78) Activity-based costing
A) is an accounting system that assigns a company’s expenses to whichever activity in a
company’s value chain is responsible for creating the cost.
B) involves using benchmarking techniques to develop cost estimates for the value chain
activities of each major rival.
C) is a powerful tool for identifying the different pieces of a company’s value chain and
classifying them as primary activities and support activities.
D) involves determining which value chain activities represent variable costs and which
represent fixed costs.
E) is a tool for identifying the activities that cause a company’s product to be strongly
differentiated from the products of rivals.
79) Costs and price differences among competing companies can have origins in activities
performed by
A) the company’s internally performed activities (its own value chain) compared to the cost
structure of the internally performed activities of rival companies.
B) value chains of the company’s suppliers.
C) value chains of a company’s distributors and retail dealers and forward channel allies.
D) the company’s internally performed activities (its own value chain), but also on costs in the
value chain of its suppliers and distribution channel allies.
E) whether the company has a longer or shorter value chain than its close rivals.
80) Benchmarking involves
A) comparing how different companies perform various value chain activities and then making
cross-company comparisons of the costs and effectiveness of these activities.
B) checking whether a company has achieved more of its financial and strategic objectives over
the past five years relative to its direct competitors.
C) studying whether a company’s resource strengths are more/less powerful than the resource
strengths of rival companies.
D) studying how a company’s competitive capabilities stack up against the competitive
capabilities of selected companies known to have world-class competitive capabilities.
E) comparing the best practices in one industry against the best practices in another industry.
81) The process of benchmarking SunPower’s value chain activities against its rivals in the solar
power industry would not entail
A) identifying the best practices in performing various value chain activities.
B) learning how best practice companies achieve lower costs or better results in performing
benchmarked activities.
C) constructing a company value chain and identifying which activities are primary and which
are support activities.
D) making cross-company comparisons of the costs of performing specific value chain activities.
E) taking actions to improve a company’s cost competitiveness when benchmarking reveals that
its costs and results of performing an activity are not as good as what other companies have
achieved.
82) Benchmarking provides low-cost providers such as Dollar General, Ryanair, T.J.Maxx, and
Nucor Steel with
A) hard evidence of cost competitiveness.
B) proof of resource availability.
C) a company strategy.
D) verification of total cost ownership.
E) improvements to internal processes.
83) The most difficult part of benchmarking is
A) the decision of whether to do it at all.
B) how to obtain access to information regarding rivals’ practices and costs.
C) when to initiate the process.
D) what information to utilize in the analysis process.
E) when to stop the process and move forward with strategy.
84) Obtaining cost information is a primary difficulty associated with benchmarking. The
following are typical sources for collecting information except from
A) published reports, industry research firms, and trade groups.
B) talking to knowledgeable industry leaders.
C) field trips to the facilities of competitors or non-competing firms.
D) independent firms and consulting firms to gather best practices and comparative cost data
without identifying competing firms.
E) classified government documents.
85) Managers can improve efficiency and effectiveness in a company’s value chain by analyzing
A) a company’s own internal activity segments, the suppliers’ part, and the forward (distribution)
channel portion of the value chain system.
B) a company’s reinforced activities identified as efficiency measures for improved effectiveness.
C) only the internal activity segments.
D) only the suppliers’ part.
E) only the distributors’ channel portion.
86) An option for not remedying an internal cost disadvantage includes
A) investing in productivity-enhancing, cost-saving technological improvements.
B) redesigning the product or some of its components to facilitate speedier and more economical
manufacture or assembly.
C) implementing the use of best practices throughout the company, particularly for high-cost
activities.
D) eliminating some cost-producing activities altogether by revamping the value chain.
E) performing activities in the same way as done earlier.
87) If you were a consultant to SunPower, one of the largest solar power companies in the United
States, you would not recommend this activity to remedy high internal costs relative to its rivals.
