The payoff of good scouting reports on rivals is improved ability to
A. predict what strategic moves rivals are likely to make next, thereby allowing a
company to prepare defensive countermoves and develop strategies to exploit rivals’
missteps.
B. determine which rivals are in the best strategic group.
C. figure out how many key success factors a rival has.
D. determine whether a rival is gaining or losing market share, whether rivals are
increasing or decreasing R&D spending, and what new marketing promotions are in the
works.
E. determine whether a rival has the best strategy and is the industry leader.
The options for remedying a cost disadvantage associated with activities performed by
forward channel allies include
A. switching to lower priced substitutes.
B. pressuring forward channel allies to reduce their costs and markups.
C. shifting into the production of substitute products.
D. shifting from a differentiation strategy to a best-cost strategy or focus strategy.
E. implementing a benchmarking program and adopting best practices.
A company’s direction, objectives, and strategy
A. have to be revisited any time internal conditions warrant.
B. are never final as it is an ongoing process.
C. are not a now-and-then task.
D. have to be revisited whenever a firm encounters disruptive changes in its
environment.
E. All of these
Which one of the following is not a reliable measure of how well a company’s current
strategy is working?
A. Trends in the company’s sales and earnings growth.
B. The company’s development of human capital, organizational capital, and
information capital.
C. Changes in the firm’s image and reputation with its customers.
D. The company’s overall financial strength.
E. Evidence of improvement in internal processes such as defect rate, order fulfillment,
and employee productivity.
The strategy-making, strategy-executing process
A. is usually delegated to members of a company’s board of directors so as not to
infringe on the time of busy executives.
B. includes establishing a company’s mission, developing a business model aimed at
making the company an industry leader, and crafting a strategy to implement and
execute the business model.
C. embraces the tasks of developing a strategic vision, setting objectives, crafting a
strategy, implementing and executing the strategy, and then monitoring developments
and initiating corrective adjustments in light of experience, changing conditions, and
new opportunities.
D. is principally concerned with sizing up an organization’s internal and external
situation, so as to be prepared for the challenge of developing a sound business model.
E. is primarily the responsibility of top executives and the board of directors; very few
managers below this level are involved.
The managerial purpose of setting objectives includes
A. converting the strategic vision into specific performance targets.
B. using the objectives as yardsticks for tracking the company’s progress and
performance.
C. challenging the organization to perform at its full potential and deliver the best
possible results.
D. establishing deadlines for achieving performance results.
E. All of these.
Management’s strategic vision for an organization
A. charts a strategic course for the organization (“where we are going”) and outlines the
company’s future product-customer-market-technology focus.
B. describes in fairly specific terms the organization’s business model, strategic
objectives, and strategy.
C. spells out how the company will become a big moneymaker and boost shareholder
value.
D. addresses the critical issue of “why our business model needs to change and how we
plan to change it.”
E. spells out the organization’s strategic moves that will be undertaken to achieve
competitive advantage.
The essential requirement for different businesses to be “related” is that
A. their value chains possess competitively valuable cross-business fit relationships.
B. the products of the different businesses are bought by much the same types of
buyers.
C. the products of the different businesses are sold in the same types of retail stores.
D. the businesses have several key suppliers in common.
E. the production methods that they employ both entail economies of scale.
A comprehensive evaluation of the group of businesses a company has diversified into
involves
A. evaluating the attractiveness of industries the company has diversified into and the
competitive strength of each of its business units.
B. evaluating the strategic fits and resource fits among the various sister businesses.
C. ranking the performance prospects of the businesses from best to worst and
determining what the corporate parent’s priorities should be in allocating resources to its
various businesses.
D. using the results of the prior analytical steps as a basis for crafting new strategic
moves to improve the company’s overall performance.
E. All of these.
Cross-business strategic fits can be found
A. in unrelated as well as related businesses and in the markets of foreign countries as
well as in domestic markets.
B. only in businesses whose products/services satisfy the same general types of buyer
needs and preferences.
C. mainly in either technology-related activities or sales and marketing activities.
D. chiefly in the R&D portions of the value chains of unrelated businesses.
E. anywhere along the respective value chains of related businesses.
Dispersing particular value chain activities across many countries rather than
concentrating them in a select few countries can be more advantageous when
A. buyer-related activities (such as sales, advertising, after-sale service and technical
assistance) need to take place close to buyers.
B. high transportation costs make it uneconomical to operate from one or just a few
locations.
C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and
adverse political developments.
D. there are diseconomies of scale in trying to operate from a single location.
E. All of these.
Which of the following is not a factor that causes buyer bargaining power to be
stronger?
