Crafting and Executing Strategy, 22e (Thompson)
Chapter 6 Strengthening a Company’s Competitive Position
1) Bonobos’s Guideshop store concept allows men to have a personalized shopping experience,
where they can try on clothing in any size or color, and then have it delivered the next day to
their home or office. This fashion retail concept is a good example of
A) an offensive strategy to leapfrog competitors by being the first adopter of next-generation
technologies or being first to market with next-generation products.
B) an offensive strategy to offer an equally good or better product at a lower price.
C) an offensive strategy to seek uncharted waters and compete in blue oceans.
D) a defensive strategy to minimize the competitive advantages of rivals.
E) a defensive strategy to capture occupied territory by maneuvering around rivals.
2) A hit-and-run or guerrilla warfare type offensive strategy
A) involves random offensive attacks used by a market leader to steal customers away from
unsuspecting smaller rivals.
B) involves undertaking surprise moves to secure an advantageous position in a fast-growing and
profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to
defend its newly won position.
C) works best if the guerrilla is the industry’s low-cost leader.
D) involves pitting a small company’s own competitive strengths head-on against the strengths of
much larger rivals.
E) involves unexpected attacks (usually by a small-to-medium size competitor) to grab sales and
market share from complacent or distracted rivals.
3) Sometimes it makes sense for a company to go on the offensive to improve its market position
and business performance. The best offensives tend to incorporate the following EXCEPT
A) focusing relentlessly on building a competitive advantage.
B) applying resources where rivals are least able to defend themselves.
C) using a strategic offensive to allow the company to leverage its weaknesses to strengthen
operating vulnerabilities.
D) employing the elements of surprise as opposed to doing what rivals expect and are prepared
for.
E) displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.
4) Once a company has decided to employ a particular generic competitive strategy, then it must
make the following additional strategic choices, except whether to
A) focus on building competitive advantages.
B) employ the element of surprise as opposed to doing what rivals expect and are prepared for.
C) display a strong bias for swift, decisive, and overwhelming actions to overpower rivals.
D) create and deploy company resources to cause rivals to defend themselves.
E) pay special attention to buyer segments that a rival is already serving.
5) Companies like Amazon, Apple, Facebook, and Google employ all but ONE of the following
offensive actions to complement and supplement the choice of one of the five generic
competitive strategies. Which is not an example of an offensive move?
A) focusing on building competitive advantages
B) employing the element of surprise as opposed to doing what rivals expect and are prepared for
C) pursuing a market share leadership strategy
D) displaying a strong bias for swift, decisive, and overwhelming actions to overpower
E) creating and deploying company resources to cause rivals to defend themselves
6) Strategic offensives should, as a general rule, be based on
A) exploiting a company’s strongest competitive assets—its most valuable resources and
capabilities.
B) instigating and executing the chosen strategy efficiently and effectively.
C) scoping and scaling an organization’s internal and external situation.
D) molding an organization’s character and identity.
E) satisfying the buyer’s needs that the company seeks to meet.
7) The principal offensive strategy options include all of the following except
A) offering an equally good or better product at a lower price.
B) using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent
or distracted rivals.
C) launching a preemptive strike to secure an advantageous position that rivals are prevented or
discouraged from duplicating.
D) pursuing continuous product innovation to draw sales and market share away from less
innovative rivals.
E) initiating a market threat and counterattack simultaneously to effect a distraction.
8) Offensive strategic moves involve all of the following except
A) leapfrogging competitors by being first to market with next-generation products.
B) using hit-and-run or guerrilla warfare tactics to grab sales and market share.
C) launching a preemptive strike to secure an advantageous position that rivals are prevented or
discouraged from duplicating.
D) pursuing continuous product innovation to draw sales and market share away from rivals.
E) blocking the avenues open to challengers.
9) An offensive to yield good results can be short if
A) buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign).
B) competition creates an appealing new product.
C) the technology needs debugging.
D) new production capacity needs to be installed.
E) consumer acceptance of an innovative product takes time.
10) Bumble, a digital dating site where women make the first move, specifically uses which
strategic weapon in its offensive arsenal?
A) pursuing disruptive product innovations to create new markets
B) adopting and improving on the good ideas of other companies or rival firms
C) using hit-and-run guerilla warfare tactics to grab market share from distracted or complacent
rivals
D) launching a preemptive strike to capture an industry’s limited resources or capture a rare
opportunity
E) offering an equally good or better product at a lower price than rivals
11) The worst targets for an offensive-minded company to target are
A) market leaders that are strong.
B) runner-up firms with strengths in areas where the offensive-minded challenger is weaker.
C) large multinational companies with vast capabilities and resources.
D) runner-up firms that have amassed sufficient resources and capabilities to place them on the
verge of becoming market leaders.
E) other offensive-minded companies that possess a sizable war chest of cash and marketable
securities.
12) Launching a preemptive strike type of offensive strategy entails
A) sapping the rival’s financial strength and competitive position.
B) weakening the rival’s resolve.
C) moving first to secure advantageous competitive assets that rivals can’t readily match or
duplicate.
D) threatening the rival’s overall survival in the market.
