Chapter 2—Strategic Planning for Competitive Advantage
TRUE/FALSE
1. The manufacturer of Macho brand martial arts products was implementing a strategic plan when it
sponsored a local karate tournament for teenagers.
2. The marketing plan is a written document that acts as a guidebook of marketing activities for a
marketing manager.
3. A firm’s mission statement should answer the question, “What products do we produce best?”
4. A production costs analysis could be a part of a company’s SWOT analysis.
5. Environmental scanning entails the collection and analysis of information about factors that may affect
the organization as well as the identification of market opportunities and threats.
6. To be useful, marketing objectives should meet four criteria: realistic, measurable, time-specific, and
based on sales.
7. The company’s objective is to increase sales next year. This is an example of a well-stated objective.
8. A competitive advantage is the set of unique features of a company and its products that are perceived
by the target market as significant and superior to the competition.
9. Developing a cost competitive advantage can enable a firm to deliver superior customer value.
10. As marketers gain more experience in marketing a product, costs tend to decrease, which is an
example of the maturity effect.
11. Niche competitive advantages are quite common.
12. Berkshire Hathaway Inc., a large conglomerate holding company, owns a several insurance
companies, a large chain of jewelry stores, and has recently purchased the BNSF Railway. Berkshire
Hathaway uses a market penetration strategy.
13. When the Internet auction company eBay opened a version of the company called eBayfrance for the
French market, that was an example of market penetration.
14. A market penetration strategy entails the creation of new products for current customers.
15. The Home Depot’s introduction of new fuel centers at some of its stores allows the Home Depot to
better serve its current customers, such as contractors with large trucks who no longer need to go
somewhere else to refuel. This is an example of product development.
16. When a florist shop begins to sell burial caskets to its customers, it is engaged in product development.
17. A diversification strategy entails increasing sales by introducing new products into new markets.
18. A portfolio matrix is a tool for allocating resources among products or strategic business units on the
basis of relative market share and degree of innovation.
19. 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.
20. The development of a target market strategy begins with a marketing audit.
21. The four Ps of the marketing mix are product, planning, promotion, and price.
22. Typically, the development of the marketing mix starts with determining the promotion for a product.
23. A marketing audit helps management allocate marketing resources efficiently.
24. Strategic planning is most effective when managers view it as an annual exercise.
25. The most critical element for successful strategic planning is top management’s support and
participation.
MULTIPLE CHOICE
1. _____ is the managerial process of creating and maintaining a fit between the organization’s
objectives and resources and evolving market opportunities.
a.
Tactical management
b.
The market audit
c.
Functional planning
d.
Environmental scanning
e.
Strategic planning
2. Strategic plans require:
a.
long-term resource commitments
b.
a change in organizational structure
c.
the addition of new personnel
d.
new product development
e.
changes in prices
3. With hospitals nationwide facing budget cuts and slimmer profit margins, Dekalb County’s Medical
Center decided to cash in on one of the most consistently profitable services—delivering babies. It
initiated a three-year project to build a $55 million state-of-the-art women’s center with 18 labor and
delivery suites. When the hospital decided to commit its resources to obstetrics, it was engaging in:
a.
benchmarking
b.
alternative problem solving
c.
strategic planning
d.
portfolio evaluation
e.
tactical control
4. Since gas prices have soared and consumers have cut back on their spending on new trucks and SUVs
Ford Motor Corporation is transforming several of its plants to create small cars. Ford has engaged in:
a.
benchmarking
b.
tactical resource realignment
c.
alternative selection
d.
portfolio evaluation
e.
strategic planning
5. Heinz has announced that they plan to grow the company through an accelerated push into emerging
markets such as China, Indonesia, and India in the next ten years. This is an example of:
a.
tactical objectifying
b.
contingency plan
c.
strategic planning
d.
marketing implementation
e.
horizon planning
6. _____ is the process of anticipating events and determining strategies to achieve organizational
objectives.
a.
Planning
b.
Portfolio evaluation
c.
Forecasting
d.
Implementation
e.
