Which one of the following is not a reasonable option for deploying a diversified
company’s financial resources?
A. Making acquisitions to establish positions in new businesses or to complement
existing businesses
B. Concentrating most of a company’s financial resources in cash cow businesses and
allocating little or no additional resources to cash hog businesses until they show
enough strength to generate positive cash flows
C. Funding long-range R&D ventures aimed at opening market opportunities in new or
existing businesses
D. Paying down existing debt, increasing dividends, or repurchasing shares of the
company’s stock
E. Investing in ways to strengthen or grow existing businesses
Backward integration involves
A. performing industry value chain activities previously performed by suppliers or
other companies engaged in earlier stages of the value chain.
B. Linking with businesses within the array of value chain activities to eliminate
competition and broaden the product offering.
C. capitalizing on company’s underutilized managerial capabilities for achieving greater
synergistic cost advantages.
D. reducing the opportunity for achieving greater product differentiation.
E. developing new skills and business capabilities.
To test whether a particular diversification move has good prospects for creating added
shareholder value, corporate strategists should use
A. the profit test, the competitive strength test, and the industry attractiveness test.
B. the better-off test, the competitive advantage test, and the profit expectations test.
C. the barrier to entry test, the competitive advantage test, and the stock price effect
test.
D. the strategic fit test, the industry attractiveness test, and the dividend effect test.
E. the attractiveness test, the cost-of-entry test, and the better-off test.
Which of the following is not one of the basic reasons that a company’s strategy evolves
over time?
A. An ongoing need to abandon those strategy features that are no longer working well
B. The proactive efforts of company managers to improve the company’s financial
performance and secure a competitive advantage
C. The need on the part of company managers to make regular adjustments in the
company’s business model
D. The need to respond to the actions and competitive moves of rival firms
E. The need to keep strategy in step with changing industry and competitive conditions
A company’s strategy is most accurately defined as
A. management’s approaches to building revenues, controlling costs, and generating an
attractive profit.
B. management’s game plan for growing the business, attracting and pleasing
customers, conducting operations, and achieving financial and market performance
objectives.
C. management’s concept of “where we are headed.”
D. the business model that a company’s board of directors has approved for
outcompeting rivals and making the company profitable.
E. the choices management has made regarding what financial plan to pursue.
Which of the following is most integral to the task of leading the drive for good strategy
execution and operating excellence?
A. Pushing lower-level managers and supervisors to practice MBWA
B. Being a good motivator and a decisive decision maker
C. Making sure the company has a good strategic plan, staying on top of how well
things are going, pushing organization units to achieve good results, pushing for
corrective actions to improve both the company’s strategy and how well it is being
executed, and displaying ethical integrity and leading social responsibility initiatives
D. Practicing enlightened empowerment of employees and using a decentralized
approach to decision making
E. Being good at designing a strategy-supportive reward structure
Bypassing regular sales channels in favor of Internet retailing can have strong appeal if
it
A. raises distribution costs and ignores channel conflicts.
B. provides a relative cost disadvantage over rivals.
C. offers lower margins resulting in higher selling prices to end users.
D. includes partnering rather than competing with existing distributors.
E. All of these.
The guidelines for designing an incentive compensation system that will help drive
successful strategy execution include
A. making the payoff for meeting or beating performance targets a major, not minor,
piece of the total compensation package.
B. having a bonus and incentive plan that applies to managers only (employees should
generally not be included in incentive pay plans but should have attractive wages and
salaries).
C. having an outside wage and salary expert administer the system, so that there is no
doubt as to its fairness and impartiality.
D. basing the incentives on group performance rather than individual performance.
E. making minimal use of nonmonetary incentives and rewarding people for diligently
performing their assigned duties.
Functional strategies
A. unify the company’s various operating-level strategies.
B. specify how to build and strengthen the skills, expertise, and competencies needed to
execute operating-level strategies successfully.
C. support and add power to the corporate-level strategy.
D. add detail to the company’s business-level strategy and specify what resources are
needed to put the strategy into action.
E. create the chief elements of the company’s strategy map.
Vertical integration strategies
A. extend a company’s competitive and operating scope because its operations extend
across more parts of the total industry value chain.
