A company’s competitive strategy should
A. be well matched to its internal situation and predicated on leveraging its collection of
competitively valuable resources and competencies.
B. be aligned toward being at least an average performer within the industry.
C. be well attuned to doing an outstanding job of satisfying the needs and expectations
of niche buyers.
D. have the resources and capabilities to incorporate standard attributes into its product
offering.
E. ensure it is designed to concentrate on a small range of products so it can react
quickly to competitive moves.
The objective of competitive strategy is to
A. provide detail to the company’s business model.
B. build competitive advantage in the marketplace by giving buyers superior value
relative to the offerings of rival sellers.
C. get the company into the best strategic group and then dominate it.
D. establish a competitively powerful value chain.
E. grow revenues at a faster annual rate than rivals are able to grow their revenues.
The state of competition in an industry is a function of
A. the competitive pressures associated with rivalry among competing sellers to attract
customers.
B. competitive pressures coming from the attempts of companies in other industries
attempting to win buyers over to their substitute products.
C. competitive pressures associated with the threat of new entrants into the
marketplace.
D. competitive pressures associated with the bargaining power of suppliers and
customers.
E. All of these
One important dimension of resource fit concerns the potential to generate internal cash
flows sufficient to fund capital requirements of its business lineup, termed the firm’s
A. internal capital market.
B. debt policy management.
C. liquidity management.
D. economic value added.
E. All of these.
A blue ocean strategy
A. is an offensive attack used by a market leader to steal customers away from
unsuspecting smaller rivals.
B. involves a preemptive strike to secure an advantageous position in a fast-growing
market segment.
C. works best when a company is the industry’s low-cost leader.
D. offers growth in revenues and profits by discovering or inventing a new industry or
distinct market segment that allows a company to create and capture altogether new
demand.
E. involves the use of highly creative, never-used-before strategic moves to attack the
competitive weaknesses of rivals.
The strategic options to improve a diversified company’s overall performance do not
include which of the following categories of actions?
A. Broadening the company’s business scope by making new acquisitions in new
industries
B. Increasing dividend payments to shareholders and/or repurchasing shares of the
company’s stock
C. Restructuring the company’s business lineup and putting a whole new face on the
company’s business makeup
D. Sticking closely with the existing business lineup and pursuing opportunities these
businesses present
E. Divesting weak-performing businesses and retrenching to a narrower base of
business operations
Which of the following is not a good option for trying to remedy high internal costs
vis-à-vis rivals firms?
A. Investing in productivity-enhancing, cost-saving technological improvements
B. Redesigning the product or some of its components to permit more economical
manufacture or assembly
C. Implementing aggressive strategic resource mapping to permit across-the-board cost
reduction
D. Outsourcing high-cost activities to vendors or contractors who can perform them
more economically
E. Relocating high-cost activities (like manufacturing) to geographic areas (such as
China or Latin America or Eastern Europe) where they can be performed more cheaply
The hallmark of an adaptive corporate culture is
A. a shared willingness to adapt core values to fit the changing requirements of an
evolving strategy.
B. a conservative strategy, prudent risk taking, and strong peer pressures to observe
cultural norms.
C. willingness on the part of organizational members to accept change and take on the
challenge of introducing and executing new strategies.
D. a commitment to the types of core values and ethical standards that make a company
a great place to work.
E. a strong preference for performance-based compensation systems, especially the
payment of bonuses and stock options.
A broad differentiation strategy generally produces the best results in situations where
A. buyer brand loyalty is low.
B. few rivals are following a similar differentiation approach.
C. new and improved products are introduced only infrequently.
D. most rivals are seeking to differentiate their products on most of the same features
and attributes.
E. price competition is vigorous.
Mergers and acquisitions are often driven by such strategic objectives as to
A. expand a company’s geographic coverage, extend its business into new product
categories, or gain quick access to new technologies or other resources and capabilities.
B. weaken the bargaining power of either key suppliers or key customers.
C. reduce the company’s vulnerability to industry driving forces.
D. facilitate a company’s shift from one type of competitive strategy to another.
E. secure a higher credit rating and better access to additional financial capital.
Which of the following is not a factor to consider in identifying an industry’s dominant
economic features?
A. The market size, growth rate and prospects
B. The scope of competitive rivalry including geographic area
C. The market demand-supply conditions
D. How strong driving forces and competitive forces are
E. The role and pace of technological change
Define and briefly explain what is meant by each of the following terms:a) Strategic
inflection point
b) Strategic vision
c) Strategic objective
d) Strategic plan
e) Balanced scorecard
Answer:
Answer may vary
The big danger or risk of an unsound best-cost provider strategy is
A. that buyers will be highly skeptical about paying a relatively low price for upscale
attributes/features.