Evaluation
7. A written document that acts as a guidebook of marketing activities for the marketing manager is
known as the _____.
a.
strategy document
b.
marketing plan
c.
vision statement
d.
mission statement
e.
strategic plan
8. Earl is starting a new bank. Before their opening day Earl had a meeting with all employees. He
discussed their mission, defined objectives for the bank for the coming years and shared who their
target market is. He talked about their product offerings and where their future branches would be
located. Earl is sharing the bank’s _____.
a.
reengineering
b.
hierarchical restructuring
c.
financial analysis
d.
marketing plan
e.
strategic contingency planning
9. Marketing plans should be written to do all of the following EXCEPT:
a.
compare actual and expected performance
b.
provide clearly stated activities
c.
create common goals for employees to work toward
d.
allow managers to enter the marketplace with an awareness of possibilities and problems
e.
control the elements of the external marketing environment
10. All of the following are elements of the marketing plan EXCEPT:
a.
business mission statement
b.
situation analysis
c.
target market strategy
d.
marketing mix
e.
portfolio analysis
11. A statement of the firm’s business based on a careful analysis of benefits sought by present and
potential customers and an analysis of existing and anticipated environmental conditions is known as
a(n):
a.
business audit
b.
marketing plan
c.
mission statement
d.
environmental focus
e.
portfolio matrix
12. The _____ answers the question, “What business are we in, and where are we going?”
a.
mission statement
b.
financial statement
c.
situation analysis
d.
market strategy
e.
strategic plan
13. PepsiCo’s annual report has the following statement: “Our business is to increase the value of our
shareholder’s investment. We do this through sales growth, cost controls and wise investment of
resources. We believe our commercial success depends upon offering quality and value to our
consumers and customers; providing products that are safe, wholesome, economically efficient and
environmentally sound; and providing a fair return to our investors while adhering to the highest
standards of integrity.” This statement is an example of PepsiCo’s:
a.
marketing mix strategy
b.
quantifiable goal
c.
mission statement
d.
statement of economic potential
e.
market segmentation strategy
14. The focus of an organization’s mission statement should be on:
a.
the products it wishes to sell
b.
the market it wishes to serve
c.
its social responsibilities
d.
the desires of government regulators
e.
technologies it understands well
15. _____ occurs when a business is defined in terms of goods and services rather than by the benefits
customers seek from it.
a.
Synergy
b.
Tunnel vision
c.
Narrowcasting
d.
Unempowerment
e.
Marketing myopia
16. By defining its business as “printing books” instead of “empowering imaginations,” a children’s book
publishing company would more than likely experience:
a.
market synergy
b.
product entropy
c.
market harvesting
d.
nonspecific strategic planning
e.
marketing myopia
17. Subgroups of a single business or a collection of related businesses within a larger organization are
referred to as:
a.
strategic marketing organizations
b.
strategic subgroups
c.
market segments
d.
business segments
e.
strategic business units
18. A popular technique for managing a large organization with different technologies and markets is to
divide it into:
a.
strategic business units
b.
different technologies
c.
strategic target markets
d.
design matrices
e.
tactical segments
19. The acronym SBU refers to:
a.
stock in business units
b.
strategic business unit
c.
standard business utilization
d.
strategic barter units
e.
samples by units
20. An SBU:
a.
competes with the same companies as the other SBUs in the parent organization
b.
shares the same mission with all the other SBUs in the parent organization
c.
controls its business independent of other SBUs in the organization
d.
usually benefits from the combined corporate raw materials purchases
e.
still has strategic planning performed back at corporate headquarters
21. Yildiz Holding of Turkey purchased Godiva Chocolates from Campbell’s Soup Company. Campbell’s
sold one of its:
a.
strategic business units (SBUs)
b.
strategic alliances
c.
action programs
d.
transactional units
e.
synergistic divisions
22. Until spun off in 2007, Kraft was part of Altria Group, Inc. Kraft had its own management team,
mission statement, and target markets different from Altria Group, Inc. Kraft was a _____ of Altria
Group, Inc.
a.
product market niche
b.
diversified division
c.
heterogeneous element
d.
strategic alliance
e.
strategic business unit
23. Chrysler has a financial unit that is responsible for vehicle leases to consumers. It has a distinct
mission, control over its resources, and plans independent of the other divisions of Chrysler. This
financial unit is an example of a(n):
a.
organizational level
b.