B. are one of the best strategic options for helping companies win the race for global
market leadership.
C. are a cost effective means of expanding a company’s lineup of products and services.
D. are particularly effective in boosting a company’s ability to expand into additional
geographic markets, particularly the markets of foreign countries.
E. are a good strategy option for improving a company’s supply chain management
capabilities, pursuing efforts to remodel a company’s value chain, achieving direct
control over the costs of performing value chain activities, and gaining access to buyers.
Strategic objectives
A. are more essential in achieving a company’s strategic vision than are financial
objectives.
B. are generally less important than financial objectives.
C. are more difficult to achieve and harder to measure than financial objectives.
D. relate to strengthening a company’s overall market standing and competitive vitality.
E. help managers track an organization’s true progress better than do financial
objectives.
Explain the meaning and significance of each of the following:a) Driving forces
b) PESTEL analysis
c) Strategic group mapping
d) Key success factors
Answer:
Answer may vary
Which of the following is not accurate as concerns the task of identifying the strategic
issues and problems that merit front-burner managerial attention?
A. It entails drawing upon the results and conclusions from analyzing the company’s
external environment.
B. It entails drawing on the results and conclusions from evaluating the company’s own
resources and competitive position.
C. It entails developing a “worry list” of problems and issues for managerial strategy
making.
D. Identifying the strategic issues and problems that the company faces is the first thing
that company managers need to do before starting to analyze the company’s internal and
external environment.
E. Developing a list of what issues and problems that managements needs to address
(and to resolve) should always precede deciding upon a strategy and what actions to
take to improve the company’s position and prospects.
The benefit of a vivid, engaging, and convincing strategic vision is
A. its ability to crystallize top management’s own view about the company’s long-term
direction.
B. it reduces the risk of rudderless decision making by managers at all levels of the
organization.
C. it helps an organization prepare for the future.
D. its ability to unite company personnel behind managerial efforts to get the company
moving in the intended direction.
E. All of these are important benefits of an effective strategic vision.
Managers in all types of businesses must address the central strategic question:
A. Where are we now?
B. Where do we want to go from here?
C. How are we going to get there?
D. When will we know we are there?
E. All of these
The businesses in a diversified company’s lineup exhibit good resource fit when
A. the resource requirements of each business exactly match the resources the company
has available.
B. individual businesses add to a company’s resource strengths and when a company
has the resources to adequately support the requirements of its businesses as a group
without spreading itself too thin.
C. each business generates just enough cash flow annually to fund its own capital
requirements and thus does not require cash infusions from the corporate parent.
D. each business unit produces sufficient cash flows over and above what is needed to
build and maintain the business, thereby providing the parent company with enough
cash to pay shareholders a generous and steadily increasing dividend.
E. there are enough cash cow businesses to support the capital requirements of the cash
hog businesses.
Competing in the markets of foreign countries entails dealing with such factors as
A. fluctuating exchange rates, country-to-country variations in host-government
restrictions and requirements, and variations in cultural, demographic, and market
conditions.
B. important country-to-country differences in consumer buying habits and buyer tastes
and preferences.
C. whether to customize the company’s offerings in each different country market or
whether to offer a mostly standardized product worldwide.
D. the fact that product designs suitable for one country are sometimes inappropriate in
another.
E. All of these.
Companies with insular, inwardly focused cultures usually
A. tend to possess arrogant overconfident mind-sets, thereby tending to underestimate
the competencies and accomplishments of rival companies and overestimate their own
progress.
B. tend to concentrate on benchmarking to find out the best methods of doing things.
C. tend to concentrate greed and ego-gratification.
D. tend to discount and doubt their own performance statistics.
E. All of these
Every organization has many resources, capabilities and routines however those few
things the company does really well and are performed with a very high proficiency are
termed
A. Core competencies.
B. Distinct capabilities.
C. Sustainable activities.
D. Socially complex activities.
E. Distributive factors.
A creative, distinctive strategy that delivers a sustainable competitive advantage is
important because
A. without a proven strategy a company is likely to fall into bankruptcy.
B. without a competitive advantage a company cannot have a profitable business
model.
