Which of the following is not a typical reason for a company to expand into the markets
of foreign countries?
A. To gain access to new customers
B. To strengthen its capability to employ offensive strategies, especially those that
involve preemptive strikes
C. To achieve lower costs and enhance the firm’s competitiveness
D. To capitalize on company competencies and capabilities
E. To spread business risk across a wider geographic market base
Crafting a strategy involves
A. blending deliberate/planned initiatives with emergent/unplanned reactive responses
to changing circumstances, while abandoning planned strategy elements that have failed
in the marketplace.
B. developing a five-year strategic plan and then fine-tuning it during the remainder of
the plan period.
C. trying to imitate as much of the market leader’s strategy as possible so as not to end
up at a competitive disadvantage.
D. doing everything possible (in the way of price, quality, service, warranties,
advertising, and so on) to make sure the company’s product/service is very clearly
differentiated from the product/service offerings of rivals.
E. All of these accurately characterize the managerial process of crafting a company’s
strategy.
Briefly define each of the following terms:
a. Strategy
b. Sustainable competitive advantage
c. Business model
Answer:
Answer may vary
The strategic impetus for forward vertical integration is to
A. gain better access to end users, improve market awareness, and/or include the end
user’s purchasing experience as a differentiating feature.
B. the opportunity to capture the profits being earned by forward distribution allies (and
thereby increase the company’s own profits).
C. reduce or eliminate disruptions in the delivery of the company’s products to end
users.
D. avoid channel conflict.
E. expand a company’s geographic coverage.
The most important strategy-making guidance that comes from drawing a nine-cell
industry attractiveness-competitive strength matrix is
A. which businesses in the portfolio have the most potential for strategic fit and
resource fit.
B. why cash cow businesses are more valuable than cash hog businesses.
C. that corporate resources should be concentrated on those businesses enjoying both a
higher degree of industry attractiveness and competitive strength and that businesses
having low competitive strength in relatively unattractive industries should be looked at
for possible divestiture.
D. which businesses have the biggest competitive advantages and which ones confront
serious competitive disadvantages.
E. which businesses are in industries with profitable value chains and which are in
industries with money-losing value chains.
Which one of the following does not cause the rivalry among competing sellers to be
weak?
A. High buyer switching costs
B. Rapid growth in buyer demand
C. Industry members aren’t aggressive in drawing sales and market share away from
rivals
D. When one or more competitors become dissatisfied with their market position
E. Strongly differentiated products among rival sellers
Which of the following is an important appeal of a related diversification strategy?
A. Represents an effective way of capturing valuable financial fit benefits
B. Offers opportunities to transfer skills, expertise, technical know-how, or other
capabilities from one business to another
C. Offers significant opportunities to strongly differentiate a company’s product
offerings from those of rivals
D. Is more likely to pass the cost-of-entry test and the capital gains test than unrelated
diversification
E. Is typically more profitable than unrelated diversification, which is a major factor in
helping related diversification pass the attractiveness test
Which one of the following does not intensify the competitive pressures associated with
the threat of entry?
A. When incumbent firms are unable or unwilling to launch competitive initiatives to
strongly contest the entry of newcomers
B. When industry members are struggling to earn good profits
C. When entry barriers are relatively low
D. When existing industry members are looking to expand their market reach by
entering product segments or geographic areas where they currently do not have a
presence
E. When newcomers can expect to earn attractive profits and a number of outsiders
have the expertise and resources to hurdle whatever entry barriers exist
Why do mergers and acquisitions sometimes fail to produce anticipated results?
A. They do not produce the hoped for outcomes and changes to existing operations may
not eventuate.
B. Cost savings may prove smaller than expected.
C. Gains in competitive capabilities may take substantially longer or never materialize.
D. Efforts to mesh corporate cultures can stall due to formidable resistance from
organization members and key employees can become disenchanted and leave.
