. Consider there are two firms (firm X and Y) in the e-commerce industry. Both
has same price and equivalent products (generated same willingness to pay), but
firm X has an average cost of 40 / unit while firm Y of 30 / unit.
a. If firm X is able to reduce average by 10 / unit it would create same Economic
value than firm Y
b. Marketing investments in brand equity would reinforce reliability, very
relevant factor of differentiation in this specific industry
c. One of them could generate more economic value adoption a successful
differentiation strategy
d. All of the statements are correct

23. The company luxury is in the air and luxury is in the rent is focused on car rental
services for only very wealthy individuals whose income ranges from 500,000.000
Euros. This might be an example of:
client specialization

24. Economies of scale:

a. Are beneficial to establish a cost advantage and favor a high concentration in
an industry
b. Are beneficial to establish a cost advantage and favor a low concentration in
an industry
c. Are beneficial to establish a differentiation advantage and favor a high
Herfindahl – Index in an industry
d. Imply learning by- doing
25. If the upstream industry of a focal firm is fragmented:
a. Suppliers are likely to have a higher bargaining powe
b. Suppliers are likely to have a lower bargaining power
c. Suppliers do not exist
d. Exogenous barriers to enter are likely to be lower
26. Which of the following statements is incorrect?
a. To establish a cost advantage a firm can improve managerial effectiveness
b. To establish a cost advantage a firm can decrease organizational slack
c. To establish a cost advantage a firm can engage in process innovation
d. To establish a cost advantage a firm can decrease standardization of product
components
27. Which of the following statements about Henry Ford’s strategies to cut costs for
his Model T is correct?
a. Ford tried to leverage economies of segmentation
b. Ford increased the number of components for the Model T
c. Ford improved the production technique used
d. Ford decreased the degree of capacity utilization
28. Technology, globalization & changes in demographics are producing rapid
changes in the external environment. Which of the following provide a more
secure basis for strategy formulation in a fast changing external environment?
a. Industry attractiveness is the primary source of superior profitability
b. Resources & capabilities is the basis for achieving superior profitability
c. Seeking shelter from the storm of competition is the primary goal of strategy
d. None of the above are correct
29. A high appropriability means
a. that firms can use a resource for a strategic purpose
b. that a resource allows firms to keep some of the generated value as a producer
surplus
c. that a firm has resources and capabilities that have a high degree of fit
d. that a resource is easy to imitate
30. Harley creates its competitive advantage
a. By exploiting cost advantage in tangible differentiation strategy
b. By exploiting exclusively tangible differentiation strategy
c. By exploiting social and psychological factors in intangible differentiation in a
successful way
d. By exploiting cost advantage in intangible differentiation strategy
31. Harley Davidson adopts
a. A broad strategy, it concentrates on large segment
b. A focused strategy, it concentrates on a narrow segment
c. A geographical specialized strategy
d. Cost leadership strategy
32. Cost advantage should be pursued when:
a. Consumers preferences are changing
b. Consumers are not willing to pay a price premium for benefit enhancement
c. The product is an experienced good
d. The product targets a niche segment
33. The following performance measures are all backward-looking with the
exception of one, which is
a. Return on capital employed (ROCE)
b. Return on equity (ROE)
c. Stock market value
d. Net margin
34. A company’s brand is a resource that is often hard to imitate because
a. Is often protected by a patent
b. It is often historically grown
c. Protected by long-term contracts
d. All of the previous answers are correct