A) finding ways to detour around activities or items where costs are high
B) redesigning the product or some of its components to permit more economical manufacture or
assembly
C) implementing aggressive strategic resource mapping to permit across-the-board cost reduction
D) outsourcing high-cost activities to vendors or contractors who can perform them more
economically
E) relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin
America or Eastern Europe) where they can be performed more cost-effectively
88) A company’s strategic options for remedying cost disadvantages in internally performed
value chain activities do not include
A) revamping its value chain to eliminate or bypass some cost-producing activities (particularly
low value-added activities).
B) implementing the use of best practices, particularly for high-cost activities.
C) investing in productivity-enhancing, cost-saving technological improvements.
D) switching to activity-based costing.
E) outsourcing the performance of high-cost activities to vendors that can perform them more
cheaply.
89) The options for remedying a supplier-related cost disadvantage include
A) pressuring suppliers for more favorable prices, switching to lower-priced substitute inputs,
and collaborating closely to identify mutual cost-saving opportunities.
B) instituting forward vertical integration.
C) shifting into the production of substitute products.
D) shifting from a low-cost leadership strategy to a differentiation or focus strategy.
E) cutting selling prices and trying to win a bigger market share.
90) Remedying a supplier-related cost disadvantage would not entail
A) integrating backward into the business of high-cost suppliers in an effort to reduce the costs
of the items being purchased.
B) negotiating more favorable prices with suppliers.
C) collaborating closely with suppliers to identify mutual cost-saving opportunities.
D) switching to lower-priced substitute inputs.
E) persuading forward channel allies to implement best practices.
91) Remedying a cost disadvantage associated with activities performed by forward channel
partners (wholesale distributors and retail dealers) would not involve
A) changing to a more economical distribution strategy such as putting more emphasis on
cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating
forward into company-owned retail outlets.
B) enhancing differentiation through activities such as cooperative advertising at the forward end
of the value chain.
C) pressuring distributors/dealers and other forward channel allies to reduce their costs and
markups.
D) insisting on across-the-board cost cuts in all value chain activities—those performed by
suppliers, those performed in-house, and those performed by distributors/dealers.
E) collaborating with forward channel allies to identify win-win opportunities to reduce costs.
92) The means to enhance differentiation through activities at the forward end of the value chain
system do not include
A) engaging in cooperative advertising and promotions.
B) creating exclusive arrangements with downstream sellers or other mechanisms that increase
their incentives for enhanced-delivery customer value.
C) creating and enforcing standards for downstream activities.
D) assisting in training channel partners in business practices.
E) enhancing cost-reducing activities with defensive functionality designed to create incentives.
93) A company’s value-creating activities can offer a competitive advantage in one of these
ways.
A) contribute to greater efficiency and lower costs and provide a basis for differentiation.
B) contribute expense savings and enhance product exclusivity.
C) reduce cost disadvantages and market price anomalies.
D) contribute customer experience value and conserve operating functionality.
E) contribute to competitive assets and discontinue distinctive competencies.
94) For a company to translate its performance of value chain activities into a competitive
advantage, it must
A) undertake ongoing and persistent efforts to be cost-efficient and develop differentiation
advantages.
B) have more core competencies than rivals.
C) have at least three distinctive competencies.
D) have competencies that allow it to produce the highest-quality product in the industry.
E) have more competitive assets than competitive liabilities.
95) To build a competitive advantage by out-managing rivals in performing value chain
activities, a company must
A) position itself in the industry’s more favorably situated strategic group.
B) develop resource strengths that will enable it to pursue the industry’s most attractive
opportunities.
C) develop core competencies and maybe a distinctive competence that rivals don’t have or can’t
quite match and that are instrumental in helping it deliver attractive value to customers.
D) outsource all of its value chain activities to world-class vendors and suppliers.
E) eliminate its resource weaknesses.
96) When companies engage in value-creating activities, they do so by
A) focusing on exploiting a company’s best-executed operating strategy.
B) concentrating on efficient performance of the company’s primary value chain activities.
C) concentrating on minimizing the costs associated with the design of a product or service.
D) drawing on specific company resources and capabilities that underlie and enable the activity.