The success of unrelated diversification is dependent upon management’s ability to
A. acquire new businesses that utilize much the same technology as existing businesses.
B. divest businesses whose competitive strategies do not match the overall competitive
strategy of the corporation.
C. acquire new businesses having attractive distribution-related and customer-related
strategic fits with existing businesses.
D. spotting bargain-priced companies with big upside potential and then turning around
their operations quickly with the aid of the parent company’s financial resources and
managerial know-how.
E. identify potential new acquisition candidates that are cash cows (as opposed to cash
hogs).
Which of the following conditions acts to weaken buyer bargaining power?
A. When buyers are unlikely to integrate backward into the business of sellers
B. When buyers are well informed about sellers’ products, prices, and costs
C. When the costs incurred by buyers in switching to competing brands or to substitute
products are relatively low
D. When buyers have the ability to postpone purchases if they don’t like the prices
offered by sellers
E. When buyers are few in number and/or often purchase in large quantities
Just how strong the competitive pressures are from substitute products depends on
A. whether the available substitutes are strongly or weakly differentiated and whether
buyers make purchases frequently or infrequently.
B. whether attractively priced substitutes are readily available and the ease with which
buyers can switch to substitutes.
C. whether the available substitutes are products or services.
D. whether the producers of substitutes have ample budgets for new product R&D.
E. the speed with which buyer needs and expectations are changing.
Whether supplier-seller relationships in an industry represent a strong or weak source of
competitive pressure is a function of
A. whether the profits of suppliers are relatively high or low.
B. the number of suppliers that each seller/industry member purchases from on average.
C. how aggressively rival industry members are trying to differentiate their products.
D. the extent to which suppliers can exercise sufficient bargaining power to influence
the terms and conditions of supply in their favor and the extent of seller-supplier
collaboration in the industry.
E. whether the prices of the items being furnished by the suppliers are rising or falling.
Which of the following is not a sound guideline for designing a reward and incentive
system that helps promote good strategy execution?
A. The reward system must be administered with scrupulous objectivity and fairness.
B. The payoff for meeting or beating performance targets must be a major, not minor,
piece of the total compensation package.
C. The incentive plan should extend to all managers and all employees, not just top
management.
D. Ways must be found to reward deserving nonperformers who, for some reason, do
not fare well under the incentive system.
E. Make sure that the performance targets each individual or team is expected to
achieve involve outcomes that the individual or team can personally affect.
Companies that adopt the principle of ethical relativism in providing ethical guidance to
company personnel
A. base their standards of what is ethical and what is unethical on the Global Code of
Ethical Conduct first developed in 1935 and since subscribed to by the governments of
180 countries.
B. have little moral basis for ethical standards companywide because it has no ethical
standards or principles of its own.
C. have no fair way to judge the ethical correctness of the conduct of company
personnel.
D. have a one-size-fits-all set of ethical standards.
E. end up allowing each company employee to determine what set of ethical standards
to observe.
Which of the following is an issue likely to be addressed by a company’s business
strategy?
A. Actions to respond to changing economic and market conditions.
B. Actions to supplement the company’s resources and capabilities through alliances
and joint ventures.
C. Reactions to offensive moves by rival sellers.
D. Actions and approaches used in managing the functional areas of the business.
E. All of these are pertinent in identifying a company’s strategy.
Which of the following is not an accurate statement as concerns competing in the
markets of foreign countries?
A. A multicountry strategy is generally superior to a global strategy.
B. There are country-to-country differences in consumer buying habits and buyer tastes
and preferences.
C. A company must contend with fluctuating exchange rates and country-to-country
variations in host-government restrictions and requirements.
D. Product designs suitable for one country are often inappropriate in another.
E. Market growth rates vary from country to country.
The options for remedying a supplier-related cost disadvantage include
A. trying to negotiate more favorable prices with suppliers and switching to lower
priced substitute inputs.