35. A company’s production processes are often hard to imitate because

a. They are protected by economies of scale
b. They are protected by trademarks
c. There is a high level of causal ambiguity for processes
d. All of the previous answers are correct
36. Causal ambiguity allows a firm's competitive advantage to be sustained because
potential rivals are:
a. Deterred from directly competing with the advantaged firm
b. Unable to identify the sources of the advantaged firm’s superior performance
c. Unable to acquire the resources needed to compete against the advantaged
firm
d. All statements are true
37. Considering the case of Southwest; when considering the attractiveness of its
segment (direct flight for people living in secondary cities of US) based on
Porter’s 5 forces, which of the following sentences is correct:
a. Southwest had less rivalry threat than operating form large hubs, reducing the
risk of a price war with Legacy Airlines
b. Southwest had more bargain power against suppliers on those secondary
airports
c. Car travelling might be a substitute force for certain extents, but its low cost
model helped to fight for this threat
d. All of the statements are correct
38. Experience goods are those which:
a. Have performance attributes that are difficult to ascertain at the moment of
purchase
b. Only customers with previous experience of using these goods would
rationally consider purchasing
c. Only firms with wide experience in an industry would rationally consider
making
d. Have been produced by the firm furthest down the learning curve.
39. Which of the following is not an isolating mechanism?
a. Private ownership of a company which means that it is not obliged to publish
its financial statements
b. Competitive advantage which is based upon the interaction of a number of
different resources and capabilities
c. Competitive advantage based upon exploiting pricing abnormalities
d. Competitive advantage that is based upon resources that are difficult to
transfer and slow to replicate.
40. Net Margin is a performance indicator that measures net income over sales:
a. Is useful for the strategist to compare the performance of firms in different
industries
b. Is a long-term indicator as we can see the evolution of firm performance over
time
c. Is useful for the strategist to compare the performance of firms within the
same industry
d. It is not an indicator of performance
41. Volkswagen Group and Toyota are among the biggest car manufacturers in the
world. They are similar in terms of size or manufacturing techniques, similar
product portfolio and geographic scope. As a consequence, we could say that:
a. Both companies belong to the same focus group
b. It is unlikely that both companies follow a similar strategy
c. Both companies belong to the same strategic group
d. they can only follow a diversification strategy outside the car industry to grow
successfully.
42. In the industry analysis of the US airline industry, we discussed that
a. Rivalry and Substitutes are the main forces that lower industry attractiveness
b. Buyer and Supplier Power are the main forces that lower industry
attractiveness
c. Buyer Power and Entry are the main forces that lower industry attractiveness
d. Rivalry and Supplier Power are the main forces that lower industry
attractiveness
43. Assume that there are two companies: Company A and Company B that
compete in the same market segment. The two companies produce perfect
substitute products, they have the same costs structure and marginal costs (MC)
a. If two companies produce perfect substitutes, the differentiation between the
products is inexistent
b. If two companies produce perfect substitutes, the diversification between the
products is inexistent
c. Price competition is not likely if vertical differentiation between company
exists
d. Price competition is not likely if horizontal differentiation between company
does not exist
44. A firm that is investing a high amount of cash in R&D to develop new products
a. It is creating endogenous barriers by enriching its product portfolio
b. It is creating exogenous barriers by enriching its product portfolio
c. It is creating exogenous barriers via innovation
d. It is creating a deterring entry behavior
45. ‘Given the value creation equation (B - P) + (P - C)= B - C, when B-C>0 we can
state that.’
a. The offered product is economic viable
b. The offered product is economic viable and profit is created
c. Profit is created
d. Cost Advantage is achieved

46. Cost Advantage

a. Implies that the operating costs of the local firms are lower compared to the
competitors
b. Implies that the prices of the focal firms are lower compared to the
competitors
c. Implies that the quality of the focal firm’s product(s)/ servic(es) is lower
compared to the competitors
d. All the statements are false

47. Referring to the Arrogant Bastard case, please indicate which of the following
statements is false
a. The entry barriers in the mass-market beer are higher than in the craft segment
b. The range of competitive advantage (single segment vs industry wide)
remained different between Arrogant Bastard and AB Inbev, even after AB
Inbev entered in the craft beer segment
c. Arrogant Bastard want to construct a differentiation advantage in the
mass-market beer to target more segments of customers and therefore getting
higher market shares
d. When the incumbents of the mass-market beer AB Inbev decides to release a
niche product, the best strategy for Arrogant Bastard is the one of regenerating
and reinforcing its resources.

48. In the case of Arrogant Bastard, you have learnt the Fudenberg and Tirole
matrix in the third section of the case, when an employee decides to spin-off.
According to the Fudenberg-Tirole model, the founders/managers of Arrogant
Bastard
a. Can opt to adopt either an accommodating or aggressive strategy, called
respectively Puppy Dog or Lean & Hungry strategy feasible options due to
ex-ante low barriers to entry
b. Can opt to adopt either an accommodating or aggressive strategy, called
respectively Fat Cat or Top Dog strategy feasible options due to ex-ante high
barriers to entry
c. Must adopt a Fat Cat Strategy
d. Must adopt a Puppy Dog Strategy
49. Referring to the US Airline case, a disruptive change has impacted the barriers
to entry in this industry changing its structure and its competition. Which is this
barrier?
a. Strategic (or Endogenous) Barrier of Advertising Expenditure
b. Cost of Capital
c. Policy Regulation
d. Excess Capacity

50. A firm should exploit its key strengths. This means that a firm should exploit
resources and capabilities
a. Of high strategic importance and for which the firm’s relative strength
compared to competitors is low
b. Of low strategic importance and for which the firm’s relative strength
compared to competitors is low
c. Of high strategic importance and for which the firm’s relative strength
compared to competitors is high
d. Of low strategic importance and for which the firm’s relative strength
compared to competitors is high

51. The key idea behind strategy analysis is that:

a. The structure of the industry determines the conduct of the firms within the
industry and, thus, the industry performance
b. The conduct of the firms within the industry determines the structure of the
industry and, thus, the industry performance
c. The structure of the industry determines the industry performance and, thus,
the conduct of the firms within the industry
d. The structure of the industry determines the industry performance but not the
conduct of the firms within the industry

52. The fundamental idea of a Competitive Advantage based on Differentiation is

that:
a. One firm must always be different from competitors
b. One must always be diversified from the competitors
c. One firm must find a single superior aspect to build the strategy
d. None of the statements describes completely the differentiation advantage