SWOT
c.
secure business unit
d.
business sales unit
e.
strategic business unit
24. A _____ is a study conducted by an organization to identify its internal strengths and weaknesses and
also examine external opportunities and threats.
a.
situation analysis
b.
marketing audit
c.
trend analysis
d.
strategic alternative selection
e.
competitive advantage audit
25. The SWOT acronym refers to a firm’s analysis of its:
a.
sales, width of product mix, observations, and technology
b.
situations, wealth, organizational strengths, and target markets
c.
strengths, weaknesses, opportunities, and threats
d.
service levels, willingness to spend, organizational culture, and total revenues
e.
strategies, willingness to change, objectives, and trends
26. Tub King is a small company that refinishes antique claw foot bathtubs, antique sinks, and provides
training for bathtub refinishing. The company’s management is currently conducting a formal study of
its current strengths and weaknesses by looking at the company’s profit and sales histories and
searching for opportunities and threats by studying consumer trends. Tub King is conducting a(n):
a.
marketing audit
b.
SWOT analysis
c.
environmental scan
d.
market differentiation scan
e.
strategic window search
27. Briggs and Stratton is a Southeastern company that makes small engines. The company is looking at
customer trends, its competitors, and the economy to see if there are any threats or opportunities on the
horizon. It has also examined its production policies and sales histories to determine its strengths and
weaknesses. Briggs & Stratton is conducting a(n):
a.
environmental test
b.
market audit
c.
trend analysis
d.
situation analysis
e.
competitive advantage search
28. Coca-Cola drink vending machines are found all over the world. The newest machines have an
interactive screen that runs advertisements and allows users to obtain free photos of themselves and
ringtones after they have bought a drink. The reason for the introduction of this new style vending
machine is to “allow the company to interact more directly with its customers.” According to a SWOT
analysis, the technology used by these machines is an example of a(n):
a.
strength because it is part of Coke’s external environment
b.
advantage because it is part of Coke’s marketing environment
c.
weakness because Coke cannot control technology
d.
opportunity because it is part of Coke’s external environment
e.
benefit because Coke has the resources to make use of the new technology
29. Smucker’s purchased Folgers Coffee in 2008. The option to buy Folgers represented a(n) _____ to
Smucker’s.
a.
opportunity
b.
strength
c.
weakness
d.
threat
e.
burden
30. Coca-Cola drink vending machines are found all over the world. The newest machines have an
interactive screen that runs advertisements and allows users to obtain free photos of themselves and
ringtones after they have bought a drink. Critics of these new vending machines are concerned that
entertaining technology is being used to market sugary products. In terms of a SWOT analysis, this
concern would be an example of a(n):
a.
weakness
b.
strength
c.
advantage
d.
opportunity
e.
threat
31. _____ is defined as the collection and interpretation of information about forces, events, and
relationships in the external environment that may affect the organization or the implementation of the
marketing plan.
a.
Market sampling
b.
An internal audit
c.
Opportunity analysis
d.
Environmental scanning
e.
Stakeholder analysis
32. A _____ is defined as a statement of what is to be accomplished through marketing activities.
a.
mission statement
b.
business plan
c.
marketing objective
d.
goal-driven directive
e.
marketing criteria
33. All of the following are characteristics of a good objective EXCEPT:
a.
profitable
b.
realistic
c.
measurable
d.
time-specific
e.
consistent
34. Of the following, what is the most useful objective for Purina cat food?
a.
To increase sales of Purina brand cat food by 15 percent over 2010 sales of $300 million.
b.
To increase sales of Purina brand cat food between January 1, 2010 and December 31,
2010.
c.
To increase sales of Purina brand cat food from $300 million to $345 million.
d.
To increase sales of Purina Brand cat food.
e.
To increase sales of Purina pet food.