C. a strategy that yields a competitive advantage over rivals is a company’s most
reliable means of achieving above-average profitability and financial performance.
D. a competitive advantage is what enables a company to achieve its strategic
objectives.
E. how a company goes about trying to please customers and outcompete rivals is what
enables senior managers to choose an appropriate strategic vision for the company.
Identifying the primary and secondary activities that comprise a company’s value chain
A. indicates whether a company’s resource strengths will ultimately translate into
greater value for shareholders.
B. reveals whether a company’s resource strengths are well-matched to the industry’s
key success factors.
C. is the first step in understanding a company’s cost structure (since each activity in the
value chain gives rise to costs).
D. is called benchmarking.
E. is called resource value analysis.
Which of the following do not qualify as potential driving forces capable of inducing
fundamental changes in industry and competitive conditions?
A. Changes in who buys the product and how they use it, changes in the long-term
industry growth rate, and changes in cost and efficiency
B. Entry or exit of major firms, product innovation, and marketing innovation
C. Increases in the economic power and bargaining leverage of customers and suppliers,
growing supplier-seller collaboration, and growing buyer-seller collaboration
D. Diffusion of technical know-how and changing societal concerns, attitudes, and
lifestyles
E. Changes in manufacturing processes brought on by technological change, increasing
globalization of the industry, and new Internet capabilities
Which of the following is not an example of a defensive move to protect a company’s
market position and restrict a challenger’s options for initiating competitive attack?
A. Granting volume discounts or better financing terms to dealers/distributors and
providing discount coupons to buyers to help discourage them from experimenting with
other suppliers/brands
B. Signaling challengers that retaliation is likely in the event they launch an attack
C. Publicly committing the company to a policy of matching a competitors’ terms or
prices
D. Maintaining a war chest of cash and marketable securities
E. Challenging struggling runner-up firms that are on the verge of going under
The better-off test for evaluating whether a particular diversification move is likely to
generate added value for shareholders involves
A. assessing whether the diversification move will make the company better off
because it will produce a greater number of core competencies.
B. assessing whether the diversification move will make the company better off by
improving its balance sheet strength and credit rating.
C. assessing whether the diversification move will make the company better off by
spreading shareholder risks across a greater number of businesses and industries.
D. evaluating whether the diversification move offers potential for the company’s
existing businesses and new businesses to perform better together under a single
corporate umbrella.
E. assessing whether the diversification move will benefit shareholders due to gains in
earnings per share and faster stock price appreciation.
The most appealing approaches to differentiation are
A. those that are the most costly to incorporate.
B. those that match the differentiating features offered by rivals in the industry.
C. those that can be made even more attractive to buyers via clever advertising.
D. those that appeal to the most affluent consumers.
E. those that are hard or expensive for rivals to duplicate and that also have
considerable buyer appeal.
The organizing challenge of a decentralized structure that stresses employee
empowerment is
A. how to keep empowered employees from making lots of stupid decisions.
B. establishing a collegial, collaborative culture so that decisions can be made by
gaining a quick consensus on what to do and when to do it.
C. how to avoid de-motivating employees (because empowered employees are expected
to take responsibility for their actions and decisions).
D. how to exercise adequate control over the actions and decisions of empowered
employees so that the business is not put at risk while trying to capture the benefits of
empowerment.
E. how to convince lower-level managers and employees that they are empowered.
Acquisition of an existing firm rather than going de novo may be the least risky and
cost-efficient means of overcoming entry barriers such as
A. gaining access to local distribution networks, building supplier networks, and
establishing working relationships with key government officials.
B. moving directly to the task of transferring resources and personnel, integrating and
redirecting activities into its own operation.
C. putting its own strategy into place.
D. accelerating efforts to build a strong market presence.
E. All of these.
Why should long-run objectives take precedence over short-run objectives?
A. Focus is placed on improving performance in the near term.
B. Long-run objectives are necessary for achieving long-term performance and stand as
a barrier to undue focus on short-term results.
C. This will satisfy shareholder expectations for progress.
D. This will force the company to deliver performance improvement in the current
period.
