The obligations of an investor-owned companys board of directors in the
strategy-making, strategy-executing process include
A. coming up with compelling strategy proposals to debate against those put forward by
top management.
B. taking the lead in formulating the companys strategic plan but then delegating the
task of implementing and executing the strategic plan to the companys CEO and other
senior executives.
C. taking the lead in developing the companys business model and strategic vision.
D. overseeing the companys financial accounting and financial reporting practices and
evaluating the caliber of senior executives strategy-making/strategy-executing skills.
E. approving the companys operating strategies, functional-area strategies, business
strategy, and overall corporate strategy.
The value of determining the relative competitive strength of each business a company
has diversified into is
A. to have a quantitative basis for identifying which businesses have large/small
competitive advantages or competitive disadvantages vis-à-vis the rivals in their
respective industries.
B. to have a quantitative basis for rating them from strongest to weakest in terms of
contributing to the corporate parents revenue growth.
C. to compare resource strengths and weaknesses, business by business.
D. to have a quantitative basis for rating them from strongest to weakest in contending
for market leadership in their respective industries.
E. to have a quantitative basis for rating them from strongest to weakest in terms of
contributing to the corporate parents profitability.
According to the school of ethical universalism,
A. universal ethical principles or norms put limits on what actions and behaviors fall
inside the boundaries of what is right and which ones fall outsidesuch universal norms
include honesty, trustworthiness, respecting the rights of others, practicing the Golden
Rule, and avoiding unnecessary harm to workers or to the users of the companys
product or service.
B. all societies and countries are obligated to apply universally defined ethical
principles of right and wrong as set forth in the Global Code of Ethical and Social
Morality (which is subscribed to by 150 nations of the world).
C. all societies and countries apply essentially the very same set of universally defined
ethical principles of right and wrong in judging the ethical correctness of business
behavior.
D. it is only fair that the standards of whats ethical and whats unethical be applied
universally to all businesses in all countries irrespective of local business traditions and
local business norms.
E. the standards of what constitutes ethical and unethical behavior in business situations
are partly universal, but in the main are governed by local business norms.
Which one of the following is not a characteristic of an effectively worded strategic
vision statement?
A. Directional (is forward-looking, describes the strategic course that management has
charted and the kinds of product-market-customer-technology changes that will help the
company prepare for the future)
B. Easy to communicate (is explainable in 10 to 15 minutes, can be reduced to a
memorable slogan)
C. Graphic (paints a picture of the kind of company management is trying to create and
the market position or positions the company is striving to stake out)
D. Consensus-driven (commits the company to a “mainstream” directional path that
most all stakeholders will enthusiastically support)
E. Focused (is specific enough to provide guidance to managers in making decisions
and allocating resources)
Which one of the following statements about recruiting and retaining capable
employees is true?
A. The quality of an organizations people is always an essential ingredient of successful
strategy executionknowledgeable, engaged employees are a companys best source of
creative ideas for the nuts-and-bolts operating improvements that lead to operating
excellence.
B. Recruiting and retaining capable employees is an essential element of developing a
distinctive competence.
C. Recruiting and retaining capable employees is closely tied to developing strong
information capital capabilities.
D. It is very difficult for a company to competently execute its strategy and achieve
operating excellence without a cadre of young managerial talent committed to staying
with the company for at least a decade.
E. In many industries, adding to a companys talent base and building intellectual capital
is more important than having a good situational fit between the companys strategy and
its external environment.
Which one of the following is an example of an offensive strategy?
A. Blocking the avenues open to challengers
B. Signaling challengers that retaliation is likely
C. Pursuing continuous product innovation to draw sales and market share away from
less innovative rivals
D. Introducing new features or models to fill vacant niches in its overall product
offering and better match the product offerings of key rivals
E. Maintaining a war chest of cash and marketable securities
A company may develop an emergent strategy due to
A. strategic moves by rival firms.
B. unexpected shifts in customer preferences.
C. fast-changing technological developments.
D. new market opportunities.
E. All of these.
A well-conceived strategy is value creating producing excellence in company
performance and is best when the gains are achieved.
A. in profitability and financial strength.
B. in competitive strength and market standing.
C. in developing distinctive competencies and sustainability.
D. in developing a desirable competitive edge.
E. All of these
When a company operates in the markets of two or more different countries, its
foremost strategic issue is
A. whether to use strategic alliances to help defeat its rivals.
B. whether to vary the companys competitive approach to fit specific market conditions
and buyer preferences in each host country or whether to employ essentially the same
strategy in all countries.
