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Chapter 02: Strategic Planning for Competitive Advantage
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Page 1
1. Marketing objectives serve as motivators by creating something for employees to strive for.
a.
True
b.
False
ANSWER:
True
2. Environmental scanning refers to the process of collecting and interpreting information about forces, events, and
relationships in the external environment that may affect the future of the organization or the implementation of the
marketing plan.
a.
True
b.
False
ANSWER:
True
3. A strategic business unit (SBU) is a single business or a collection of related businesses.
a.
True
b.
False
ANSWER:
True
4. According to the General Electric model for strategic alternatives, conditions that have low overall attractiveness are
the best candidates for investment.
a.
True
b.
False
ANSWER:
False
5. RegiSure is a strategic business unit that shows low growth but has a dominant market share. Since it has a dominant
market share, it must be additionally financed despite its low growth.
a.
True
b.
False
ANSWER:
False
6. A diversification strategy is free of risk when a firm is entering unfamiliar markets.
a.
True
b.
False
ANSWER:
False
7. Eldams Inc., a technological firm, started producing a new gaming console for its domestic market. This shows that
Eldams Inc. has adopted a diversification strategy.
a.
True
b.
False
ANSWER:
False
8. Marketing strategy involves the activities of selecting and describing one or more target markets and developing and
maintaining a marketing mix that will produce mutually satisfying exchanges with target markets.
a.
True
b.
False
ANSWER:
True
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Page 2
9. Fresnas Inc. introduced a new line of smartphones in the market. As it is expected to generate huge profits and needs
more financing, the new line of smartphones can be categorized as dogs.
a.
True
b.
False
ANSWER:
False
10. According to Ansoff's strategic opportunity matrix, both product development and diversification entail the creation of
new products.
a.
True
b.
False
ANSWER:
True
11. The creation and implementation of a marketing plan will allow the organization to achieve marketing objectives and
succeed.
a.
True
b.
False
ANSWER:
True
12. In terms of effect strategic planning, managers should refrain from establishing new strategies.
a.
True
b.
False
ANSWER:
False
13. Market segments cannot be differentiated by ethnicity and multicultural aspects.
a.
True
b.
False
ANSWER:
False
14. A group of individuals in the age group of 11 to 16 years who extensively use the Internet is an example of a market
segment.
a.
True
b.
False
ANSWER:
True
15. The best marketing tactic is to protect existing market share by reinvesting earnings in product improvement, better
distribution, more promotion, and production efficiency.
a.
True
b.
False
ANSWER:
True
16. By manipulating elements of the marketing mix, marketing managers can fine-tune the customer offering and achieve
competitive success.
a.
True
b.
False
ANSWER:
True
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Chapter 02: Strategic Planning for Competitive Advantage
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Page 3
17. Marketing objectives must be consistent with and indicate the priorities of an organization.
a.
True
b.
False
ANSWER:
True
18. Adjacent innovation involves decisions that result in brand-new markets, products, and often new businesses by
relying on new, unfamiliar assets to develop the type of breakthrough decisions that fall in this category.
a.
True
b.
False
ANSWER:
False
19. A business mission does not affect a firm's long-run resource allocation, profitability, and survival.
a.
True
b.
False
ANSWER:
False
20. Unlike an operating decision, a strategic decision probably will not have a big impact on the long-run profitability of a
company.
a.
True
b.
False
ANSWER:
False
21. A firm's assets are functions—customer service and promotions—that the firm performs better than its competitors.
a.
True
b.
False
ANSWER:
False
22. SharpSheets is a paper manufacturing company that sells products made of recycled materials. No other paper
manufacturing company in the market has the ability to replicate its products. SharpSheets has a competitive advantage in
this scenario.
a.
True
b.
False
ANSWER:
True
23. Target markets can be selected only by appealing to the entire market with one marketing mix, concentrating on one
segment.
a.
True
b.
False
ANSWER:
False
24. In a target market strategy, identifying the market segment or segments begins with a market opportunity analysis
(MOA).
a.
True
b.
False
ANSWER:
True
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Page 4
25. A task force is a tightly organized unit under the direction of a manager who, usually, has broad authority.
a.
True
b.
False
ANSWER:
True
26. A company's skills include patents, copyrights, and technology that are superior to those of the competition.
a.
True
b.
False
ANSWER:
False
27. Unlike market penetration, diversification is not profitable when a firm enters markets with prominent competition.
a.