A. Some buyers are a threat to integrate backward into the business of sellers
B. The industry is composed of a few large sellers and the customer group consists of
numerous buyers that purchase in fairly small quantities
C. Buyers have considerable discretion over whether and when they purchase the
product
D. Buyers are well informed about sellers’ products, prices, and costs
E. The costs incurred by buyers in switching to competing brands or to substitute
products are relatively low
Rivalry among competing sellers is generally more intense when
A. buyer demand is growing rapidly.
B. the industry’s driving forces are strong and rivals have strongly differentiated
products.
C. barriers to entry are moderately high and the pool of likely entry candidates is small.
D. industry conditions tempt competitors to use price cuts or other competitive weapons
to boost unit volume.
E. barriers to entry are high and buyer switching costs are high.
The procedure for evaluating the pluses and minuses of a diversified company’s strategy
includes
A. assessing the attractiveness of the industries the company has diversified into.
B. assessing the competitive strength of each business the company has diversified into.
C. ranking the performance prospects of the various businesses from best to worst and
determining the priorities for resource allocation.
D. evaluating the extent of cross-business strategic fits and also checking whether the
firm’s resources fit the needs of the various businesses the company has diversified into.
E. All of these.
The competitive pressures from substitute products tend to be stronger when
A. buyers are relatively comfortable with the quality and performance of substitutes and
the costs to buyers of switching over to the substitutes are low.
B. there are more than 10 sellers of substitute products.
C. substitutes exhibit the latest in technological innovation.
D. buyers have high psychic costs in severing existing brand relationships and
establishing new ones.
E. demand for the industry’s product is not very price sensitive.
The bargaining leverage of suppliers is greater when
A. only a small number of suppliers exist and when it is difficult for industry members
to switch to attractive substitutes.
B. industry members incur low costs in switching their purchases from one supplier to
another.
C. industry members purchase in large quantities and thus are important customers of
the suppliers.
D. it makes good economic sense for industry members to vertically integrate
backward.
E. the supplier industry is composed of a large number of relatively small suppliers.
Which of the following factors is not a relevant consideration in judging whether buyer
bargaining power is relatively strong or relatively weak?
A. Whether the number of buyers is small or if a customer is particularly important to
the seller
B. Whether buyers are relatively well informed about sellers’ products, prices, and costs
C. Whether buyer needs and expectations are changing rapidly or slowly
D. Whether buyer demand is weak or strong and rapidly growing
E. Whether buyers pose a credible threat of integrating backward into the business of
sellers
A company’s business model
A. details the manner in which the company will pass the three tests of a winning
strategy .
B. indicates how the strategy will result in achieving the targeted strategic objectives.
C. clarifies (1) how the business will provide customers with value, and (2) why the
business will generate revenues sufficient to cover costs and produce attractive profits.
D. explains how it intends to achieve high profit margins.
E. sets forth the actions and approaches that it will employ to achieve market
leadership.
The competitive power of a company resource or competitive capability hinges on
A. how hard it is for competitors to copy or imitate.
B. whether it is rare and, therefore, something rivals lack.
C. whether it is really competitively valuable.
D. how easily it can be trumped by the substitute resources/capabilities of rivals.
E. All of these.
The strategic management process is shaped by
A. management’s strategic vision, strategic and financial objectives, and strategy.
B. the decisions made by the compensation and audit committees of the board of
directors.
C. external factors such as the industry’s economic and competitive conditions and
internal factors such as the company’s collection of resources and capabilities.
D. a company’s customer value proposition and profit formula.
E. actions to strengthen competitive capabilities and correct weaknesses, actions to
strengthen market standing and competitiveness by acquiring or merging with other
companies, and actions to enter new geographic or product markets.
Competitive pressures stemming from buyer bargaining power tend to be weaker when
A. the number of buyers is small, such that each customer’s business tends to be
particularly important to a seller.
B. buyer demand is growing slowly or maybe even declining.
C. the costs incurred by buyers in switching to competing brands or to substitute
products are relatively high.
D. buyers are well informed about sellers’ products, prices, and costs.
E. the buyer group consists of a few large buyers and the seller group consists of
numerous small firms.
A company’s mission statement should be sufficiently descriptive and include which of
the following?
A. Identify the company’s services and products to give the company its own identity
B. Relate to the buyer’s needs that the company seeks to satisfy
C. Identify the customer or market that the company intends to serve
D. Specify the approach taken by the company to satisfy its customer’s needs
E. All of these
A joint venture is an attractive way for a company to enter a new industry when
A. a firm is missing some essential skills or capabilities or resources and needs a
partner to supply the missing expertise and competencies or fill the resource gaps.
B. it needs access to economies of scope and good financial fits in order to be
cost-competitive.
C. it is uneconomical for the firm to achieve economies of scope on its own initiative.
D. the firm has no prior experience with diversification.
E. it has not built up a hoard of cash with which to finance a diversification effort.
Crafting strategy requires
A. a collaborative effort that includes managers in various position at various
organizational levels.