53. Strategic innovation

a. Always comprises the introduction of novel products or processes that embody
new technology.
b. Always comprises the introduction of only novel processes that embody new
technology
c. All statements are true
d. All statements are false
54. The generate a sustainable competitive advantage a resource should be
a. Easy to transfer
b. Durable
c. Easy to replicate
d. All of the previous answers are correct

55. What statements about resource identification is incorrect?

a. Technology is an intangible resource and can be proxied via a firm’s R&D
spending
b. A firm’s physical resources include skilled employees and can be proxied with
a firm’s turnover rate
c. Reputation is an intangible resource and can be proxied via a firm’s brand
equity
d. Firms financial resources can be proxied based on firms credit rating
56. A firm’s profit performance can be measured:
a. With the return on average equity, this is the most effective metric
b. With the annual sales growth, this is the most effective metric
c. With the EBITDA, this is the most effective metric
d. All of the above are false

57. Which of the following statements is TRUE?

a. Value Captured by the consumer is the difference between the maximum price
the consumer is willing to pay and the prevailing market price
b. Value captured by the firm needs to be positive for the purchase to occur
c. If there is a choice between two or more products consumer will choose the
one with the largest consumer surplus
d. All the statements are TRUE

58. What factors of the following options do not help a firm to protect its resources
and capabilities against imitation?
a. Legal restrictions
b. Causal clarity (probably this)
c. Market size
d. Superior access to inputs or customers
59. Management innovations of such the ones bt as Procter & Gamble’s brand
management system or Toyota’s lean production are unlikely to offer competitive
advantage
a. Because these innovations are easy to imitate
b. Because these innovations are not valuable
c. All the statements are true
d. All the statements are false
60. The primary distinction between corporate strategy and business strategy is:
a. Corporate strategy is the responsibility of the CEO, business strategy is
formulated by the heads of business units
b. Corporate strategy is concerned with where the firm competes; business
strategy with how it competes
c. Corporate strategy is concerned with establishing competitive advantage;
business strategy with strategy implementation in individual businesses
d. Corporate strategy is concerned with the long-term performance of the firm;
business strategy with resource deployment

61. Which statement about Harley Davidson’s strategic positioning is correct?

a. HD seeks to serve all customer groups in the market by offering a diverse line
of related products
b. HD serves a narrow set of customers with a narrow set of products
c. HD offers a limited set of products to an array of different customer groups
d. None of the above is correct

62. In the case about the US Industry Airline

a. We observed that deregulations and the opportunity to lease airplanes
decreased the competitiveness of the industry
b. We observed that deregulations and the opportunity to lease airplanes
decreased the barriers to entry
c. We observed that deregulations and the opportunity to lease airplanes led to
higher ticket prices
d. We observed that deregulations and the opportunity to lease airplanes
increased industry concentration

63. When considering strategic positioning, which of the following sentences is false:
a. Almost every industry can be broken down into smaller pieces known as
segments. A frequent exercise a strategist must done to identify structural
attractiveness in an industry
b. Focus positioning is recommended to small and medium companies, due to the
large fixed costs an industry wide position generates
c. A broad coverage strategy seeks to serve all customer groups in the market by
offering a full line of related products and normally there are economies of
scope across product classes (production facilities, distribution channels,
marketing)
d. A firm with a focus strategy either offers a narrow set of product varieties or
serves a narrow set of customers, or does both. May be possible to insulate the
focusing firm from competition
64. Which statement about the Buyer Power in the US airline industry is correct
a. High switching costs decrease the buyer power in the airline industry
b. Price sensitivity is not a relevant driver for buyer power in the airline industry
c. Digital price comparison platforms increased buyer power in the airline
industry
d. Loyalty programs have no influence on switching costs

65. Which of the following strategies does not help firms to defend competitive
advantage?
a. Obscure the firm’s performance
b. Decrease causal ambiguity about the source of competitive advantage
c. Deter rivals from imitating the sources of competitive advantage
d. Build competitive advantage in immobile resources and capabilities

66. Isolating mechanisms are

a. Barriers to erosion of interfirm profit differentials
b. Mechanisms that impede the equilibration of rents between industries
c. A synonym for barriers to mobility
d. Sources of disequilibrium that cause the profitability of different firms in an
industry to diverge over time

67. R&D expenditure can be

a. An endogenous ex-ante barrier to entry
b. An endogenous ex-post barrier to entry
c. An exogenous ex-ante barrier to entry
d. An exogenous ex-post barrier

68. Strategic group is

a. The group of firms in an industry following the same or a similar strategy
b. The group of segments that share two or more characteristics
c. The company leader in a particular segment
d. All statements are false