B. not establishing strong alliances and partnerships with key suppliers.
C. that low-cost leaders will be able to steal away some customers on the basis of a
lower price and high-end differentiators will be able to steal away customers with the
appeal of better product attributes.
D. that it will be unable to achieve top-notch quality at a rock-bottom cost.
E. becoming too highly integrated and not relying enough on outsourcing.
When calculating industry attractiveness scores, to produce a valid response it is
necessary to
A. ensure the appropriate weights are assigned to each measure and that the preparer
has sufficient knowledge to rate the industry on each attractiveness measure.
B. ensure the weights are assigned evenly so as not to bias the attractiveness scores.
C. ensure at least three companies within the industry are clearly well-understood to
ensure validated scores.
D. be prepared to make an educated guess if the available information is skimpy.
E. All of these.
In which one of the following instances is supplier bargaining power and leverage not
weakened?
A. When industry members pose a credible threat of backward integration into the
business of suppliers
B. When the cost of switching from one supplier to another is low
C. When the buying firms purchase in large quantities and thus are important customers
of the suppliers
D. When the item being supplied is a commodity
E. When the items purchased from suppliers are in short supply
Which of the following is generally not considered as a barrier to entry?
A. Rapid market growth
B. Sizable capital requirements and an array of regulatory requirements
C. Strong buyer loyalty to existing brands
D. Sizable economies of scale in production
E. Difficulties in gaining access to distribution and securing adequate space of retailers’
shelves
For a best-cost provider strategy to be successful, a company must have
A. excellent marketing and sales skills in convincing buyers to pay a premium price for
the attributes/features incorporated in its product.
B. the capability to incorporate upscale attributes at lower costs than rivals whose
products have similar upscale attributes.
C. access to greater learning/experience curve effects and scale economies than rivals.
D. one of the best-known and most respected brand names in the industry.
E. a short, low-cost value chain.
Broad differentiation strategies are well suited for market circumstances where
A. there are many ways to differentiate the product or service and many buyers perceive
these differences as having value.
B. most buyers have the same needs and use the product in the same ways.
C. buyers are susceptible to clever advertising.
D. barriers to entry are high and suppliers have a low degree of bargaining power.
E. price competition is especially vigorous.
A diversified company’s business units exhibit good resource fit when
A. each business is a cash cow.
B. a company has the resources to adequately support the requirements of its businesses
as a group without spreading itself too thin and when individual businesses add to a
company’s overall resource strengths.
C. each business is sufficiently profitable to generate an attractive return on invested
capital.
D. each business unit produces large internal cash flows over and above what is needed
to build and maintain the business.
E. the resource requirements of each business exactly match the resources the company
has available.
The competitive threat that outsiders will enter a market is weaker when
A. financially strong industry members send strong signals that they will launch
strategic initiatives to combat the entry of newcomers.
B. the pool of entry candidates is large and some have resources that would make them
formidable market contenders.
C. the industry’s market growth is rapid.
D. newcomers can be expected to earn attractive profits.
E. buyers have little loyalty to the brands and product offerings of existing industry
members.
In seeking to predict the next moves of close or key rivals, it is useful to consider such
questions as:
A. Which rivals badly need to increase their unit sales and market share?
B. Are there predictable trends in the timing of rivals’ new-product launches or
marketing promotions?
C. Which rivals have a strong incentive, along with the resources, to make major
strategic changes?
D. Which rivals are likely to enter new geographic markets or expand their product
offerings?
E. All of these
Good corporate citizens
A. go beyond meeting society’s expectations for ethical strategies and business behavior
by fostering social benefit and balancing the interests of all.
B. are active participants in the political process.
C. identify up-and-coming managers who have a future in local- or state-level politics.
D. create a democratic workplace whereby the voices of lower-level employees are
heard through representation on the board of directors.
E. All of these.
The consequences of pursuing a strategy that has unethical or shady components
include
A. lower stock prices.
B. customer defections and loss of reputation.
C. incurring potentially large legal and investigative costs, government fines, and civil
penalties.
D. the costs of providing remedial education and ethics training to company personnel.
E. All of these.
Companies can pursue differentiation from many angles including
A. providing a unique competitive product taste.
B. executing superior customer service.
C. ensuring engineering design and performance benefits.
D. providing products that ensue luxury and prestige.
E. All of these.
Which of the following is not among the principal offensive strategy options that a
company can employ?