True
b.
False
ANSWER:
False
28. The key to having a sustainable competitive advantage is having a product that can be imitated by a competitor.
a.
True
b.
False
ANSWER:
False
29. Imitating a rival's competitive advantage requires a company to first identify the rival's competitive advantage.
a.
True
b.
False
ANSWER:
True
30. A competitive advantage is a set of unique features of a company and its products that are perceived by the target
market as significant and superior to those of the competition.
a.
True
b.
False
ANSWER:
True
31. Freulia Inc. manufactures and sells stationery and office supplies. The firm begins to lose its competitive advantage
with the entry of new competitors. In this case, in order to gain a sustainable competitive advantage, Freulia Inc. should:
a.
imitate the products of its competitors.
b.
depend on government subsidies.
c.
develop the skills and assets of the organization.
d.
aim at being the low-cost competitor in the industry.
ANSWER:
c
32. Which of the following strategies can enable companies to gain a cost competitive advantage?
a.
Removing frills from products
b.
Focusing on serving marginal customers
c.
Eliminating reverse engineering efforts
d.
Developing additional exclusive functional departments
ANSWER:
a
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33. Which of the following is a distinct feature of a product/service differentiation competitive advantage?
a.
Using government subsidies
b.
Controlling overhead costs
c.
Establishing a brand name
d.
Obtaining inexpensive raw materials
ANSWER:
c
34. In the context of implementation, which of the following statements is true of a task force?
a.
Authority is equally vested in each employee.
b.
It is established to accomplish a single goal or mission.
c.
It works independent of a specific deadline.
d.
Task force is set up for simple rather than strategic plans.
ANSWER:
b
35. In the context of a marketing mix, which of the following business activities is closely associated with promotion?
a.
Usage of social media to increase products sales
b.
Deciding to increase prices of products
c.
Changing the appearance of the product packaging
d.
Ways to improve product quality
ANSWER:
a
36. Critics of Ansoff's matrix mention that the matrix does not:
a.
provide firms with different marketing strategies.
b.
reflect the reality of how businesses grow.
c.
match products with various types of markets.
d.
outline clear-cut sectors outlined for businesses.
ANSWER:
b
37. Which of the following companies has most likely adopted a product/service differentiation competitive advantage?
a.
A firm that sells its products at lower costs than its competitors
b.
A firm that inhibits post-sale customer service relations
c.
A firm that provides highly reliable products
d.
A firm that solely relies on promotional strategies to increase its sales
ANSWER:
c
38. Remvault Dairies witnessed a steady decline in the sales of its products due to increased competition in the local
market. Remvault Dairies plans to adopt the market development strategy. In this scenario, which of the following is the
best step the company should take in an attempt to rejuvenate its financial losses?
a.
Introduce new products into new markets.
b.
Create new products for its present markets.
c.
Attract existing customers rather than new customers.
d.
Focus on promoting new uses for old products.
ANSWER:
d
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39. In the context of the innovation matrix, decisions taken at the _____ level implement changes that use existing assets
to provide added convenience to existing customers, and potentially entice customers from other brands.
a.
divestment
b.
diversification
c.
adjacent innovation
d.
core innovation
ANSWER:
d
40. The product in a marketing mix includes:
a.
the point of purchase.
b.
the company image.
c.
personal selling.
d.
sales promotion.
ANSWER:
b
41. Which of the following statements is true of a marketing audit?
a.
It should be carried out on a regular schedule.
b.
It is normally conducted by an outside party and restricts an inside party of a firm.
c.
It covers just the trouble spots of an organization.
d.
It is a device to implement a marketing plan.
ANSWER:
a
42. Which of the following is an element of a marketing mix?
a.
Pricing strategies
b.
Divestment strategies
c.
Investment strategies
d.
Trade restraint strategies
ANSWER:
a
43. Nessca Inc. is a pharmaceutical company. It follows a target market strategy because its products are designed to suit
the needs of a group of people with similar characteristics. In this case, which of the following market segments can be
targeted by Nessca Inc.?
a.
A group of individuals who are diabetic
b.
A group of individuals who work in the same organization
c.
A group of individuals who are working professionals
d.
A group of individuals who reside in the same residential area
ANSWER:
a
44. Synergy Corp., a large seller of energy-efficient light bulbs, uses extensive promotional strategies to stimulate sales.