69. Among the following statements related to price competition one is not true.
Which one?
a. The extent to which industry profitability is depressed by aggressive price
competition depends upon the differentiation of competitors
b. The extent to which industry profitability is depressed by aggressive price
competition deepends upon the industry concentration
c. The extent to which industry profitability is depressed by aggressive price
competition depends upon the presence of excess capacity and exit barriers
d. The extent to which industry profitability is depressed by aggressive price
competition depends upon the lack of switching costs.
70. “Advertising costs as a percentage of sales revenue for soft drinks brands with
large market shares (such as Coca-Cola and Pepsi-Cola) are lower than for
brands with small market shares (Dr.Pepper, Schweppes, Fresca). This is
because:”
a. Advertising campaigns are subject to a large minimum budgets
(indivisibilities)
b. Big brands can negotiate lower rates with advertising agencies and media
owners
c. Economies of learning long-established brand such as Coca-Cola and Pepsi
have learned how to be more efficient in their advertising campaigns
d. All statements are false

71. What is the main difference between segmentation and differentiation?

a. Segmentation deals with where the firm is competing, while differentiation
deals with how the firm is competing
b. Segmentation regards how the firm distinguishes its offerings from those of its
competitors, while differentiation regards the disaggregation of the industry
into smaller markets
c. Both concepts are very similar so they can be used as synonyms
d. Segmentation regards the firm’s ability to set a price equal to the marginal
cost, while differentiation regards the disaggregation of the industry into
smaller markets

72. In the case of Arrogant Bastard the major threats of the mass-market beer
producers are:
a. Supplier power, buyer power
b. Buyer power, threat of new entry
c. Threat of substitution, buyer power, industry rivalry
d. Threat of substitution, buyer power

73. When comparing the Competitive Forces Approach (CFA) with the Resources
Based View (RBV), which of the following is FALSE:
a. CFA focuses on Industry Attractiveness & relative firm position
b. RBV explores the internal heterogeneous resources that firms possesses
c. CFA seeks a favorable position to get monopoly rent
d. CFA approach is more useful than the RBV in more unstable industry
environments

74. What are the five forces of Porter’s model?

a. Concentration, diversification, backward vertical integration, forward vertical
integration, horizontal integration
b. Current rivalry, threat of new entrants, threat of substitutes, concentration,
diversification
 c. Current rivalry, threat of new entrants, threat of substitutes, bargaining power
of distributors, bargaining power of buyers
d. Current rivalry, threat of new entrants, threat of substitutes, bargaining power
of suppliers, bargaining power of buyers

75. A proper segmentation of the market in which the Cirque du Soleil used to
operate is done through the choice and the combination of the following
dimensions
a. The level of vertical integration of the production and the level of R&D
expenditure
b. The level of price and the level of advertising expenses to spread the new
business
c. All statements are true
d. All statements are false

76. What is strategy for an organization?

a. A detailed plan and set of instructions that programs the actions of an
organization
b. A unifying theme that gives coherence and direction to the actions and
decisions of an organization
c. Both are true
d. None is true

77. In the case of the U.S. Airline Industry, the profitability of the industry began to
increase around 2014-2016. One of the cause might be:
a. The industry consolidation that made the industry more fragmented and hence,
the number of competitors increased
b. The industry consolidation that made the industry more fragmented and hence,
the number of competitors decreased
c. The industry consolidation that made the industry more concentrated and
hence, the number of competitors decreased
d. The industry consolidation that made the industry more concentrated and
hence, the number of competitors increased

78. Capital requirements can be:

a. An endogenous ex-ante barrier to entry
b. An endogenous ex-post barrier to entry
c. An exogenous ex-ante barrier to entry
d. An exogenous ex-post barrier

79. Which of the following would be the best segmentation matrix for the restaurant
market:
a. Based on product (e.g. food type such as Japanese or Italian food) and on
customer type (e.g. family meals, business meals)
 b. Based on number and typology of competitors (e.g. restaurant chains,
international and local owned restaurants) and on geographical location (e.g.
number of restaurants within 1km walking distance)
c. Based on number of suppliers-size (both food and beverage) and on quality of
them
d. Based on complementary services (e.g. parking) and on price level (high,
medium, low)

80. Please indicate which of the following statements is false:

a. Where will the firm create value? The answer is broad or narrow segments, it
is a matter of segmentation & positioning
b. How will the firm create value? The answer is differentiation or cost
leadership, it is a matter of competitive advantage
c. Members of a strategic group, may not pursue similar strategies, rather they
are always in competition among them
d. To define strategic groups is necessary to identify principal strategic
dimensions that distinguish firms that are not correlated (e.g. product range,
geographical breadth, distribution channels, choice of technology)

81. The examples of Ikea and Southwest Airlines (Low Cost Airlines) demonstrate
a. The power of brand as a factor of success
b. The quality of the top management of these firms
c. The power of advertising
d. How a low-price strategy can be combined with distinctive product
differentiation

82. Which statement about the Supplier Power in the US airline industry is correct?
a. Supplier power is low in the airline industry
b. Labor unions helped decrease supplier power
c. The Hub-and-spoke system increased supplier power
d. There are many airplane manufacturers

83. Which of these are good reasons to minimize inventory?

a. Holding costs, product expiration, economies of scale
b. Holding costs, product expiration, waste reduction
c. Waste reduction, speculation on raw material, smoothing of the production
plan
d. Economies of scale, speculation on raw material, smoothing of the production
plan