35. All of the following are functions served by objectives EXCEPT:
a.
communicate philosophies and provide direction
b.
motivate employees
c.
clarify executives’ thinking
d.
form the basis for control
e.
guarantee market performance
36. The set of unique features of a company and its products that are perceived by the target market as
significant and superior to the competition is known as a(n):
a.
environmental advantage
b.
experience curve
c.
competitive advantage
d.
market segment
e.
strategic business unit
37. As a customer entered the Hornady store, which sells muzzle loading rifles, a salesperson approached
her and said, “Hornady lead round balls are the musket balls you ought to buy. They are the most
uniform in size and shape, and they are made of pure lead. Our shot is used by the Muzzle Loading
World Champion.” The salesperson was describing Hornady’s:
a.
competitive advantage
b.
strategic strength
c.
tactical opportunity
d.
opportunity mission
e.
quality objective
38. Land O’Lakes makes a light butter with Canola oil that has sixty percent less cholesterol and fifty
percent less fat and calories than butter. This marketing gives the product a _____.
a.
strategic edge
b.
competitive advantage
c.
tactical strength
d.
marketing mix
e.
mission statement
39. Each labor and delivery room at Dekalb County’s new Medical Center has hardwood floors, soft
lighting, and mission-style furniture. The facility also features a stone fireplace in the lobby, a bistro-
style restaurant, and VIP suites for discerning mothers-to-be. This unique design and furnishings give
the Medical Center a:
a.
profit-enhanced advantage
b.
competitive advantage
c.
quality objectivity
d.
strategic strength
e.
tactical opportunity
40. Which of the following is NOT a type of competitive advantage?
a.
management structure
b.
cost
c.
product/service differentiation
d.
niche strategies
e.
all of these choices are types of competitive advantages
41. All of the following are sources of a cost competitive advantage EXCEPT:
a.
reengineering
b.
experience curves
c.
break-even analyses
d.
efficient labor
e.
production innovations
42. _____ show costs declining at a predictable rate as experience with a product increases.
a.
Liquidity growth curves
b.
EOQ graphs
c.
Breakeven analyses
d.
Experience curves
e.
Supply/demand curves
43. WalMart realizes a _____ using its relationships with suppliers to give customers low prices and good
customer service.
a.
brand name strategy
b.
niche competitive advantage
c.
cost competitive advantage
d.
marketing competitive advantage
e.
synergistic competitive advantage
44. Aldi is a no-frills grocery chain. It sells grocery staples right out of crates and boxes with emphasis on
low-priced, private-label brands. Aldi stores are typically about one-third the size of the traditional
supermarket. By controlling expenses, Aldi enables its customers to save 30 to 50 percent compared to
Kroger customers. The chain targets bargain hunters who are willing to rent a cart and bag their own
groceries. Aldi has a(n)
a.
market-homogeneous focus
b.
cost competitive advantage
c.
product aggregation strategy
d.
revenue-based competitive advantage
e.
profit-enhanced advantage
45. Jiffy Mixes do not do any type of traditional advertising or use fancy packaging in marketing their
products. They store their own wheat and make their own flour and their little blue boxes, too. Jiffy is
an example of a low cost strategy based on:
a.
efficient labor
b.
no-frills goods and services
c.
government subsidies
d.
product design
e.
reengineering
46. Zipcar is a car rental service found in many metropolitan areas. It targets people who take mass transit
or carpool to work but who occasionally need a car to run errands, visit the doctor, or check on a sick
child. Zipcar is one of a few companies currently providing cars that can be rented by the hour. Zipcar
has created a(n) _____ advantage.
a.
reengineering
b.
experience curve
c.
service differentiation competitive
d.
alternative market
e.
sustainable competitive
47. Arizona Tea is marketed by Vultaggio & Sons. Vultaggio & Sons took a basic drink and put it into
unusual bottles with elaborate designs. The wide-mouthed, long-necked bottles are now considered to
be trendsetters in the new age beverage industry, and customers often buy the tea just for the bottle.