B. executive management involvement only.
C. participation by all employees.
D. a collaborative effort between the CEO and board members only.
E. All of these.
Determining whether a company’s prices and costs are competitive
A. requires looking at the costs of a company’s internally performed activities and the
costs of its suppliers and forward channel allies (distributors/dealers).
B. requires performing pricing surveys on at least a quarterly basis.
C. involves developing close relationships with buyers to determine if the market is
showing signs of increasing price sensitivity.
D. typically involves the use of activity-based cost accounting by the company’s key
retail customers.
E. All of these.
The backbone of identifying, studying, and implementing best practices is
A. business process reengineering.
B. a corporate culture that has a core value of operating excellence.
C. benchmarking.
D. Six Sigma quality control techniques.
E. innovative application of TQM techniques.
A company’s business model
A. concerns the actions and business approaches that will be used to grow the business,
conduct operations, please customers, and compete successfully.
B. relates to the principle business components that will allow the business to generate
revenues ample to cover costs and produce a profit.
C. concerns what moves in the marketplace it plans to make to outcompete rivals.
D. deals with how it can simultaneously maximize profits and operate in a socially
responsible manner.
E. concerns how management plans to pursue strategic objectives, given the larger
imperative of meeting or beating its financial performance targets.
Proficient strategy execution
A. is always the product of much organizational learning.
B. is achieved unevenly, coming quickly in some areas and more slowly in others.
C. entails vigilantly searching for ways to improve performance.
D. is an ongoing process, not an every-now-and-then task.
E. All of these.
Business process reengineering is a tool for
A. expediting the redesign of existing products and shortening the design-to-market
cycle.
B. pulling the pieces of strategy-critical activities out of different departments and
unifying their performance in a single department or cross-functional work.
C. instituting total quality management.
D. making the most effective use of Six Sigma techniques.
E. rapid redesign of an organization’s structure so as to rapidly create organizational
competencies and capabilities.
Which of the following is generally not among the practices that companies use to staff
jobs with the best people they can find?
A. Careful screening and evaluation of job applicants
B. Rotating people through jobs that span functional and geographic boundaries
C. Weeding out the 20% lowest-performing employees each year
D. Striving to retain talented, high-performing employees via promotions, salary
increases, and other perks
E. Coaching average performers to improve their skills and capabilities
Identify and briefly explain any three factors that intensify competitive pressures
stemming from the threat that new firms will enter the industry.
Answer:
Answer may vary
What are the strategic advantages of being a first mover? What are the strategic
advantages of being a follower or late mover?
Answer:
Answer may vary
What are the strategic advantages of a backward vertical integration strategy?
Answer:
Answer may vary
Explain the importance of competing in emerging markets.
Answer:
Answer may vary
Identify and briefly discuss each of the three tests for determining whether
diversification into a new business is likely to build shareholder value.
Answer:
Answer may vary
Identify and briefly explain any two of the factors that influence the strength of
competition from substitute products.
Answer:
Answer may vary
What does the industry attractiveness test involve in evaluating a diversified company’s
business lineup? Why is it relevant?
Answer:
Answer may vary
What are the distinctive features of a focused low-cost strategy? How does it differ
from a low-cost leadership strategy?
Answer:
Answer may vary
List and discuss three strategy options for competing in emerging markets.
Answer:
Answer may vary
Identify cost drivers in a company’s value chain. Explain how these drivers impact a
firm’s generic strategy.
Answer:
Answer may vary
Give two examples of ‘symbolic” culture-changing actions and two examples of
‘substantive” culture-changing actions.
Answer:
Answer may vary
Assume a firm is at a cost disadvantage with rivals because of higher distributor-dealer
costs than rivals. Identify two strategic moves that it can make to restore cost parity.
Answer:
Answer may vary
What are the two elements of a company’s business model?
Answer:
Answer may vary
Define and explain the importance of the two elements of a company’s business model.
Answer:
Answer may vary
What is the essence of the business case for why a company should endeavor to be
socially responsible in its actions and conduct?
Answer:
Answer may vary
In determining the various strategic issues that a company needs to address, managers
need to consider both the results of its analysis of the company’s external environment
and the results of its evaluation of the company’s competitive position, customer value
proposition, and cost structure. True or false? Explain and defend your answer.
Answer:
Answer may vary
What are the two types of objectives included in the balanced scorecard? Define and
provide five examples of each.
Answer:
Answer may vary
What is the analytical value of studying competitors and trying to predict what moves
rivals will make next?
Answer:
Answer may vary
What is meant by the term “resource fit” as it applies to evaluating a diversified
company’s business lineup?
Answer:
Answer may vary
The achievement of financial objectives tends to be a lagging indicator of a company’s
performance while the achievement of strategic objectives tends to be a leading
indicator of a company’s future financial performance. True or false? Support and
explain your answer.
Answer:
Answer may vary