84. The creation of the Starbucks’ experience is

a. A differentiation strategy
b. A diversification strategy
 c. All statements are true
d. All statements are false

85. A company that offers just marketing consulting services but to an array of
different customer groups,applies a segmentation strategy with:
a. A product specialization focus
b. A customer specialization focus
c. A geographic specialization focus
d. An industry wide focus
86. A proper analysis of the strategic groups of the market in which the Cirque du
Soleil used to operate is done through the choice and the combination of the
following dimensions
a. Cost of production and presence of animals
b. Costs of tickets
c. All statements are true
d. All statements are false

87. Regarding the sectoral analysis of US Industry Airline

a. Just right after the deregulation, the competition was based on accommodating
entry and product differentiation
b. Just right after the deregulation, the competition was based on accommodating
entry strategies and price wars
c. Just right after the deregulation, the competition was based on deterring entry
strategies and predatory pricing
d. Just right after the deregulation, the competition was based on deterring
strategies and product differentiation

88. Comparing Harley D. and Honda’s capabilities, where does the internal
competitive advantage come from?
a. HD’s strengths are based upon two core resources: the brand strength and
customer loyalty that results from Harley’s heritage and reputation
b. Both Honda and HD have the same resources and thus, same capabilities.
Therefore they have competitive parity
c. HD has higher technical capabilities
d. All the previous answers are false

89. Harley has differentiated many aspects of its design, production processes, and
dealer and customer support value chain activities in order to make the activities
of the customer easier cheaper or more satisfying
a. this is an example of functional capabilities through Porter's value chain
b. this is an example of how building differentiation advantage through building
linkages between its value chain and that of its customers
c. This is an example of how to manage strategic change and innovation
d. All the previous answers are correct
90. The bargaining power of buyers is likely to be high:
a. When the buyers price sensitivity is low
b. When the buyers industry is concentrated
c. When there are many buyers
d. Buyers cannot backward integrate

91. In the sectoral analysis of the US airline industry, two forces have major
influence:
a. Supplier bargaining Power and Threats of Barriers to entry
b. Supplier bargaining power and Internal Rivalry
c. Supplier bargaining power and Threats of Substitutes
d. Barriers to entry and Internal rivalry

92. A firm’s costs for labor per unit decrease

a. When the firm increases the paid, average salary
b. When the firm’s employees are more productive
c. When the firm needs additional employees for its production process
d. All of the previous answers are incorrect

93. Differentiation Advantage of Harley D. highlights:

a. The concept of product integrity as well
b. New business model
c. All statements are true
d. All statements are false

94. If in an industry with 8 main players the CR4 is 0.35

a. You can argue that the industry is fragmented
b. The industry is likely to be concentrated
c. The industry is likely to be saturated
d. The industry is likely to be an uncontested market

95. Barney’s VRIO framework stands for:

a. Verifiable, rare, Costly to Imitate, Organized to Capture value
b. Valuable, Resourceful, Costly to imitate, Organized to make profit
c. Valuable, rare, costly to imitate, organized to support the business
d. Valuable, Rare, costly to imitate, Organized to Capture Value

96. In which of the following sets of capabilities - that are strategically important -
Harley Davidson has a relative strength vs Honda?
a. Marketing and Customer Service capabilities
b. Marketing and Research & Development capabilities
c. Purchasing and Research & Development capabilities
d. Customer Service and Purchasing capabilities
97. Which of the following factors does not represent a threat to Harely Davidson’s
future success?
a. Demographic trends
b. HD’s focus strategy
c. HD’s strong marketing capabilities
d. Potential costs due to excess capacity

98. What statement about Harley-Davidson’s resources and capabilities is correct?

a. HD has strong R&D capabilities and the largest patent portfolio in the industry
b. HD has strong customer retention capabilities
c. HD outperforms Honda by its efficient purchasing that leverages economies of
scope
d. HD outperforms Honda by its efficient manufacturing that leverages
economies of scale

99. Which of the following factors is not a residual driver of a cost advantage?
a. Organizational slack
b. Organizational Culture
c. Managerial Effectiveness
d. Product Variety

100. Which of strategies has not been used by Henry Ford to reduce costs for his
Model T
a. Ford invented the assembly line to make production more efficient
b. Ford increased product variety
c. Ford increased wages for his employees to reduce the turnover rate
d. Ford increased the degree of capacity utilization

101. Economies of scale are a barrier to entry because:

a. New entrants do not know where they are positioned on their learning curve
b. New entrants do not know the economies they can generate in the future and
therefore cannot precisely determine their selling price
c. New entrants face a risk of retaliation from the incumbents which could occur
immediately on a large scale and start a price war as a deterrent of their entry
d. New entrants face the cost and risk of creating large-scale capacity to start
with or a severe cost disadvantage if they enter on a smaller scale

102. ROIC:
a. Measures the firm success in using shareholder s capital to generate profits.
b. This is interesting for strategists because it compares ROS that measures how
much profit the company is able to generate given its sales with CT which
represents how many sales a company it is able to generate given the capital
invested
 c. Is the rate of return earned in the business without regards for whether
financing comes from debt or equity
d. It is not an indicator of performance

