Crafting and Executing Strategy, 22e (Thompson)
Chapter 1 What Is Strategy and Why Is It Important?
1) Managerial considerations in determining how to compete successfully do not normally
include
A) How can a company attract, keep, and please customers?
B) How can a company modify its entire product line to emphasize its internal service attributes?
C) How should a company respond to changing economic and market conditions?
D) How should a company be competitive against rivals?
E) How should a company position itself in the marketplace?
2) A pharmaceutical company selling prescription drugs in France for the past 10 years has had
moderate sales in a crowded market, as its rivals manufacture and market drugs of similar
efficacy and having similar safety precautions, but that have superior market share. This
particular pharmaceutical company’s greatest challenge is to increase French doctors’ prescribing
their drugs. What would be the most effective strategy to improve sales performance in the
existing market?
A) modifying marketing communication to increase brand familiarity within key physician
segments
B) relocating all the existing drug manufacturing facilities to developing countries to reduce
operational costs
C) employing hiring plans that aim at acquiring drug designers from rival companies
D) exiting the market and entering a new unexplored geographical location
E) engaging in new contract talks with suppliers about price breaks
3) A company’s strategy consists of the action plan management takes to
A) stake out a unique market position and achieve superior profitability.
B) compete against rivals and establish a transitory competitive advantage.
C) concentrate on improving the existing product offering irrespective of the changing and
turbulent markets.
D) develop a more appealing business model than rivals.
E) identify its strategic vision, its strategic objectives, and its strategic intent.
4) ________ is the set of actions that its managers take to outperform the company’s competitors
and achieve superior profitability.
A) A strategy
B) A mission statement
C) Strategic intent
D) A cost-price framework
E) A market vision
5) Strategy, at its essence, is about
A) matching rival businesses’ products and quality dimensions in the marketplace.
B) building profits for short-term success.
C) realigning the market to provoke change in rival companies.
D) developing lasting success that can support growth and secure the company’s future over the
long term.
E) re-creating a business model with regularity.
6) To improve performance, there are many different avenues for outcompeting rivals such as
A) realizing a higher cost structure and lower operating profit margins than rivals in order to
drive sales growth.
B) creating products analogous with competitors so as to be competitive in the same markets.
C) pursuing similar personalized customer service or quality dimensions as rivals.
D) being undecided whether or not to concentrate operations on local versus global markets.
E) strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.
7) Under Armour, a multinational sports apparel company plans entry into a new geographical
location, Vietnam, considered an emerging market, with its established and best-selling product
line: women’s running shorts. How should Under Armour not craft a strategy to enhance future
profits in Vietnam?
A) create a sales plan that aims to enhance initial sales and market penetration with low prices
based on high operational costs
B) devise a marketing plan that aims at mass customer segments with attractive advertisements
and offers on products
C) implement a diversification plan that aims at adding health and fitness centers to its existing
line of products
D) chart an acquisition plan that aims at acquiring local smaller-scale sports apparel
manufacturers that seek funding and offer a complementary product lineup
E) establish a distribution plan to set up more supply outlets than any other rivals in the location
8) Every strategy needs
A) a distinctive element that attracts customers and produces a competitive edge.
B) to include similar characteristics to rival company strategies.
C) to pursue conservative growth built on historical strengths.
D) to employ diverse and sundry operating practices for producing greater control over sales
growth targets.
E) to mimic the plans of the industry’s most successful companies.
9) A company’s strategy is NOT concerned with management’s choices about how to
A) attract and please customers.
B) stake out the same market position as successful rival companies.
C) grow the business.
D) compete successfully.
E) conduct operations and improve the company’s financial and market performance.
10) FaberRoad, a respected courier brand, is fast losing its market share to competitors who do
overnight deliveries of packages or offer lower prices. The company’s research department has
found that many customers care more about knowing exactly when a package will arrive than
getting it the next day. Which strategy would best address the current state of FaberRoad and
help it regain its market?
A) employing night delivery drivers at a high cost and maintenance charges
B) developing radio tags that could be attached to packages to allow for real-time tracking by
customers’ PCs and mobile phones
C) diversifying the different types of packages that can be transported and enabling booking
through calls
D) acquiring small transportation companies with cheaper trucks and tempos, rebranding, and
using them for deliveries
E) engaging in expensive advertising with new tag lines and famous celebrities to enhance its
brand image in the market
11) A company’s strategy stands a better chance of succeeding when
A) it is developed through a collaborative process involving all managers and staff from all
levels of the organization.
B) managers employ conservative strategic moves based on past experience and form an
underlying basis of control.
C) it is predicated on competitive moves aimed at appealing to buyers in ways that set the
company apart from rivals.
D) managers copy the strategic moves of successful companies in its industry.
E) managers focus on meeting or beating shareholder expectations.
12) In crafting a company’s strategy, managers
A) face the biggest challenge of how closely to replicate strategies of successful companies in
the industry.