A. Leapfrogging competitors by being the first adopter of next-generation technologies
or being first to market with next-generation products
B. Offering an equally good or better product at a lower price
C. Blocking the avenues open to challengers
D. Attacking the competitive weakness of rivals
E. Capturing unoccupied or less contested territory by maneuvering around
SWOT analysis
A. is a way to measure whether a company’s value chain is longer or shorter than the
chains of key rivals.
B. is a tool for benchmarking whether a firm’s strategy is closely matched to industry
key success factors.
C. reveals whether a company is competitively stronger than its closest rivals.
D. provides a good overview of a company’s overall situation.
E. identifies the reasons a company’s strategy is or is not working very well.
A company’s realized strategy is made up of
A. deliberate/planned initiatives that have proven themselves in the marketplace and
newly launched initiatives aimed at further boosting performance.
B. emergent/reactive adjustments to unanticipated strategic moves by rivals, unexpected
changes in customer preferences, and new market opportunities.
C. tactical plans to imitate the key elements of the strategies employed by rivals.
D. Both deliberate/planned initiatives that have proven themselves in the marketplace
and newly launched initiatives aimed at further boosting performance and
emergent/reactive adjustments to unanticipated strategic moves by rivals, unexpected
changes in customer preferences, and new market opportunities.
E. All of these.
A company’s social responsibility strategy is typically comprised of all but which one of
the following elements?
A. Actions to enhance workforce diversity and make the company a great place to work
B. Making charitable contributions and donating the time of company personnel to
community service endeavors
C. Actions to protect or enhance the environment
D. Conscious efforts to ensure that all elements of the company’s strategy are ethical
and actions to protect or enhance the environment (beyond what is legally required)
E. Actions to keep prices low enough that the company’s profits will not be viewed by
the general public as obscenely high or exorbitant
Which one of the following is not a tool that company managers can use to promote
continuous improvement (operating excellence) in performing value chain activities?
A. Variability reduction analysis in work processes
B. Six Sigma quality control techniques
C. Total quality management (TQM)
D. Business process reengineering
E. Adoption of standard industry techniques
A strategy to be the industry’s overall low-cost provider tends to be more appealing than
a differentiation or focus strategy when
A. there are many ways to achieve product differentiation that buyers find appealing.
B. buyers use the product in a variety of different ways.
C. the offerings of rival firms are essentially identical, standardized, commodity-like
products.
D. buyers have high switching costs in changing from one seller’s product to another.
E. the market is composed of many buyer types, all with varying needs and
expectations.
A “cash hog” type of business
A. is one that is losing money and requires cash infusions from its corporate parent to
continue operations.
B. is one that generates cash flows that are too small to fully fund its operations and
growth.
C. generates negative cash flows from internal operations and thus requires cash
infusions from its corporate parent to report a profit.
D. is a business growing so rapidly that it does not have the funds to cover its short- and
long-term debt obligations.
E. is one that has more current liabilities than current assets and faces a liquidity crisis
due to declining sales revenues and declining profitability.
Which one of the following is not a good type of rival for an offensive-minded
company to target?
A. Market leaders that are vulnerable
B. Runner-up firms with weaknesses in areas where the offensive-minded challenger is
strong
C. Small local and regional companies with limited capabilities
D. Struggling enterprises that are on the verge of going under
E. Other offensive-minded companies with a sizable war chest of cash and marketable
securities
What factors should management consider when ranking business units and setting a
priority for resource allocation?
Answer:
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Explain the benefits of preparing a competitive strength assessment.
Answer:
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What is the purpose of defensive strategy? Give at least two examples of defensive
moves.
Answer:
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What is a resource-based strategy?
Answer:
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Under what circumstances might an already diversified company chose to enter
additional businesses and broaden its diversification base?
Answer:
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What are the three main approaches to rectify a weakness in a company’s customer
value proposition?
Answer:
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What is the difference between a mission statement and a strategic vision?
Answer:
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Assume a firm is at a cost disadvantage with rivals because its internal costs are higher
than rivals. Identify five strategic moves that it can make to restore cost parity.
Answer:
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What are the remedies for an internal cost disadvantage?
Answer:
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Identify and briefly describe any three of the five strategic options for entering foreign
markets.
Answer:
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What is the difference between ethics and business ethics?
Answer:
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Identify and briefly discuss at least three obligations of a company’s board of directors
in corporate governance and the strategy-making, strategy-executing process.
Answer:
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What are the strategic disadvantages of a vertical integration strategy?
Answer:
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Explain the difference between the school of ethical universalism and the school of
ethical relativism.
Answer:
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Explain the differences between a “think global, act global” strategy and a “think
global, act local” strategy.
Answer:
Answer may vary