A firm’s organizational structure is comprised of:
A. resource strengths and competitive capabilities that allow it to incorporate attributes
at lower costs than rivals whose products have similar attributes.
B. the formal and informal arrangement of tasks, responsibilities, lines of authority, and
reporting relationships by which the firm is administered.
C. excellent marketing and sales skills to convince buyers to pay a premium price for
the attributes/features incorporated in its product.
D. sustainable distinctive competencies to ensure cost reduction and competitiveness.
E. a number of independent functional units involved in some common undertaking,
with one unit typically in a more central role.
The advantages of using an acquisition strategy to pursue opportunities in foreign
markets include:
A. having a high level of control and speed as an entry strategy to overcome trade
barriers.
B. allowing a company to achieve scalable economies.
C. eliminating the costs and risks associated with establishing a foreign business
location.
D. achieving variable product quality and competitive product performance.
E. exporting goods at higher costs than rivals in those locations.
The two biggest drawbacks or disadvantages of unrelated diversification are:
A. the difficulties of passing the cost-of-entry test and the ease with which top
managers can make the mistake of diversifying into businesses where competition is
too intense.
B. the difficulties of capturing financial fit and having insufficient financial resources to
spread business risk across many different lines of business.
C. the demanding managerial requirements and the limited competitive advantage
potential due to lack of cross-business strategic fit benefits.
D. ending up with too many cash hog businesses and too much diversity among the
competitive strategies of the businesses it has diversified into.
E. the difficulties of achieving economies of scope and conflicts/incompatibility among
the competitive strategies of the company’s different businesses.
A dynamic capability is the:
A. ongoing capacity to modify existing resources and capabilities to create new ones.
B. improvement evaluation process for eliminating waste in the firm.
C. functional and operating resources management process.
D. ongoing capability to understand and establish a rival commitment to resource
alignment.
E. most compelling product or service a firm .
A low-cost provider’s product does NOT have to always:
A. contain enough attributes to be attractive to prospective buyers.
B. suggest strong rather than weak product differentiation.
C. signal value to buyers.
D. provide high margins per unit sold to bring in enough unit sales.
E. be valuable and appealing to a wide range of buyers.
Which of the following is a benefit of closely aligning the corporate culture with the
requirements for proficient strategy execution?
A. A good strategy-culture alignment makes it possible to establish a much bolder
strategic vision and strategic intent.
B. A good strategy-culture alignment enhances a company’s cost competitiveness.
C. A tight strategy-culture fit steers company personnel into displaying behaviors and
adopting operating practices that promote good strategy execution.
D. A tight strategy-culture alignment enhances the creation of core competencies and
distinctive competencies.
E. A tight strategy-culture alignment makes it easier to change a company’s culture over
time-as a company’s strategy evolves, the culture automatically evolves too.
With a strategy of unrelated diversification, an acquisition is deemed to have potential if
it:
A. can achieve at least existing profit margins into the near future.
B. has the opportunity to generate positive buzz in the industry, even if it may not be
able to contribute to the parent firm’s bottom line
C. can pass the industry attractiveness test and the cost-of-entry test, and if it has good
prospects for profit growth.
D. can pass at least the industry attractiveness test if not the cost of entry test.
E. can add economic value for managers.
New strategies often entail budget reallocations because:
A. revamping the performance of value chain activities can be costly.
B. the accompanying policy revisions and compensation incentives tend to require
different levels of funding than before.
C. business units important in the prior strategy but having a lesser role in the new
strategy may need downsizing, while units and activities that now have a bigger and
more critical strategic role may need more people, new equipment, additional facilities,
and above-average increases in their operating budgets.
D. empowering employees to carry out the new strategy elements and shifting to a total
quality management type of culture to build skills in competent strategy execution
typically require substantial new funding and budget revisions.
E. adopting best practices and pushing for continuous improvement tends to reduce
costs and reduce overall resource requirements.