E. None of these.
A competitive environment where there is weak to moderate rivalry among sellers, high
entry barriers, weak competition from substitute products, and little bargaining leverage
on the part of both suppliers and customers
A. lacks powerful driving forces.
B. gives each industry competitor the best potential for building sustainable competitive
advantage.
C. makes it hard for industry members to pursue a differentiation strategy.
D. is conducive to industry members earning attractive profits.
E. requires that industry members have low costs.
A company’s value chain identifies
A. the steps it goes through to convert its net income into value for shareholders.
B. the primary activities that create value for customers and related support activities.
C. the series of steps it takes to get a product from a raw materials stage to a finished
product.
D. the activities it performs in transforming its competencies into distinctive
competencies.
E. the competencies and competitive capabilities that underpin its efforts to create value
for customers and shareholders.
A company’s strategic options for internally performed value chain activities do not
include:
A. revamping its value chain to eliminate or bypass some cost-producing activities
(particularly low value-added activities).
B. implementing the use of best practices, particularly for high-cost activities.
C. investing in productivity-enhancing, cost-saving technological improvements.
D. switching to activity-based costing.
E. outsourcing the performance of high-cost activities to vendors that can perform them
more cheaply.
Which of the following is typically the strategic impetus for forward vertical
integration?
A. Being able to control the wholesale/retail portion of the industry value chain
B. Fewer disruptions in the delivery of the company’s products to end users
C. Gaining better access to end users and better market visibility
D. Broadening the company’s product line
E. Allowing the firm access to greater economies of scale
Which of the following statements about a company’s realized strategy is true?
A. A company’s realized strategy is mostly hidden to outside view and is deliberately
kept under wraps by top-level managers.
B. A company’s realized strategy is typically planned well in advance and usually
deviates little from the planned set of actions.
C. A company’s realized strategy generally changes very little over time unless a newly
appointed CEO decides to take the company in a new direction with a new strategy.
D. A company’s realized strategy is typically a blend of deliberate/planned initiatives
and emergent/unplanned reactive strategy elements.
E. A company’s realized strategy is developed mostly on the fly because of the constant
efforts of managers to keep rival companies at a disadvantage.
Identify and describe the relevant factors and forces comprising the environmental
context in which a company operates. Which of these factors and forces constitute the
company’s macro-environment and which constitute the industry and competitive
environment? Explain.
Answer:
Answer may vary
Under what circumstances might a diversified firm choose to divest one of its
businesses?
Answer:
Answer may vary
Identify and briefly explain any three factors that lead to strong bargaining power on the
part of buyers.
Answer:
Answer may vary
Identify uniqueness drivers in a company’s value chain. Explain how these drivers
impact a firm’s generic strategy.
Answer:
Answer may vary
Under what sorts of circumstances are mergers with or acquisitions of other companies
a better solution than entering into partnerships or alliances with these companies? How
do mergers and/or acquisitions contribute to enhancing a company’s position?
Answer:
Answer may vary
Identify and briefly describe the three main drivers of unethical strategies and unethical
managerial and business behavior.
Answer:
Answer may vary
Discuss in some detail the difference between a localized multidomestic strategy and a
global strategy and give the pros and cons of each.
Answer:
Answer may vary
Identify and briefly explain any three factors that lead to weak bargaining power on the
part of suppliers.
Answer:
Answer may vary
A single-business company has three levels of strategy. Name and describe each level.
Answer:
Answer may vary
What are the five generic competitive strategies? Briefly describe each one and identify
the type of competitive advantage that each strategy is aimed at achieving.
Answer:
Answer may vary
What are the characteristics of unhealthy cultures?
Answer:
Answer may vary
In conducting a SWOT analysis, is it enough to simply compile lists of the company’s
strengths, weaknesses, opportunities, and threats? Why or why not?
Answer:
Answer may vary
What is the connection between a company’s strategy and its quest for sustainable
competitive advantage?
Answer:
Answer may vary
A decentralized organization structure is more likely to further the cause of good
strategy execution than is a centralized organization structure. True or false? Justify
your answer.
Answer:
Answer may vary
Explain why companies committed to environmental sustainability are able to address
society’s concerns about protecting the environment, while lowering costs and/or
creating value for customers.
Answer:
Answer may vary