B) have comparatively little freedom in choosing the “hows” of strategy.
C) are wise not to decide on concrete courses of action in order to preserve maximum strategic
flexibility.
D) need to come up with a sustainable competitive advantage that draws in customers and
produces a competitive edge over rivals.
E) are well-advised to be risk-averse and develop a “conservative” strategy—“dare-to-be-
different” strategies are rarely successful.
13) The heart and soul of a company’s strategy-making effort is determining how to
A) become the industry’s low-cost provider.
B) maximize profits and shareholder value.
C) improve the efficiency of its business model.
D) maximize profits while simultaneously operating in a socially responsible manner that keeps
the company’s prices as low as possible.
E) come up with moves and actions that produce a durable competitive edge over rivals.
14) The pattern of actions and business approaches that would not define a company’s strategy
include actions to
A) strengthen market standing and competitiveness by acquiring or merging with other
companies.
B) strengthen competitiveness via strategic coalitions and partnerships.
C) upgrade competitively important resources and capabilities.
D) gain sales and market share with lower prices despite increased costs.
E) strengthen the firm’s bargaining position with suppliers and distributors.
15) A creative, distinctive strategy that delivers a sustainable competitive advantage is important
because
A) without a competitive advantage a company cannot become the industry leader.
B) without a competitive advantage a company is likely to fall into bankruptcy.
C) crafting a strategy that yields a competitive advantage over rivals is a company’s most reliable
means of achieving above-average profitability and financial performance.
D) a competitive advantage is what enables a company to achieve its strategic objectives.
E) how a company goes about trying to please customers and outcompete rivals is what enables
senior managers to choose an appropriate strategic vision for the company.
16) A company achieves a competitive advantage when it
A) provides buyers with superior value compared to rival sellers or offers the same value at a
lower cost.
B) has a profitable business model.
C) is able to maximize shareholder wealth.
D) is consistently able to achieve both its strategic and financial objectives.
E) has a strategy well-matched to its business model.
17) A creative and distinctive strategy that sets a company apart from rivals and that gives it a
sustainable competitive advantage
A) is a reliable indicator that the company has a socially responsible business model.
B) is achievable in emerging but not mature industries.
C) is a company’s most reliable ticket to above-average profitability.
D) signals that the company has a bold, ambitious strategic intent that places the achievement of
strategic objectives ahead of the achievement of financial objectives.
E) is the best indicator that the company’s strategy and business model are well-matched and
properly synchronized.
18) What separates a powerful strategy from a run-of-the-mill or ineffective one?
A) the ability of the strategy to keep the company profitable
B) the proven ability of the strategy to generate maximum profits
C) the speed with which it helps the company achieve its strategic vision
D) management’s ability to forge a series of actions, both in the marketplace and internally, that
sets the company apart from rivals and produces sustainable competitive advantage
E) whether it allows the company to maximize shareholder value in the shortest possible time.
19) Volta Motors, a manufacturer of self-driving delivery trucks, is working on developing its
next-generation electric vehicles. It has decided on a strategy of focusing on a narrow buyer
segment and outcompeting rivals by offering buyers customized autonomous, self-driving
electric vehicles at a lower cost than rivals. What basic strategic approach has Volta Motors
decided upon?
A) focused differentiation
B) best-cost provider
C) low-cost provider
D) broad differentiation
E) focused low-cost
20) Strategic approaches to set a company apart from rivals and achieve a sustainable
competitive advantage are not likely to include
A) striving to be the industry’s low-cost provider.
B) outcompeting rivals on the basis of differentiating features that will appeal to a broad
spectrum of buyers.
C) developing a best-cost provider strategy that gives customers more value for the money.
D) focusing on a narrow market niche and serving buyers’ special needs and tastes.
E) striving to be the industry’s high-price provider.
21) If you were advising Rebel Toad Brewing, a local brewpub, about how to set itself apart
from rivals and achieve a sustainable competitive advantage, you would most likely not
recommend that Rebel Toad Brewing
A) strive to be the industry’s low-cost provider, thereby aiming for a cost-based competitive
advantage.
B) outcompete rivals on the basis of differentiating features such as higher quality, wider product
selection, added performance, better service, more attractive styling, technological superiority, or
unusually good value for the money.
C) mimic the successful strategies of rivals.
D) focus on a narrow market niche to achieve a competitive edge by doing a better job than
rivals of satisfying the needs and tastes of buyers comprising the niche.
E) develop a cost advantage based on offering more value for its patrons’ money.
22) A salsa manufacturing company that enjoys the lest bargaining power with its suppliers
would most likely be
A) involved in mass production of its products to cater to an expanding customer base.
B) actively catering to a broad, price-sensitive customer base.
C) manufacturing high-quality salsa and related products from readily available raw materials for
a broad customer base.
D) selling salsa and related products deemed to be highly popular and easily available across
most supermarkets.
E) offering high-cost specialized salsas that could be consumed only by customers with specific
food allergies.
