Cavco Construction divests funds from its commercial property ventures to invest in
gated community properties close to New York, signaling a change of strategy. Which
of the following statements about Cavco is most likely true?
A. Cavco is impeding the efforts to proficiently execute the strategy.
B. Cavco is merely fine-tuning its existing strategy to test efficiency.
C. Cavco is marshalling resources to support new strategic initiative.
D. Cavco is hampering work climate conducive for good strategy execution.
E. Cavco is focusing on activities that are a low priority in the strategy execution effort.
Brands create customer loyalty, which in turn:
A. increases the perceived cost of switching to another product.
B. strengthens the product’s quality.
C. validates the motivation for alternate products.
D. provides monetary incentive for using the product.
E. allows a company to operate facilities at full capacity.
Which of the following strategies identifies a multidomestic approach?
A. Texas Instruments strongly encourages its trading partners to use the UN/EDIFACT
standard.
B. Hard Rock Cafes in Hawaii offer fish tacos and ahi tuna sandwich.
C. Coca Cola’s general market approach is controlled from Atlanta.
D. Nestle established its own distribution network in China.
E. Air Asia adapts its price to industry pressures.
Profit sanctuaries are found to differ by a company’s strategy, such that a(n):
A. domestic-only company has access to many profit sanctuary locations worldwide.
B. international competitor usually has a profit sanctuary in its home market and may
have other sanctuaries in countries where it has a strong position and market share.
C. globally competitive company generally has a profit sanctuary outside its home
market in countries where it is a market leader and enjoys a strong competitive position.
D. transnational company has profit sanctuaries in every country where it operates.
E. company competing in a few country markets has more profit sanctuaries.
Which of the following is NOT a reason why companies might use outsourcing to
improve performance of strategy-critical activities?
A. Improving a company’s chances for outclassing rivals in the performance of
strategy-critical activities and turning a core competence into a distinctive competence
B. Promoting quick establishment of a total quality culture
C. Speeding internal decision making and shortening the time it takes to respond to
changing market conditions
D. Capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities
and thus contribute to better strategy execution
E. Helping decrease internal bureaucracies and flatten the organizational structure
An industry’s key success factors can always be deduced by asking what factors:
A. are a function of market share, entry barriers, and economies of scale, degree of
vertical integration, and industry profitability that are advantageous.
B. vary according to whether an industry has high or low long-term attractiveness.
C. such as product attributes and service characteristics are crucial, and what resources
and competitive capabilities are needed, and what shortcomings are evident to put a
company at a competitive disadvantage.
D. can be determined from studying the “winning” strategies of the industry leaders and
ruling out as potential key success factors the strategy elements of those firms
considered to have “losing” strategies.
E. depend on the relative competitive strengths of the industry leaders and how
vulnerable they are to competitive attack.
Regardless of the circumstances, an industry’s key success factors can always be
deduced by asking the same three questions:
1) On what basis do buyers of the industry’s product choose between the competing
brands of sellers? That is, what product attributes and service characteristics are
crucial?
2) Given the nature of competitive rivalry prevailing in the marketplace, what resources
and competitive capabilities must a company have to be competitively successful?
3) What shortcomings are almost certain to put a company at a significant competitive
disadvantage?
The guidelines for designing an incentive compensation system that will help drive
successful strategy execution include:
A. making the performance payoff a major, not minor, piece of the total compensation
package.
B. having incentives that apply to the management team (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 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.
The key success factors in an industry:
A. are those competitive factors that most affect industry members’ abilities to prosper
in the marketplace-the particular strategy elements, product attributes, operational
approaches, resources, and competitive capabilities that spell the difference between
being a strong competitor and a weak one, and between profit and loss.
B. are determined by the industry’s driving forces, which are essential to surviving and
thriving in the industry.
C. hinge on how many different strategic groups the industry has operating within the
industry and their level of profitability and sustainable advantages.
D. depend on how many rivals are trying to move from one strategic group to another
without losing momentum.
E. are a function of such considerations as how many firms are in the industry, how
many have market shares above 5 percent, and whether the business models being used
are similar or diverse.
Which of the following is NOT a common shortcoming when wording a company’s
vision statement? When the statement is somewhat:
A. vague or incomplete-short on specifics.
B. flexible-is adjusted according to changing circumstances.
C. bland or uninspiring-short on inspiration.
D. generic-could apply to almost any company (or at least several others in the same
industry).