The marketers at Synergy Corp. have noticed that a competitor is doing well and is steadily gaining a large market share.
They want to counter the competitor immediately by increasing the sales of Synergy Corp.'s bulbs. In this case, which of
the following steps is the quickest step that the marketers at Synergy can take to stimulate the sales of its products?
a.
Changing the pricing strategy.
b.
Creating complex production techniques.
c.
Entering into new supplier contracts.
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d.
Adopting a divesting strategy.
ANSWER:
a
45. Unlike a cost competitive advantage, a sustainable competitive advantage:
a.
is not attractive because of its durability.
b.
cannot be copied by the competition.
c.
lowers costs by removing frills.
d.
does not offer any low-priced products.
ANSWER:
b
46. The price component of a marketing mix is:
a.
a competitive weapon for companies.
b.
a basis to obtain a product differentiation advantage.
c.
the starting point of the marketing mix.
d.
the least flexible element of the marketing mix.
ANSWER:
a
47. Revel Inc., a cell phone manufacturer, decides to launch its new range of smartphones on the company's official Web
site so that its logistics issues can be solved. With this modification, its customers can now buy the smartphones even if
they are not sold in any of the stores in their locality. In this case, Revel Inc. focuses on the _____ element of the
marketing mix.
a.
evaluation
b.
promotion
c.
price
d.
distribution
ANSWER:
d
48. _____ is the strategy of preserving market share so that an organization can take advantage of very positive cash flow.
a.
Building
b.
Holding
c.
Harvesting
d.
Divesting
ANSWER:
b
49. Which of the following statements is true of effective strategic planning?
a.
Subordinates must persuade the management to accept their demands.
b.
Managers should challenge assumptions about the firm and the environment.
c.
Sound strategic planning is based on trial and error method of effective execution.
d.
Companies should refrain from establishing new strategies to improve productivity.
ANSWER:
b
50. _____ is the process of anticipating future events and determining strategies to achieve organizational objectives in the
future.
a.
Divesting
b.
Planning
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c.
Holding
d.
Harvesting
ANSWER:
b
51. In the context of the innovation matrix, _____ are decisions designed to take company strengths into new markets.
a.
transformational innovations
b.
retroactive innovations
c.
adjacent innovations
d.
core innovations
ANSWER:
c
52. In the context of marketing planning, implementation involves:
a.
allocating resources.
b.
identifying market segments.
c.
defining the business mission.
d.
assessing internal capabilities of a firm.
ANSWER:
a
53. Unlike a product/service differentiation competitive strategy, a niche strategy:
a.
is suitable for small companies with limited resources.
b.
is opted in a market segment that has low growth potential.
c.
aims at being the low-cost competitor in an industry.
d.
removes frills and options from a product or service.
ANSWER:
a
54. Magnira Inc. plans to implement a market penetration strategy to increase its market share. According to Ansoff's
strategic opportunity matrix, which of the following scenarios is most likely to happen?
a.
Magnira Inc. will try to attract new customers to its products.
b.
Magnira Inc. will try to increase its market share among existing customers.
c.
Magnira Inc. will create new products for its existing customers.
d.
Magnira Inc. will move away from its core capabilities and diversify its business.
ANSWER:
b
55. Which of the following should be the main focus of marketers in accordance with distribution strategies?
a.
Market segments to be targeted
b.
Medium to be used for advertising
c.
Products to be manufactured
d.
Physical locations of products
ANSWER:
d
56. In the context of the portfolio matrix, which of the following statements is true of dogs?
a.
Protection of existing market shares is essential for dogs.
b.
Dogs have a dominant market shares in low growth markets.
c.
Typical marketing strategies for dogs are to harvest or divest.
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d.
Dogs are escalated in the market by strong financial funding.
ANSWER:
c
57. A product/service differentiation competitive advantage can be achieved by:
a.
using inexpensive raw materials.
b.
having a strong dealer network.
c.
having low overhead costs.
d.
creating generic products.
ANSWER:
b
58. Fourlotts Inc. is a renowned technological firm. It controls many strategic business units (SBUs). In this case, each
SBU:
a.
has its own return on investment.
b.
shares the same goals and use the same strategies as Fourlotts Inc.
c.
plans collaboratively with Fourlotts Inc.'s other SBUs.
d.
refrains from performing manufacturing functions.