103. In the Arrogant Bastard case, we concluded that the attractiveness of the
mass-market beer industry is low, due to
a. High level of competition (CR4 < 50%) and high bargaining power of buyers
b. High level of bargaining power, both from buyers and suppliers
c. High bargaining power of buyers and an increasing threat of substitutes
d. High bargaining power of suppliers
104. “To illustrate a success of cost leadership, the level of cost advantage of a
focal company with respect competitors can be quantified by”
a. (Weighted average of competitors operating profit) - (focal company operating
profit)
b. (Weighted average of competitors selling price) - (focal company selling
price)
c. (Weighted average of competitors fully loaded costs) - (focal company fully
loaded costs)
d. None of the statements are correct

105. What term coined by Michael Porter describes a firm that pursues elements
of cost leadership and benefit leadership at the same time?
a. Five focus
b. Stuck in the middle
c. Generic strategies
d. Strategies that can be pursued simultaneously
106. Which statement about substitutes in the US airline industry is correct?
a. Video Conferencing cannot be considered as substitute
b. The degree of substitutability depends on the travel distance
c. There are no substitutes in the airline industry
d. Airlines strongly depend on complements
107. Comparing Harley D. and Honda’s capabilities, where does the competitive
advantage of HD come from?
a. HD s strength is based upon few core resources as its brand and customer
loyalty
b. Both Honda and Hd have equally strong resources and thua, the same
capabilities. Therefore the competitive parity
c. HD has higher research and development capabilities than Honda
d. All off the above answers are incorrect

108. Which description of a red ocean industry is incorrect?

a. “In red oceans, firms compete in existing market space”
b. “In red oceans, firms create and capture new demand”
c. “The more crowded red oceans, the less prospects for profits and growth”
 d. “In red oceans, competitors fight for market share”

109. Which of the following statements is not compatible with a resource-based

view of the firm?
a. Resources are homogeneously distributed across firms
b. Resources are immobile
c. There are tangible and intangible resources
d. Resources can be re-deployed

110. Which statement about porter s five forces (5F) model is incorrect
a. Porter s 5F do not take into account complements
b. Porters 5F take a dynamic perspective on industries
c. Porters 5F assume that the industry structuree is an important determinant of
firms profit
d. Porters 5F do not take into account that firms can cooperate

111. If in an industry with 8 main players the CR4 is 0.35

a. It is likely to have fierce price wars If companies are not differentiated
b. If it is easier for companies to be coordinated and have non-price competition
c. The industry is consolidated
d. The industry is profitable

112. The success of the Porsche Macan is based on sharing economies of scope with
Volkswagen to leverage the power of the Porsche brand.
a. TRUE
b. FALSE

113. "The value creation is a motive of a diversifier, which may capitalize all the future
profits coming from diversification process."
a. TRUE
b. FALSE

114. "When analyzing situations with game theory, changing the assumptions can help
to check the robustness of the optimal strategy"
a. TRUE
b. FALSE

115. By outsourcing production firms can maximize their control over the
production
a. TRUE
b. FALSE

116. Food industries tend to experience less decline than other industries
a. TRUE
 b. FALSE

117. Avoiding overcapacity is more important in the introduction stage than in

the maturity stage
a. TRUE
b. FALSE (maturity stage no)?

118. Diversification lowers the unsystematic risk of businesses

a. TRUE
b. FALSE

119. Differentiation is more difficult in the decline phase of an industry

a. TRUE
b. FALSE

120. "If the cost of organizing activities within the firm exceed the costs of
organizing across markets, firms should avoid vertical integration"
a. TRUE
b. FALSE

121. Economies of scope only arise from sharing resources not from
transferring capabilities
a. TRUE
b. FALSE

122. "During the past three decades, increased emphasis on flexibility and the
need to develop superior organizational capabilities has caused large
companies to reduce their vertical scope. "
a. TRUE
b. FALSE

123. Diversification strategy has to do with how does a firm compete in given
industry ?
a. TRUE
b. FALSE

124. Limit pricing is successful if it does not influence entrants expectations about
post-entry competition and pay-offs
a. TRUE
b. FALSE

125. American Apparel´s decision to vertically integrate responded to the

company strategy to differentiate from competitors offering customers higher
quality products.
a. TRUE
b. FALSE

126. The cost-of-entry test involves checking if the cost of entry capitalize all the
 future profits
a. TRUE
b. FALSE

The cost-of-entry test involves checking if the cost of entry do not capitalize all the future profits

127. "Based on the lessons of the Porsche AG case seen in class, new electric
vehicles like the Porsche Taycan are"
a. Consistent with Porsche strategy as it does not require any
change in the strategy and the organizational skills required to
sustain their competitive advantage
b. Inconsistent with the Porsche strategy as an electric vehicle
cannot be a sportscar.
c. Consistent with Porsche strategy as ultimately a sportscar is not
only determined by the type of engine.
d. All answers are false.