C. whether to maintain a national (one-country) manufacturing base and export goods
to the other countries.
D. choosing which foreign companies to team up with via strategic alliances or joint
ventures.
E. whether to test the waters with an export strategy before committing to some other
competitive approach.
Benchmarking involves
A. comparing how different companies perform various value chain activities and then
making cross-company comparisons of the costs of these activities.
B. checking whether a company has achieved more of its financial and strategic
objectives over the past five years relative to the other firms it is in direct competition
with.
C. studying whether a companys resource strengths are more/less powerful than the
resource strengths of rival companies.
D. studying how a companys 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.
A companys biggest vulnerability in employing a best-cost provider strategy is
A. relying too heavily on outsourcing.
B. getting squeezed between the strategies of firms employing low-cost provider
strategies and high-end differentiation strategies.
C. getting trapped in a price war with low-cost leaders.
D. being timid in cutting its prices far enough below high-end differentiators to win
away many of their customers.
E. not having a sustainable distinctive competence in cost reduction.
A differentiation-based competitive advantage
A. nearly always is attached to the quality and service aspects of a companys product
offering.
B. most usually is the result of highly effective marketing and advertising campaigns
designed to build awareness and recognition of the product or service offering.
C. requires developing at least one distinctive competence that buyers consider
valuable.
D. hinges on a companys success in developing top-of-the-line product features that
will command the biggest price premium in the industry.
E. often hinges on incorporating features that (1) raise the performance of the product
or (2) lower the buyers overall costs of using the companys product or (3) enhance
buyer satisfaction in intangible or noneconomic ways or (4) deliver value to customers
by exploiting competitive capabilities that rivals cant match.
Which one of the following is not one of the elements of crafting corporate strategy for
a diversified company?
A. Picking new industries to enter and deciding on the means of entry
B. Choosing the appropriate value chain for each business the company has entered
C. Pursuing opportunities to leverage cross-business value chain relationships and
strategic fits into competitive advantage
D. Steering corporate resources into the most attractive business units
E. Initiating actions to boost the combined performance of the businesses the firm has
entered
When the race among rivals for industry leadership is a marathon rather than a sprint,
A. it is best to be a fast follower rather than a first mover or a slow mover.
B. fast followers find it easy to leapfrog the pioneer with even better next-generation
products of their own.
C. a slow mover may not be unduly penalized and first-mover advantages can be
fleeting.
D. being a first mover generally entails relatively low risk and carries a potentially big
advantage.
E. there are nearly always big advantages to being a slow mover rather than an early
mover, especially as concerns avoiding the “mistakes” of first or early movers.
Which of the following is an integral part of the managerial process of crafting and
executing strategy?
A. Developing a proven business model
B. Setting objectives and using them as yardsticks for measuring the companys
performance and progress
C. Deciding how much of the companys resources to employ in the pursuit of
sustainable competitive advantage
D. Communicating the companys mission and purpose to all employees
E. Deciding on the composition of the companys board of directors
The principal managerial actions and initiatives undertaken in the strategy execution
process include which of the following?
A. Building an organization with the capabilities, people, and structure needed for
execution
B. Instituting policies and procedures that facilitate rather than impede effective
strategy execution
C. Allocating ample resources to required activities
D. Tying rewards directly to achievement of performance objectives
E. All of these
One important indicator of how well a companys present strategy is working is whether
A. it has more core competencies than close rivals.
B. its strategy is built around at least two of the industrys key success factors.
C. the company is achieving gains in financial strength.
D. it has been able to create new industry demand through the use of a blue ocean
strategy.
E. it is subject to weaker competitive forces and pressures than close rivals (a good
sign).
The difference between a merger and an acquisition is
A. that a merger involves one company purchasing the assets of another company with
cash, whereas an acquisition involves one company becoming the owner of another
company by buying all of the shares of its common stock.
B. that a merger is the combining of two or more companies into a single corporate
entity (with the newly created company often taking on a new name) whereas an
acquisition is a combination in which one company, the acquirer, purchases and absorbs
the operations of another, the acquired.
C. basically a play on wordsin both instances, two companies become one.
D. that the brands of both companies are retained in a merger whereas with an
acquisition there is only one surviving brand name.
E. that a merger involves two or more companies deciding to adopt the same strategy
whereas an acquisition involves one company becoming the owner of another company
but with each company still pursuing its own separate strategy.