E) using hit-and-run tactics to grab sales and market share away from complacent or distracted
rivals.
13) A blue-ocean strategy
A) is an offensive strike employed by a market leader that is directed at pilfering customers away
from unsuspecting rivals to boost profitability.
B) involves an unexpected (out-of-the-blue) preemptive strike to secure an advantageous
position in a fast-growing market segment.
C) works best when a company is the industry’s low-cost leader.
D) involves abandoning efforts to beat out competitors in existing markets and instead invent a
new industry or new market segment that renders existing competitors largely irrelevant and
allows a company to create and capture altogether new demand.
E) involves the use of highly creative, never-used-before strategic moves to attack the
competitive weaknesses of rivals.
14) A good example of blue-ocean type of offensive strategy is
A) a company like EERO that leapfrogged rivals in innovation in the home Wi-Fi market.
B) a company like EasyJet that developed a cost advantage to undercut its rivals in passenger
airlines
C) a company like Home Depot that adopted and improved on the good ideas of other
companies.
D) a company like Australian winemaker Casella Wines that created a Yellow Tail brand
designed to appeal to a wider market, one that also includes consumers of other alcoholic
beverages.
E) a company like Google that plays hardball, aggressively pursuing competitive advantage and
trying to reap the benefits a competitive edge offers—a leading market share, excellent profit
margins, and rapid growth.
15) An example of a company that does not use blue-ocean market strategy is
A) eBay in the online auction industry
B) Tune Hotels in the lodging industry
C) Uber and Lyft in the ridesharing industry
D) Cirque du Soleil in the live entertainment industry
E) Walmart’s logistics and distribution in the retail industry
16) As general manager of a local restaurant chain, you have been asked to develop defensive
moves to protect your company’s market position and restrict any challenger’s options for
initiating a competitive attack. You would present all but ONE of the following strategic options
to your executive team.
A) Challenge struggling runner-up restaurants that are on the verge of going under.
B) Grant volume discounts or better financing terms to dealers/distributors and provide discount
coupons to customers to help discourage them from frequenting other local restaurants.
C) Signal to challengers and new entrants in the local restaurant industry that retaliation is likely
in the event they launch an attack.
D) Publicly commit your restaurant chain to a policy of matching a competitor’s terms or prices
or breadth of menu items.
E) Maintain a war chest of cash and/or marketable securities.
17) The purposes of a defensive strategy do not include
A) increasing the risk of having to defend an attack.
B) weakening the impact of any attack that occurs.
C) pressuring challengers to aim their efforts at other rivals.
D) helping protect a competitive advantage.
E) decreasing the risk of being attacked.
18) To fend off a competitive attack, defensive-minded companies
A) remain steadfast to current product features and models to ensure resources are not diverted
toward unproductive efforts.
B) avoid giving suppliers volume discounts or providing them with better financing terms from
the strategic response in order to maintain current profitability levels.
C) use innovation and intellectual property protection to obtain product line exclusivity to force
competitors to use other distributors.
D) void all lengthy warranties to save money.
E) avoid competitor’s clients since their loyalty will not allow them to switch.
19) What is the goal of signaling a challenger that strong retaliation is likely in the event of an
attack?
A) to alleviate their fears by committing to reduce the costs of value chain activities
B) to cause the challenger to begin the attack instead of waiting
C) to dissuade challengers from attacking or diverting them into using less-threatening options
D) to create collaborative relationships with challengers
E) to insulate other firms from adverse impacts resulting from the challenge
20) A signal that would not warn challengers that strong retaliation is likely is
A) publicly announcing management’s commitment to maintain market share.
B) publicly committing to a company policy of matching competitors’ terms or pricing.
C) maintaining a war chest of cash and marketable securities.
D) making a strong counter-response to the moves of weak competitors.
E) publicly announcing strong quarterly earnings potential to financial analysts.
21) Tinder’s first-mover strategic thrust into the online dating industry resulted in a high payoff
in all of the following except
A) pioneering rollout of the dating app on college campuses helped build up the firm’s image and
reputation and created strong brand loyalty.
B) users remained strongly loyal to Tinder because of incentives and switching cost barriers.
C) learning how to use Tinder was kept proprietary.
D) moving first constituted a preemptive strike, making competitive imitation very difficult or
unlikely for rivals.
E) market uncertainties made it difficult for Tinder’s founding team to ascertain whether or not
the dating app would eventually succeed.
22) Being a first mover is not particularly advantageous under which circumstance?
A) when moving first with a preemptive strike makes imitation difficult or unlikely
B) when first-time buyers remain strongly loyal to pioneering firms in making repeat purchases
C) when early commitments to new technologies, types of components, or emerging distribution
channels produce an absolute cost advantage over rivals
D) when markets are slow to accept the innovative product offering of a first mover, and fast
followers possess sufficient resources and marketing muscle to overtake a first mover
E) when being a pioneer helps build a firm’s image and reputation with buyers
23) First-mover disadvantages (or late-mover advantages) rarely arise when
A) the costs of pioneering are much higher than being a follower and only negligible
learning/experience curve benefits accrue to the pioneer.
B) rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-
generation products of their own.