The success of Arizona Tea is based on:
a.
supply-demand curves
b.
reengineering
c.
a product differentiation competitive advantage
d.
a cost competitive advantage
e.
a heterogeneous marketing strategy
48. Everyone knows the brand name Kleenex. Kleenex is what many consumers think of when they think
of tissues. This widely recognized brand name is a source of:
a.
a product differentiation competitive advantage
b.
a cost advantage
c.
market augmentation
d.
a niche competitive advantage
e.
none of these things
49. Yuengling is the oldest brewery in the United States. It was founded in 1827 in a time when small
breweries dotted the nation. The brewery only sells in a ten state area on the eastern seaboard. For over
170 years, this strategy has given the brewery a:
a.
brand name strategy
b.
niche competitive advantage
c.
price differentiation advantage
d.
marketing competitive advantage
e.
sustainable competitive advantage
50. Fujisawa is Japan’s seventh-largest pharmaceutical company. It sells drugs for organ transplant patients
to increase the probability the new organ will operate efficiently and not be rejected. Currently, the
only products Fujisawa makes are these organ transplant drugs, which it sells worldwide. Its patents
protect it from competitors. Fujisawa has a:
a.
brand name advantage
b.
niche competitive advantage
c.
cost competitive advantage
d.
marketing competitive advantage
e.
complete competitive advantage
51. Technol Medical Products makes specialty face masks to shield health-care workers from infection.
Because it focuses on this narrow market, it is able to outsell its primary competitors—3M and Johnson
& Johnson. Technol Medical Products has a(n):
a.
aggregated positioning strategy
b.
demarketing focus
c.
heterogeneous target marketing strategy
d.
cost competitive advantage
e.
niche competitive advantage
52. An advantage that cannot be copied by the competition is called a(n) _____ competitive advantage.
a.
sustainable
b.
monopolistic
c.
primary
d.
unique
e.
dominant
53. Patents on prescription medications give pharmaceutical companies that own the patents a(n) _____
for 17 years until the patent expires.
a.
targeted market position
b.
sustainable competitive advantage
c.
strategic focus
d.
situational strength
e.
opportunistic privilege
54. iTunes has a(n) _____ as they have exclusive agreements with some of the most sought after music
corporations that other digital music stores do not have.
a.
targeted market position
b.
sustainable competitive advantage
c.
strategic focus
d.
situational strength
e.
opportunistic privilege
55. Which of the following is a strategic alternative?
a.
vertical integration
b.
product penetration
c.
divestment
d.
horizontal integration
e.
market penetration
56. All of the following are strategic alternatives that match products with markets EXCEPT:
a.
product development
b.
market penetration
c.
product penetration
d.
diversification
e.
market development
57. _____ is a strategy of increasing market share for present products in existing markets.
a.
Market penetration
b.
Product development
c.
Market development
d.
Diversification
e.
Product penetration
58. Market penetration occurs when:
a.
a supermarket adds a new store
b.
a U.S.-based company begins to sell its products in China
c.
Motown records sells DVDs to Wal-Mart
d.
Yoplait yogurt sends coupons to its existing customers
e.
3M distributes breathe-right nasal strips in Europe
59. Kraft foods created a magazine full of recipes and coupons for customers as well as a web site with
product and recipe information. The goal was to get current customers to purchase more of Kraft’s
products. These activities are representative of a _____ strategy.
a.
diversification
b.
product development
c.
market development
d.
market penetration
e.
product penetration
60. _____ is a strategy that attempts to attract new customers to existing products.
a.
Product development
b.
Market development
c.
Market penetration
d.
Product penetration
e.
Diversification
61. In order to expand its sales into the U.S. market, BRL, an Australia-based winemaker, agreed to a
merger with a U.S.-based wine distribution company. According to Ansoff’s Strategic Opportunity
Matrix, BRL would be implementing a _____ strategy.
a.
diversification
b.
market development
c.
product development
d.
divestment
e.
product penetration
62. Yard Whimzees, a Statesboro, Georgia sign business, began by making wooden signs for residential
use to announce births, anniversaries and such. They then turned to the business market making signs
for businesses. Creating signs for a new market is an implementation of a _____ strategy.
a.
market development
b.
market penetration
c.
product penetration