B. forward vertical integration.
C. shifting into the production of substitute products.
D. shifting from a low-cost leadership strategy to a differentiation or focus strategy.
E. cutting selling prices and trying to win a bigger market share.
Evaluating whether an industry presents a sufficiently attractive business opportunity
usually does not involve a consideration of which of the following factors?
A. The industry’s growth potential
B. Whether competitive pressures will likely grow stronger or weaker
C. Whether the industry’s future profitability will be favorably or unfavorably affected
by the prevailing driving forces
D. The company’s competitive position in the industry and its ability to perform
industry key success factors
E. Whether the industry’s product is strongly or weakly differentiated
Market conditions and factors that tend not to favor first movers include
A. growth in demand that depends on the development of complementary products or
services that are not currently available and new industry infrastructure that is needed
before buyer demand can surge.
B. quick market penetration and strong loyalty among first-time customers.
C. buyer behavior that is readily attracted to new technology or product features.
D. conditions that make imitation difficult and absolute cost advantages that accrue to
those who make early commitments to new technologies, components, or distribution
channels.
E. All of these.
The three components of building a capable organization are
A. making periodic changes in the firm’s internal organization to keep people from
getting into a comfortable rut, instituting a decentralized approach to decision making,
and developing the appropriate competencies and capabilities.
B. hiring a capable top management team, empowering employees, and establishing a
strategy-supportive corporate culture.
C. putting a centralized decision-making structure in place, determining who should
have responsibility for each value chain activity, and aligning the corporate culture with
key policies, procedures, and operating practices.
D. staffing the organization, building core competencies and competitive capabilities,
and structuring the organization and work effort.
E. optimizing the number of core competencies and competitive capabilities, making
sure that all managers and employees are empowered, and maximizing internal
operating efficiency.
The place for management to begin in trying to change a problem culture is
A. by selling company personnel on the need for a new set of behaviors and work
practices.
B. by spending heavily on programs to train employees in the ways and beliefs of the
new culture to be implanted.
C. to visibly praise and reward people who exhibit traits and behaviors that undermine
the existing culture.
D. writing a new values statement and describing in highly motivating terms the kind of
culture that is needed.
E. to institute incentive compensation programs that generously reward employees for
adopting best practices.
The results of strategies that cannot pass the test of moral scrutiny often are manifested
in
A. sharp drops in stock prices.
B. devastating public relations hits.
C. sizable fines.
D. criminal indictment and convictions of company executives.
E. All of these.
A strategic group
A. consists of those industry members that are growing at about the same rate and have
similar product line breadth.
B. includes all rival firms having comparable profitability.
C. is a cluster of industry rivals that have similar competitive approaches and market
positions.
D. consists of those firms whose market shares are about the same size.
E. is made up of those firms having comparable profit margins.
A good example of vertical integration is
A. a producer of organic vegetables deciding to expand into the production of organic
fruits.
B. a supermarket chain acquiring a distributor of fresh fruits and vegetables.
C. a crude oil refiner purchasing a railroad company.
D. a hospital opening a nursing home for the aged.
E. a maker of prescription drugs acquiring a chain of hospitals.
The school of ethical relativism holds that
A. what constitutes ethical or unethical conduct varies according to the religious
convictions of each society or each culture within a country.
B. when there are country or cross-cultural differences in what is considered ethical or
unethical in business situations, it is appropriate for local moral standards to take
precedence over what the ethical standards may be elsewhere.
C. concepts of right and wrong are always governed by business norms in each country,
culture, or society.
D. concepts of right and wrong are always a function of each individual’s own set of
values, beliefs, and ethical convictions.
E. concepts of right and wrong as they apply to business behavior are always varying
shades of gray, never absolute (i.e.; black or white).