C) the pioneer’s products are somewhat primitive and do not live up to buyer expectations,
allowing clever followers to win disenchanted buyers with better-performing products.
D) the marketplace is skeptical about the benefits of a new technology or product being
pioneered by a first mover.
E) the market response is strong and the pioneer gains a monopoly position that enables it to
recover its investment.
24) Late-mover advantages (or first-mover disadvantages) are not likely to arise when
A) the costs of pioneering are much higher than being a follower and only negligible
learning/experience benefits accrue to the pioneer.
B) the marketplace is skeptical about the benefits of a new technology or product being
pioneered by a first mover.
C) the pioneer’s products are somewhat primitive and are easily bested by late movers.
D) opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market
segment that creates altogether new demand.
E) technological change is rapid, and fast-following rivals find it easy to leapfrog the pioneer
with next-generation products of their own.
25) First-mover advantages are unlikely to be present when
A) pioneering helps build a firm’s image and reputation with buyers.
B) rapid market evolution (due to fast-paced changes in technology or buyer preferences)
presents opportunities to leapfrog a first-mover’s products with more attractive next-version
products.
C) early commitments to new technologies, new-style components, new or emerging distribution
channels, and so on, can produce an absolute cost advantage over rivals.
D) moving first can constitute a preemptive strike, making imitation extra hard or unlikely.
E) first-time customers remain strongly loyal to pioneering firms in making repeat purchases.
26) Because the timing of a strategic move can be just as important as the choice of move to
make, a company’s best option with respect to timing of an action is
A) to be the first mover.
B) to be a fast follower.
C) to be a late mover (because it is cheaper and easier to imitate the successful moves of the
leaders and moving late allows a company to avoid the mistakes and costs associated with trying
to be a pioneer—first-mover disadvantages usually overwhelm first-mover advantages).
D) to be the last mover—playing catch-up is usually fairly easy and almost always is much
cheaper than any other option.
E) to carefully weigh the first-mover advantages against the first-mover disadvantages and act
accordingly.
27) The race among rivals for industry leadership is more likely to be a marathon rather than a
sprint when
A) new industry or market segments are yet to be developed and create altogether new consumer
demand.
B) fast followers find it easy to leapfrog the pioneer with even better next-generation products of
their own.
C) the market depends on the development of complementary products or services that are
currently not available, buyers have high switching costs, and influential rivals are in position to
derail the efforts of a first mover.
D) entry barriers are high, substitute products or services are readily available, and buyers are
prone to negotiate aggressively for better terms and lower prices.
E) there are nearly always big advantages to being a slow mover rather than an early mover,
especially in regard to avoiding the “mistakes” of first or early movers.
28) For every emerging opportunity, there exists a(n)
A) market penetration curve, and this typically has an inflection point where the business model
falls into place.
B) opportunity to achieve first-mover status, which depends on analyzing the competitive status
curve where all the potential rivals are encoded.
C) emerging pitfall that is a counterpoint to the intended growth.
D) normal curve scenario which signifies the average growth curve will be opportunistic.
E) intense competition that constrains the company’s prospects for rapid growth and superior
profitability.
29) Market conditions and factors that tend not to favor first movers include
A) buyer behavior that is readily attracted to new technology or product features.
B) conditions that make imitation difficult and absolute cost advantages that accrue to those who
make early commitments to new technologies, components, or distribution channels.
C) quick market penetration and strong loyalty among first-time customers.
D) growth in demand that depends on the development of complementary products or services
that are not currently available and new-industry infrastructure that is needed before buyer
demand can surge.
E) pouring too few resources into getting ahead of the market opportunity.
30) What does the scope of the firm refer to?
A) the range of activities the firm performs externally and its social responsibility activities
B) to gain competitive advantage based on where it locates its various value chain activities
C) the firm’s capability to employ vertical integration strategies
D) the range of activities the firm performs internally and the breadth of its product offerings, the
extent of its geographic market, and its mix of businesses
E) to prevent foreign competition from affecting the market
31) ________ is the range of product and service segments that the firm serves within its market.
A) Horizontal scope
B) Vertical integration
C) Vertical scope
D) Product outsourcing
E) Joint venture partnership
32) ________ is the extent to which a firm’s internal activities encompass one, some, many, or
all of the activities that make up an industry’s entire value chain system.
A) Horizontal scale
B) Vertical scope
C) Outsourcing scope
D) Cooperative scaled scope
E) Focal scope
33) The difference between a merger and an acquisition is that
A) a merger involves one company purchasing the assets of another company with cash, whereas
an acquisition involves a company acquiring another company by buying all of the shares of its
common stock.
B) a merger is the combining of two or more companies into a single corporate entity, whereas
an acquisition involves one company (the acquirer) purchasing and absorbing the operations of
another company (the acquired).
C) in a merger, the companies retain their original names, whereas in an acquisition the name of
the company being acquired is changed to be the name of the acquiring company.
D) a merger is a combination of three or more companies, whereas an acquisition is a pooling of
interests of just two companies.
E) a merger involves two or more companies deciding to adopt the same strategy, whereas an
acquisition involves one company taking over the strategy-making function of another company.