128. Which of the following statements is NOT true.

a. A firm can sustain diversification transferring functional
capabilities.
b. A firm can sustain diversification sharing intangible resources.
c. A firm can sustain diversification applying common general
management capabilities to different businesses.
d. A firm can sustain diversification by reducing transaction costs. (maybe
this one)

129. Strategic bundling can be used to deter the entry in a market. In which of the
following situations it is likely to find companies engaged in strategic bundling?
a. Strategic bundling can be found in situations where structural
barriers are high and effective.
b. Strategic bundling can be found in situations where the entry is
blockaded
c. Strategic bundling can be found in situations where the entry is
deterred
d. All answers are true.

130. Which of the following industries tend to experience shorter life cycle
a. Food industries
b. Car industries
c. Digital technologies industries
d. Hotel industry

131. It is more common that firms diversify

a. in the growth stage of the life cycle.
b. in the mature stage of the life cycle.
c. in both growth and mature stages of the life cycle.
d. none of the above are correct.
132. Which is NOT a common motive for diversification?
a. Risk Reduction.
b. Economies of learning.
c. Value Creation
d. Growth

133. "In the American Apparel case study, which of the following
statements about the strategy of the company is false?"
a. It has followed a cost strategy
b. It has increased the product range
c. It has expanded geographically outside of the US
d. It has followed a differentiation strategy

134. Please identify the FALSE statement:

a. "According to judo economics, a potential entrant can use the
incumbent s size to its advantage"
b. Excess capacity reduces credibility over predatory acts
c. Bundling pricing occurs when companies sell a set of goods for a
lower price than they would charge if the customer bought all of
them separately
d. The control of the distribution channel can be used as a
structural entry barrier

135. The vertical scope of a firm relates to:

a. The extent to which a firm owns adjacent stages of the industry
value chain.
b. The proportion of the firm s inputs that are produced in-house
c. The size of the firm s value added
d. The number of hierarchical layers of the firm s management
structure

136. "If a company acquires another company that was previously its client,
then we can say that it is pursuing a strategy of "
a. Backward integration
b. Forward integration
c. Control of the distribution network
d. Control of the demand

137. "To gain a competitive advantage in emerging and technologically

intensive industries, it is NOT RECOMMENDED to be a leader when:"
a. Complementary resources are important.
b. The innovation can be protected by property rights
c. The innovation can be protected by lead-time advantages
d. The innovation has the potential to establish a standard

138. Porsche AG has had a successful strategic transformation. The analysis of

 such transformation seen in class can be explained by:
a. The diversification move towards other segments of the
automobile industry is mainly based on Porsche s superior
organizational capabilities around building sportscars
b. The Porsche Macan success is mainly attributed to cost
synergies raised with the Volkswagen Group.
c. Porsche was mainly relaying on the utilization of its logo and
brand image to launch new products like the Porsche Macan.
d. All answers are false

139. That features of American Apparel were distinctive of the company?

a. The effective outsourcing of the design of its T-shirts
b. Its high level of vertical integration
c. The manufacturing facilities in low-cost countries
d. The effective management of its distribution stores around the
globe

140. The diversification of the product portfolio generates:

a. "High operational costs (operational frictions), which can limit
the benefit of diversification."
b. "Economies of scope (and thus, synergies)"
c. The two statements are both right
d. The two statements are both wrong

141. "Which of the following statements, regarding the maturity stage of the
ILC, is true"
a. "In maturity stage, profitability is lower because of overcapacity
and commoditization. "
b. The dominant design emerges in the maturity phase of the ILC
c. Maturity stage does not requires searching for attractive
segments with strong growth of demand
d. The number of new companies and differentiated firms
increases

142. Which of the following product categories offers the greatest potential for
differentiation?
a. Clothes and restaurants
b. Cement and wheat
c. Jet fuel for airline jets
d. Sulphur and ethylene

143. What are generic strategies according to Michael Porter?

a. Segment leadership, and global leadership
b. Cost leadership, benefit leadership
c. Price leadership, premium leadership
d. Strategies that can be pursued simultaneously
 144. Capital Requirement is an endogenous barriers to entry
a. False
145. If the CR4 is 30% the industry is concentrated
a. False
146. In the Airline case, fixed costs affected competition rivalry:
a. True
147. Blue Ocean is not a strategy of technological innovation:
a. True
148. Competitive advantage is having high profit
a. False

Porsche AG has had a successful strategic transformation. The analysis of such

transformation seen in class can be explained by:
A All answers are false.
B The diversification move towards other segments of the automobile industry is mainly
based on Porsche s superior organizational capabilities around building sportscars
C. The Porsche Macan success is mainly attributed to cost synergies raised with the
Volkswagen Group.
D Porsche was mainly relaying on the utilization of its logo and brand image to launch new
products like the Porsche Maca

Vertical integration is a corporate strategy characterized by:

A) The positioning of a Company in high value-added segments.
B The control of two or more stages in the value chain
C) The expansion of the geographical boundaries of a company
(D) An increase in the variety of products offered