The key success factors in an industry
A. are the strategy elements, intangible assets, and competitive capabilities that most
affect industry members abilities to prosper in the marketplace.
B. are determined by the industrys driving forces.
C. hinge on how many different strategic groups the industry has.
D. depend on how many rivals are trying to move from one strategic group to another.
E. are a function of such considerations as how many firms are in the industry, how
many have market shares above 5%, and whether the business models being used are
similar or diverse.
A companys corporate culture is best defined and identified by
A. the strategy and business model that a company has adopted.
B. the character of a companys internal work climateas shaped by the companys core
values, beliefs, and business principles.
C. its statement of core values and its code of ethics.
D. its internal politics.
E. the traditions that company executives are committed to maintaining.
Achieving a cost advantage over rivals entails
A. concentrating on the primary activities portion of the value chain and outsourcing all
support activities.
B. being a first mover in pursuing backward and forward integration and controlling as
much of the industry value chain as possible.
C. performing value chain activities more cost-effectively than rivals and finding ways
to eliminate or bypass some cost-producing activities.
D. minimizing R&D expenses and paying below-average wages and salaries to
conserve on labor costs.
E. producing a standard product, redesigning the product infrequently, and having
minimal advertising.
First-mover advantages are unlikely to be present in which one of the following
instances?
A. When pioneering helps build a firms image and reputation with buyers
B. When first-time customers remain strongly loyal to pioneering firms in making
repeat purchases
C. When 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. When moving first can constitute a preemptive strike, making imitation extra hard or
unlikely
E. When rapid market evolution (due to fast-paced changes in technology or buyer
preferences) presents opportunities to leapfrog a first-movers products with more
attractive next-version products
Managements most powerful tool for winning employee commitment to good strategy
execution and operating excellence is
A. the establishment of strategy-supportive policies and procedures.
B. empowering employees and encouraging them to adopt best practices.
C. setting stretch objectives.
D. a properly designed system of rewards and incentives.
E. aggressive use of TQM and Six Sigma quality control programs.
Which of the following is not a good example of a marketing-related key success
factor?
A. High utilization of fixed assets
B. A well-known and well-respected brand name
C. Breadth of product line and product selection
D. Clever advertising
E. Courteous, personalized customer service
A change in strategy nearly always entails 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. organizational 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 typically requires
substantial new funding and budget revisions.
E. adopting best practices and pushing for continuous improvement tends to reduce
costs and reduce overall resource requirements.
The single most visible factor that distinguishes successful culture-change efforts from
failed attempts is
A. forceful management actions to empower employees to adopt new operating
practices.
B. competent leadership at the top.
C. de-layering the management hierarchy.
D. developing a new values statement that inspires company personnel to put forth their
best efforts to achieve performance targets.
E. convincing employees that top management is genuinely committed to high ethical
standards and the exercise of corporate social responsibility.
The nine-cell industry attractiveness-competitive strength matrix
A. is useful for helping decide which businesses should have high, average, and low
priorities in allocating corporate resources.
B. indicates which businesses are cash hogs and which are cash cows.
C. pinpoints what strategies are most appropriate for businesses positioned in the three
top cells of the matrix but is less clear about the best strategies for businesses positioned
in the bottom six cells.
D. identifies which sister businesses have the greatest strategic fit.
E. indicates the relative size of the firms businesses.
Which of the following is not a relevant consideration in identifying an industrys
dominant economic features?
A. Market size and growth rate, the geographic scope of competitive rivalry, and
demand-supply conditions
B. How many strategic groups the industry has and which ones are most profitable and
least profitable
C. The number and sizes of buyers, the number of rivals, and the pace of product
innovation
D. The pace of technological change
E. The current industry position in its life cycle to reveal the industrys growth prospects
In evaluating proposed or existing strategies managers should
A. initiate new initiatives even though they dont seem to match the companys internal
and external situation.
B. scrutinize the companys existing strategies compatibility with desired outcomes on a
regular basis.
C. evaluate the firms business model at least every three years.
D. ensure core capabilities are incorporated for establishing a competitive advantage.
E. align existing strategies with new strategies to emphasize incremental gains.
In which of the following instances are industry members not subject to stronger
competitive pressures from substitute products?
A. The costs to buyers of switching over to the substitutes are low
B. Buyers are dubious about using substitutes
C. The quality and performance of the substitutes is well matched to what buyers need
to meet their requirements
D. Buyer brand loyalty is weak
E. Substitutes are readily available at competitive prices