23) Winning a sustainable competitive edge over competitors does not hinge on which of the
following?
A) having a distinctive competitive product offering
B) building competitively valuable expertise and capabilities not readily matched, and offering
distinctive products
C) building experience, know-how, and specialized capabilities that have been perfected over a
long period of time
D) having hard-to-beat capabilities and impressive product innovation
E) building products and distributing them at low prices to a broad customer base irrespective of
manufacturing cost
24) If you were asked to develop a low-cost provider strategy for a startup passenger air carrier
business, what would you most likely not recommend?
A) offer low prices on short-distance flights and eliminate meals during flights
B) offer low prices on long-distance flights and maintain long service times for aircraft between
flights
C) offer low prices on short-distance flights and improve airplane capacity by reducing the
distance between existing seats to permit adding more rows of seating
D) offer low prices on short-distance flights and pay flight attendants a minimum wage
E) offer low prices on long-distance flights and charge fees for both carry-on and checked
luggage
25) Amy’s Drive-Thru, a fast food facility, offers healthy, sustainably grown veggie and vegan
fast food at higher prices than its competitors in the market and has a drive-through and indoor
seated casual dining operation. What strategy is Amy’s Drive-Thru using to gain competitive
advantage?
A) a low-cost provider strategy
B) a broad differentiation strategy
C) a focused low-cost strategy
D) a differentiation strategy
E) a best-cost provider strategy
26) BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded
market that caters to all kinds of consumers, this resort caters mainly to gays with a guaranteed
hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain
competitive advantage?
A) a low-cost provider strategy
B) a broad differentiation strategy
C) a focused low-cost strategy
D) a focused differentiation strategy
E) a best-cost provider strategy
27) Identify the company with a low-cost provider strategy.
A) A fashion clothing line uses sought-after designers and natural fabrics.
B) A mortgage company specializes in lending money for second homes.
C) An online retailer delivers organic groceries overnight.
D) A baby products retailer sells unassembled baby furniture produced in China.
E) A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy products.
28) Giving customers more value for the money by satisfying their expectations on key quality
features, performance, and/or service attributes while beating their price expectations is a
________ strategy.
A) best-cost provider
B) focused low-cost
C) focused differentiation
D) broad differentiation
E) low-cost provider
29) An evolving strategy for a ride-share business like Uber or Lyft is not likely to be triggered
by
A) their need to keep strategy in step with changing circumstances, market conditions, and
changing customer needs and expectations.
B) the proactive efforts of their managers to fine-tune and improve one or more pieces of the
strategy.
C) their need to abandon some strategy features that have been faltering or are no longer working
well.
D) their need to respond to the newly initiated actions and competitive moves of manufacturers
of autonomous vehicles.
E) their need to respond to short-term swings in the stock market that impact timing of an initial
public offering (IPO).
30) A “repeatedly evolving strategy” best applies to a
A) government housing agency that formulates urban redevelopment plans during a four-year
window of time and implements them phase by phase over that period of time.
B) mobile phone company, established in a saturated market, that plans its research and
development activities to allow for quarterly releases of new products that match or overtake
features of rivals’ mobile phones.
C) startup cosmetics manufacturer that replicates the products of rivals but at a comparable
quality and lower price.
D) nationalized bank that lends at a lower interest rate but offers a zero-processing fee in a
market crowded with privatized banks running at high cost.
E) firearms regulatory agency, set up by the government, that publishes industry standards for
safety, reliability, and quality of arms and ammunition.
31) Managers of every company should be willing and ready to modify their strategies because
A) market conditions and circumstances are changing over time or the current strategy is clearly
failing.
B) the task of crafting strategy is a one-time event.
C) the strategic vision necessitates periodic updating.
D) frequent changes in strategy make it very difficult for rivals to imitate.
E) all strategies are reactive.
32) Adapting to new conditions like new innovations by competitors, fast-changing
technological developments, and constantly evaluating what is working result in
A) an assured profitability strategy.
B) a broad market entry strategy.
C) an emergent strategy.
D) unlimited revenue generation.
E) a proactive strategy.
33) Managers must be prepared to modify their strategy except when
A) changing circumstances affect performance and the desire to improve the current strategy.
B) rivals make or adjust moves in the market due to the shifting needs of buyers.
C) encountering stagnating market conditions and increasingly restrictive new customer
acquisition opportunities.
D) evidence is mounting that the current strategy is becoming less effective.
E) rivals announce their monthly profit margins in public.
34) A company’s strategy is a “work in progress” and evolves over time because of the
A) importance of developing a fresh strategic plan every year that keeps employees from
becoming bored with executing the same strategy year after year.
B) ongoing need to imitate the new strategic moves of the industry leaders.
C) need to make regular adjustments in the company’s strategic vision.
D) ongoing need of company managers to react and respond to changing market and competitive
conditions.
E) frequent need to modify key elements of the company’s business model.