Identify and briefly explain what is meant by each of the following terms:
a. Outsourcing strategy
b. Vertical integration strategy
c. First-mover advantage
d. First-mover disadvantage
Answer:
Answer may vary
A company’s competitive strategy deals with
A. management’s game plan for securing a competitive advantage relative to rivals.
B. what its strategy will be in such functional areas as R&D, production, sales and
marketing, distribution, finance and accounting, and so on.
C. its efforts to change its position on the industry’s strategic group map.
D. its plans for entering into strategic alliances, utilizing mergers or acquisitions to
strengthen its market position, outsourcing some in-house activities to outside
specialists, and integrating forward or backward.
E. All of these.
Focusing provides the ability to secure a competitive edge but also it carries some risks
that will be detrimental to the focused firm, such as
A. the chance that competitors will not find effective ways to match the focused
company’s capabilities in serving the market niche.
B. the potential for the preferences and needs of niche members to shift over time
toward mainstream provider product attributes.
C. the potential for the niche to become so attractive it will not attract new competitors
thereby providing excessive market segment profits.
D. the likelihood that a focused company will become so cost efficient it will achieve
excessive profits.
E. None of these are risks worth worrying about.
To succeed with a low-cost provider strategy, company managers have to
A. pursue backward or forward integration to detour suppliers or buyers with
considerable bargaining power and leverage.
B. move the performance of most all value chain activities to low-wage countries.
C. sell direct to users of their product or service and eliminate use of wholesale and
retail intermediaries.
D. do two things: (1) perform value chain activities more cost-effectively than rivals
and (2) be proactive in revamping the firm’s overall value chain to eliminate or bypass
“nonessential” cost-producing activities.
E. outsource the majority of value chain activities.
Integrative social contracts theory maintains that
A. there is no such thing as “moral free space”all ethical standards are determined by
societal norms, and individuals have an implied social contract to live up to these
standards.
B. few nations or cultures have common moral agreement on what is ethically right and
wrong.
C. there should be no absolute limits put on what actions and behaviors fall inside the
boundaries of what is ethically or morally right and which actions/behaviors fall
outside.
D. “first-order” universal ethical norms always take precedence over ‘second-order”
local ethical norms.
E. each country/culture/society has commonly held views about what constitutes
ethically appropriate actions/behaviors; these common standards of what is ethical and
what is not combine to form a ‘social contract” that all individuals in that
country/culture/society are obligated to observe.
Identifying the strategic issues a company faces and compiling a “worry list” of
problems and roadblocks is an important component of company situation analysis
because
A. without a precise fix on what problems/issues a company confronts, managers
cannot know what the industry’s key success factors are.
B. the “worry list” sets the management agenda for taking actions to improve the
company’s performance and business outlook.
C. without a precise fix on what problems/roadblocks a company confronts, managers
are less clear about what value chain activities to benchmark.
D. the “worry list” helps company managers clarify their thinking about how best to
modify the company’s value chain.
E. these issues and obstacles must be cleared before management can focus clearly on
what is the best strategy for the company to pursue.
In which of the following instances are first-mover disadvantages not likely to arise?
A. When the costs of pioneering are much higher than being a follower and only
negligible buyer loyalty or cost savings accrue to the pioneer
B. When rivals are employing offensive strategies rather than defensive strategies
C. When the products of an innovator are somewhat primitive and do not live up to
buyer expectations
D. When buyers are skeptical about the benefits of a new technology or product being
pioneered by a first mover
E. When rapid market evolution (due to fast-paced changes in technology or buyer
preferences) gives fast followers and maybe even cautious late movers the opening to
leapfrog a first mover’s products with more attractive next-version products
The option of sticking with the current business lineup makes sense when
A. the company’s present businesses offer attractive growth opportunities and can be
counted on to create economic value for shareholders.
B. companies are seeking multinational diversification.
C. corporate executives are excited about market opportunities.
D. corporate executives are satisfied with current performance of each of their
businesses and can use redirect capabilities and resources for expansion opportunities
E. corporate executives want to divest some businesses and retrench to a narrower
diversification base