E) focusing on working with forward-channel allies to develop capabilities to outmatch the
capabilities of rivals.
97) As a manager at the French discount retailer Carrefour, you could derive a competitive
advantage from
A) building organizational expertise in performing Carrefour’s competitively important value
chain activities.
B) understanding how Carrefour’s value chain activities provide opportunity for growth.
C) building value-creating activities all along Carrefour’s value chain.
D) increasing Carrefour’s superiority over rivals by executing even unimportant tasks and
activities extremely well.
E) sustaining Carrefour’s current chain of activities to lower costs.
98) The value of doing competitive strength assessment is to
A) determine how competitively powerful are the company’s core competencies
B) learn if the company’s market opportunities are better than those of its rivals.
C) learn whether a company has a distinctive competence.
D) learn how the company ranks relative to rivals on each of the important factors that determine
market success and ascertain whether the company has a net competitive advantage or
disadvantage vis-à-vis key rivals.
E) determine whether a company’s resource strengths are sufficient to allow it to earn bigger
profits than rivals.
99) Understanding where a company is competitive requires
A) determining whether a company has a cost-effective value chain.
B) developing quantitative strength ratings for the company and key rivals on each industry key
success factor and each pivotal resource, capability, and value chain activity.
C) identifying a company’s core competencies and distinctive competencies (if any).
D) analyzing whether a company is well positioned to gain market share and be the industry’s
profit leader.
E) developing quantitative measures of a company’s chances for future profitability.
100) Assigning a weight to each measure of competitive strength assessment is generally
analytically superior because
A) a weighted ranking identifies which competitive advantages are most powerful.
B) an unweighted ranking does not discriminate between companies with high and low market
shares.
C) it singles out which competitor has the most competitively potent core competencies.
D) weighting each company’s overall competitive strength by its percentage share of total
industry profits produces a more accurate measure of its true competitive strength.
E) all of the various measures of competitive strength are not equally important.
101) Competitive strength can be determined by assigning measures based on perceived
importance because
A) it provides a more accurate assessment of the strength of competitive forces.
B) it eliminates the bias introduced for those firms having large market shares.
C) the different measures of competitive strength are unlikely to be equally important.
D) the results provide a more reliable measure of what competitive moves rivals are likely to
make next.
E) weighting each company’s overall competitive strength by the size of its market share
produces a more accurate measure of its true competitive strength.
102) In a weighted competitive strength assessment, the sum of importance weights should add
up to
A) 100 percent.
B) 1.00.
C) 10.
D) 100.
E) 1000.
103) In a weighted competitive strength analysis, each strength measure is assigned a weight
based on
A) its percentage share of total industry revenues.
B) its percentage share of total industry losses.
C) its perceived importance in determining a company’s competitive success in the marketplace.
D) its percentage share of total industry profits.
E) what it takes to provide better analytical balance between the companies with high ratings and
the companies with low ratings and thus get the sum of the weights to add up to 1.0.
104) Calculating competitive strength ratings for a company and its rivals using the industry’s
most telling measures of competitive strength or weakness
A) is a way of determining which competitor has the highest overall competitive advantage in
the marketplace and which competitor is faced with the lowest overall competitive disadvantage.
B) is the most reliable indicator of which industry member has the highest overall product
quality.
C) is a powerful way of revealing which competitors are in the best and worst strategic groups.
D) is the most reliable indicator of which industry member has the lowest overall costs and is the
low-cost leader.
E) pinpoints which industry rivals are most insulated from the industry’s driving forces.
105) Quantitative measures of a company’s competitive strength
A) signal which competitor has the most distinctive competencies and which competitor has the
fewest.
B) provide useful indicators of how a company compares against key rivals, factor by factor and
capability by capability—thus indicating whether the company has a net overall competitive
advantage or disadvantage against each rival.
C) reveal which competitors are in the best and worst strategic groups.
D) show which industry rival has the best overall market opportunities and which competitor has
the poorest market opportunities.
E) pinpoint which industry rival is subject to the least amount of competitive pressures from the
five competitive forces.