E. reliant on superlatives (best, most successful, recognized leader, global or worldwide
leader, first choice of customers).
The difference between a merger and an acquisition is that:
A. a merger involves one company purchasing the assets of another company with cash,
whereas an acquisition involves a company acquiring another company by buying all of
the shares of its common stock.
B. a merger is the combining of two or more companies into a single corporate entity,
whereas an acquisition involves one company (the acquirer) purchasing and absorbing
the operations of another company (the acquired).
C. in a merger, the companies retain their original names, whereas in an acquisition the
name of the company being acquired is changed to be the name of the acquiring
company.
D. a merger is a combination of three or more companies, whereas an acquisition is a
pooling of interests of just two companies.
E. a merger involves two or more companies deciding to adopt the same strategy,
whereas an acquisition involves one company taking over the strategy-making function
of another company.
Which of the following is NOT an integral part of driving-forces analysis?
A. Determining whether forces are acting to cause fundamental changes in industry
conditions and/or the industry’s competitiveness
B. Determining whether forces are acting to cause industry rivals to shift to a different
strategic group
C. Determining whether forces are acting to strengthen or weaken market demand
D. Determining whether forces are acting to make competition more or less intense
E. Determining whether forces are acting to raise or lower industry profitability
A company’s strategy and its quest for competitive advantage are tightly connected
because:
A. without a competitive advantage a company cannot become the industry leader.
B. without a competitive advantage a company cannot have a profitable business
model.
C. crafting 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.
The notion of social responsibility as it applies to businesses is concerned with:
A. a company’s duty to put the public interest ahead of shareholder interests.
B. societal expectations that all company stakeholders will be treated equally and fairly.
C. a company’s duty to establish a loyal workforce.
D. the responsibility that top management has for ensuring that the company’s actions
and decisions are in the best interest of stakeholders at large.E. a company’s duty to
operate in an honorable manner and provide good working conditions for employees.
Identifying the strategic issues and problems that merit front-burner managerial
attention:
A. is accomplished solely by analyzing the company’s internal working environment.
B. helps set management’s agenda for taking actions to improve the company’s
performance and business outlook.
C. is done solely by evaluating the company’s own internal situation-its resources and
competitive position-to help come up with a “worry list” of “how to€¦,” “whether
to€¦,” and “what to do about€¦”
D. is done solely as a basis for drawing conclusions about whether to stick with a
company’s present strategy or to modify it.
E. is accomplished solely by analyzing the company’s external environment.
Successful broad differentiation allows a firm to:
A. be the industry’s best-cost provider.
B. set the industry ceiling on price.
C. avoid being dragged into a price war with industry rivals and not be overly
concerned about whether entry barriers into the industry are high or low.
D. command a premium price for its product, and/or increase unit sales, and/or gain
buyer loyalty to its brand.
E. take sales and market share away from rivals by undercutting them on price.
Successful differentiation allows a firm to do one or more of the following:
– Command a premium price for its product.
– Increase unit sales (because additional buyers are won over by the differentiating
features).
– Gain buyer loyalty to its brand (because some buyers are strongly attracted to the
differentiating features and bond with the company and its products).
A company that is already diversified may choose to broaden its business scope by
building positions in new related or unrelated businesses because of all of the following
EXCEPT:
A. it has resources or capabilities that are eminently transferable to other related or
complementary businesses.
B. the company’s growth is sluggish and it wants the sales and profit boost that a new
business can provide.
C. management wants to lessen the company’s vulnerability to seasonal or recessionary
influences or to threats from emerging new technologies, legislative regulations, and
new product innovations that alter buyer preferences and resource requirements.
D. it wants to make new acquisitions to strengthen or complement some of its present
businesses, market positioning, and competitive capabilities.
E. its top management wants to increase its compensation.
Identify five factors that tend to weaken the intensity of competitive rivalry among an
industry’s member firms.
Identify and briefly explain any three factors that lead to strong bargaining power on the
part of buyers.
Identify and briefly explain the two types of healthy cultures and how they aid in good
corporate strategy execution.
What is the case for why business strategies should be ethical?
Briefly identify the special features of competing in foreign markets.
A company’s corporate culture is grounded in and shaped by its core values and ethical
standards and drives a shared commitment to achieve the firm’s strategic and financial
objectives. True or false? Justify your answer.