ANSWER:
a
59. MaxNutri Inc. sells cookies and nutrition bars. The marketers at MaxNutri Inc. are trying to come up with new and
attractive packaging designs for its cookies. In this scenario, MaxNutri Inc. is working on its _____.
a.
purchase strategy
b.
distribution strategy
c.
advertising strategy
d.
product strategy
ANSWER:
d
60. In the context of the Boston Consulting Group's (BCG's) portfolio matrix, a _____ is a strategic business unit that
generates more cash than it needs to maintain its market share.
a.
problem child
b.
dog
c.
star
d.
cash cow
ANSWER:
d
61. According to Ansoff's strategic opportunity matrix, which of the following factors is associated with market
development?
a.
Limiting production
b.
Increasing the prices of products
c.
Adding new uses to products
d.
Limiting resources used for promotion
ANSWER:
c
62. Rues and West Bros., an ammunition manufacturer, defines its mission statement as being in the ammunition-
production business rather than in the arms industry. In the given scenario, Rues and West Bros. is suffering from _____.
a.
marketing inertia
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b.
marketing myopia
c.
marketing dissonance
d.
marketing blockage
ANSWER:
b
63. Unlike a sustainable competitive advantage, a cost competitive advantage:
a.
does not ensure satisfactory profit margins.
b.
requires business firms to reduce after-purchase service options.
c.
involves producing goods that cannot be copied by competitors.
d.
is subject to continual erosion.
ANSWER:
d
64. In the context of implementation of marketing objectives, which of the following statements is true?
a.
Implementation gauges the extent to which marketing objectives have been achieved during the specified time
period.
b.
Brilliant marketing plans succeed even without proper implementation.
c.
It involves a lot of communication for executing a plan.
d.
Managers hold the power to decide and implement decisions rather than delegating it.
ANSWER:
c
65. According to Ansoff's strategic opportunity matrix, unlike market development, product development:
a.
focuses on attracting present customers to existing products.
b.
involves creating new products for present markets.
c.
involves entering new markets as competitors.
d.
focuses on using existing assets to provide added convenience to existing customers.
ANSWER:
b
66. Which of the following statements is true of a marketing plan?
a.
It is a set of orally communicated rules and is seldom written down.
b.
It is developed independently of the external business environment.
c.
It defines the business mission and objectives.
d.
It lacks the elements of advanced strategic planning.
ANSWER:
c
67. The basic goal of _____ is to increase short-term cash return without increased concern for long-run impact.
a.
building
b.
holding
c.
harvesting
d.
divesting
ANSWER:
c
68. _____ is a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the
marketing organization.
a.
Marketing mix
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b.
Diversification
c.
Core innovation
d.
Marketing audit
ANSWER:
d
69. Which of the following statements is true of strategic planning?
a.
The goal of strategic planning is to create daily operational schedules for first-line workers.
b.
Strategic planning does not require long-term commitments of resources.
c.
A good strategic plan can help protect and grow a firm's resources.
d.
Strategic planning does not cater to understanding customers and markets.
ANSWER:
c
70. The marketers at Gemini Inc. have prepared a marketing plan for the company's air conditioners. The managers at
Gemini have outlined several activities for their subordinates based on this marketing plan. The employees are required to
finish these activities within a month. The managers have also allocated a budget for each activity. In the context of
marketing planning, which of the following concepts is illustrated in the scenario?
a.
Divestment
b.
Implementation
c.
Diversification
d.
Vertical integration
ANSWER:
b
71. Which of the following statements is true of the price component of a marketing mix?
a.
It does not affect a firm's competitive advantage.
b.
It is the least important of the four Ps of the marketing mix.
c.
It is what a buyer must give up in order to obtain a product.
d.
It is decided independently of the external environment of the business.
ANSWER:
c
72. Varion Air, an airline company, is providing promotional offers to mark its first anniversary. Its customers will be
given a complimentary air ticket on the purchase of three business class tickets. In this case, which of the following is true
of its promotional strategy?
a.
It will satisfy the flyers and not the management of Varion Air.
b.
It may not be effective because promotion does not apply to services.
c.
It may increase the sales of Varion Air.
d.
It will work independently of the other three elements of the marketing mix.
ANSWER:
c
73. In the context of the general electric model, _____ refers to how well placed the organization is to take advantage of
market opportunities.
a.
business position
b.
experience curves
c.
market attractiveness
d.
marketing myopia
ANSWER:
a