Which of the following factors is not conducive to vertical integration between two adjacent
stages of production?
A) Stability in the technologies used at each stage
B Different organizational capabilities are required at each stage
C) Similarity of the optimum scale of production between the two stages
(D) Few companies at each of the two stages

We can consider as STRUCTURAL ENTRY BARRIERS the following:

A "Economies of scale & scope, control of essential resources & customer loyalty"
B "Marketing investments, limit pricing, and control of essential resources"
C) "Government relations, economies of scale and scope, and limit pricing"
D) Capacity expansion and strategic bundling
The CEO of a company in the food industry must evaluate the expansion of the business in
the wine industry. He should consider if:
A) The average profit in the food industry is higher than the return on capital of the wine
industry
B) The return of capital in the food industry is higher than the costs of diversifying in the
wine industry
C) The return of capital in the wine industry is higher than the costs of diversifying in the
wine industry
D The return of capital in the wine industry is higher than average profit in the food industry

In which phase is cost efficiency a more relevant source of competitive advantage?

A) Maturity B) Growth C) Introzduction D Decline

Which of the following statements is TRUE?

A The umbrella effect does not help the incumbent negotiate the vertical chain
B "Price wars are wars of attrition, where two or more firms expend resources battling with
each other " C With predatory pricing an incumbent sets a low price to capture market share
from a competitor D "When exiting a market, a firm cannot redeploy its assets"

In class, we have played the Lobster Game, in which three boats competed on an island.
Which of the following statements about the Lobster Game is correct?
AFor one boat, catching one third of the monopoly amount of Lobster maximizes the boat s
profits per day irrespective of the other boats decisions
B For one boat, catching the maximum amount possible of Lobster maximizes the boat s
profits per day irrespective of the other boats decisions
C The competitive situation in the Lobster Game can be described by a Bertrand model
D The competitive situation in the Lobster Game can be described by a Cournot model

"Porsche s executives, such as the ones interviewed in the Porsche AG case seen in class, are
confident that "
A"Based on their previous amazing success, Porsche has no limitations to what type of
products they can do in the automobile."
B"Whatever Porsche does, it must be related to three core principles: sportscars, exclusivity
and profitability"
C"Porsche can undertake other projects beyond the sportscars arena, but only if they are
exclusive."
(D) All answers are true.
"Considering the industry life cycle, rationalizing capacity is a key success for"

ADecline phase
BGrowth phase
CIntroduction phase
D Maturity phase

The diversification of the product portfolio generates:

A "High operational costs (operational frictions), which can limit the benefit of
diversification."
BThe two statements are both right
C"Economies of scope (and thus, synergies)"
DThe two statements are both wrong

Which of the following statements about the Cournot model is INCORRECT?

A) The Cournot equilibrium is not Pareto optimal
B) The Cournot equilibrium industry output does not maximize industry profits
CThe Cournot model assumes that firms offer the same product and cannot differentiate
D) The Cournot equilibrium industry output is smaller than the monopoly output

If a company acquires another company that was previously its client, then we can say that it
is pursuing a strategy of
A Control of the distribution network
B Forward integration
C) Backward integration
D) Control of the demand

"A key lesson of the Porsche AG case is that when a market segment is growing, like incase
of the Sport Utility Vehicle segment (SUV s), the firm must react quickly and enter to benefit
from the growth early on."
A FALSE
B TRUE

Entry barriers can be divided into strategic and structural. A difference between these two
types of barriers is that
A "Strategic barriers are only present ex-post, while structural barriers are always ex-ante."
B All answers are false.
C "Structural barriers are generated by competitors, while strategic barriers are generated by
the industry characteristics"
D"Structural barriers relate to companie ́s Key Strengths, while strategic barriers relate to its
Key Weaknesses."
Diversification lowers the unsystematic risk of businesses A TRUE B FALSE
The more important a step of the value chain for a firm s product differentiation the more
likely firms vertically integrate this step A TRUE B FALSE

Diversification lowers the unsystematic risk of businesses A TRUE B FALSE

The more important a step of the value chain for a firm s product differentiation the more
likely firms vertically integrate this step A TRUE B FALSE

Predatory pricing is the practice whereby an incumbent firm charges a low price to
discourage new firms from entering. A TRUE B FALSE

"The greater the need for high-powered incentives, the greater the advantages of vertical
integration"
A TRUE
B FALSE

"Porsche, as seen on Porsche AG case, is an excellent example of how to face strategical

diversification." A TRUE B FALSE

Differentiation is not possible in mature industries A FALSE B TRUE

The Bertrand paradox describes that firms in duopolies make higher profits than in industries
with perfect competition A FALSE B TRUE

The number of firms constantly increases over the industry life cycle A TRUE B FALSE

A firm s growth strategies are especially successful if they are inconsistent with a firm s
business strategy A FALSE B TRUE

The assessment of market entry is shaped by the observation of the entry sunk costs and the
post-entry profits. A TRUE B FALSE