Activity-based costing is used to evaluate a company’s cost-competitiveness and:
A. determine whether the value chains of rival companies are similar or different.
B. benchmark the costs of primary value chain activities against the costs of the support
value chain activities.
C. determine the costs of each primary and support activity comprising a company’s
value chain and thereby reveal the nature and makeup of a company’s internal cost
structure.
D. determine the costs of each strategic action a company initiates.
E. analyze the costs of each primary activity.
Strategic fit between two or more businesses exists when one or more activities
comprising their respective value chains present opportunities:
A. to prevent the transfer of expertise or technology or capabilities from one business to
another.
B. to independently preserve common brand names from cross-business usage.
C. to increase costs by combining the performance of the related value chain activities
of different businesses.
D. for cross-business collaboration to build valuable new resource strengths and
competitive capabilities.
E. to maintain business value chain activities separate and apart from one business to
another to protect company independence.
A broad differentiation strategy improves profitability when:
A. it is focused on product innovation.
B. differentiating enhances product performance and quality.
C. the differentiating features appeal to sophisticated and prestigious buyers.
D. the higher price the product commands exceeds the added costs of achieving the
differentiation.
E. the differentiator charges a price that is only fractionally higher than the industry’s
low-cost provider.
Which of the following is NOT a recommended way for managers to monitor the
operating performance of employees to ensure superior strategy execution?
A. Scrutinizing daily and weekly operating statistics without resorting to constant
over-the-shoulder supervision
B. Utilizing self-managed work groups in peer-based control environments
C. Removing some layer of management hierarchy and relying on strong peer pressure
to keep team members operating between the white lines
D. Leaving employees to their own devices in meeting performance standards
E. Using information systems capability to monitor team performance in real time
The big problem a franchisor faces is:
A. allowing franchisees to achieve scale economies.
B. maintaining quality control due to a lack of commitment to consistency and
standardization.
C. eliminating the costs and risks associated with establishing a foreign business
location.
D. sharing foreign facilities and marketing strategies with local businesses.
E. achieving higher product quality and better product performance than with an export
strategy.
A focused low-cost strategy can lead to attractive competitive advantage when:
A. buyers are looking for the best value at the best price.
B. buyers are looking for a budget-priced product.
C. buyers are price sensitive and are attracted to brands with low switching costs.
D. a market is emerging and demand in the target market niche is growing rapidly and
is served by industry-wide competitors
E. a firm can lower costs significantly by limiting its customer base to a well-defined
buyer segment.
Which of the following is NOT a factor that makes it appealing to diversify into a new
industry by forming an internal startup subsidiary to enter and compete in the target
industry?
A. When internal entry is cheaper than entry via acquisition
B. When a company possesses the skills and resources to overcome entry barriers and
there is ample time to launch the business and compete effectively
C. When adding new production capacity will not adversely impact the supply demand
balance in the industry by creating oversupply conditions
D. When the industry is growing rapidly and the target industry is comprised of several
relatively large and well-established firms
E. When incumbent firms are likely to be slow or ineffective in combating a new
entrant’s efforts to crack the market
First-mover disadvantages (or late-mover advantages) rarely ever 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.
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.
Which of the following areas within a company’s total value chain system can managers
use to improve efficiency and effectiveness?
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
Which of the following is NOT an example of a company’s dynamic capability?
A. A capacity to improve existing resources and capabilities
B. Upgrades to R&D resources to drive product innovation
C. A capacity to add new resources and capabilities to the competitive asset portfolio
D. An ability to replace degraded resources with acquired capabilities
E. An ability to keep antiquated resources by disregarding innovative capabilities
Explain the differences between a “think global, act global” strategy and a “think
global, act local” strategy.
A pen manufacturer sells high-quality pens at a very low price but provides pen-specific
low-cost refills at a relatively higher price. Explain this business model.
Explain why a weighted competitive strength assessment is important.
Identify and briefly explain any three factors that lead to weak bargaining power on the
part of suppliers.
What are the pros and cons of using strategic alliances to try to enhance a company’s
ability to compete in foreign markets?