Which one of the following is not a substantive culture-changing action that a
company’s managers can undertake to alter a problem culture?
A. Promoting individuals who have stepped forward to advocate the shift to a different
culture and who can serve as role models for the desired cultural behavior
B. Revising policies and procedures in ways that will help drive cultural change
C. Screening all candidates for new positions carefully, hiring only those who appear to
fit in with the new culture
D. Urging company personnel to search outside the company for work practices and
operating approaches that may be an improvement over what the company is presently
doing
E. Designing compensation incentives that boost the pay of teams and individuals who
display the desired cultural behaviors and hit change-resisters in the pocketbook
Diversifying into a new industry by forming a new internal subsidiary to enter and
compete in the target industry is attractive when
A. all of the potential acquisition candidates are losing money.
B. it is impractical to outsource most of the value chain activities that have to be
performed in the target business/industry.
C. there is ample time to launch the new business from the ground up.
D. the company has built up a hoard of cash with which to finance a diversification
effort.
E. none of the companies already in the industry are attractive strategic alliance
partners.
The basic premise of unrelated diversification is that
A. the least risky way to diversify is to seek out businesses that are leaders in their
respective industry.
B. the best companies to acquire are those that offer the greatest economies of scope
rather than the greatest economies of scale.
C. the best way to build shareholder value is to acquire businesses with strong
cross-business financial fit.
D. any company that can be acquired on good financial terms and that has satisfactory
growth and earnings potential represents a good acquisition and a good business
opportunity.
E. the task of building shareholder value is better served by seeking to stabilize earnings
across the entire business cycle than by seeking to capture cross-business strategic fits.
A company’s strategy consists of
A. actions to develop a more appealing business model than rivals.
B. plans involving alignment of organizational activities and strategic objectives.
C. offensive and defensive moves to generate revenues and increase profit margins.
D. competitive moves and approaches that managers have developed to grow the
business, attract and please customers, conduct operations, and achieve targeted
objectives.
E. its strategic vision, its strategic objectives, and its strategic intent.
A company’s strategy needs to be ethical because
A. of the dangers that top management will get embarrassed if the company’s unethical
behavior is publicly exposed.
B. a strategy that is unethical not only damages the company’s reputation but it can also
have costly consequences.
C. everyone is an ethics watchdog and somebody is sure to blow the whistle on the
company’s unethical behavior.
D. of the risks of getting caught and prosecuted by governmental authorities if an
unethical strategy is used.
E. unethical strategies are inconsistent with or else weaken the corporate culture.
Factors that cause the rivalry among competing sellers to be weak include
A. low buyer switching costs and rival sellers that are relatively equal in size and
capability.
B. rapid growth in buyer demand and high buyer switching costs.
C. a recent acquisition of a weak rivals by an industry outsider with the intent of turning
the acquisition into a major contender.
D. low barriers to entry and weakly differentiated products among rival sellers.
E. slow growth in buyer demand and strongly differentiated products.
The transnational approach of a firm using a “think global, act local” version of a global
strategy entails
A. producing and marketing a variety of product versions under the same brand name,
with each different version being designed specifically to accommodate the needs and
preferences of buyers in a particular country.
B. little or no strategy coordination across countries.
C. pursuing the same basic competitive strategy theme (low-cost, differentiation,
best-cost, focused) in all countries where the firm does business but giving local
managers some latitude to adjust product attributes to better satisfy local buyers and to
adjust production, distribution, and marketing to be responsive to local market
conditions.
D. selling the company’s products under a wide variety of brand names (often one brand
for each country or group of neighboring countries) so that buyers in each country
market will think they are buying a locally made brand.
E. selling numerous product versions (each customized to buyer tastes in one or more
countries and sometimes branded for each country) but opting to only sell direct to
buyers at the company’s website so as to bypass the costs of establishing networks of
wholesale/retail dealers in each country market.
The basic purpose of calculating competitive strength scores for each of a diversified
company’s business units is to
A. rank the business unit from best to worst in terms of potential for cost reduction and
profit margin improvement.
B. provide a quantitative measure of the overall market strength and competitive
standing for each business unit.
C. determine which business unit has the greatest number of resource strengths,
competencies, and competitive capabilities and which one has the least.
D. determine which one has the biggest market share and is growing the fastest.
E. rank each business unit’s strategy from best to worst.
Which one of the following is not a benefit of prescribing policies and operating
procedures to aid management’s task of implementing strategy?
A. Painting a set of white lines that provides boundaries for the independent actions of
empowered personnel
B. Providing top-down guidance to operating managers, supervisory personnel, and
employees regarding how things need to be done
C. Promoting the creation of a work climate that facilitates good strategy execution
D. Helping build employee commitment to adopting best practices and using the tools
of TQM and Six Sigma
E. Helping enforce consistency in how particular activities are performed
Which of the following is not one of the ways that a company can achieve a cost
advantage by revamping its value chain?
A. Cutting out distributors and dealers by selling direct to customers
B. Replacing certain value chain activities with faster and cheaper online technology
C. Increasing production capacity and then striving hard to operate at full capacity
D. Relocating facilities so as to curb the need for shipping and handling activities
E. Streamlining operations by eliminating low value-added or unnecessary work steps
and activities
The reasons a company opts to expand outside its home market include
A. gaining access to new customers for the company’s products/services.
B. spreading its business risk across a wider market base.
C. achieving lower costs and enhancing the company’s competitiveness.
D. a desire to capitalize on its core competencies and capabilities.
E. All of these.
A viable business model includes a valuable customer value proposition that
A. is always partly deliberate/planned and partly emergent/reactive.
B. is an essential component of pursuing the company’s strategic intent.
C. suggests the greater the value provided and the lower the price, the more attractive
the value proposition.
D. lays out the approach to satisfying buyer wants and needs at a premium price.
E. must set forth management’s long-term action plan for achieving market leadership.
In order to sustain the competitive power of resources and capabilities they must be
A. continually strengthened and nurtured.
B. broadened and deepened to cover emerging market opportunities.
C. refreshed, modified, or sometimes phased out and replaced in response to ongoing
market changes.
D. difficult to imitate.
E. All of these.
Total quality management (TQM) programs
A. deal exclusively with procedures to achieve defect-free manufacturing and assembly.
B. nearly always contribute more to the achievement of operating excellence than either
business process reengineering or Six Sigma quality control techniques.
C. achieve the biggest success when extended to employee efforts in all
departmentshuman resources, R&D, accounting and records, information systems, and
so forth.
D. are considerably more effective in improving manufacturing and assembly activities
than they are in improving such value chain activities as R&D, human resources
management, supply chain management, information technology, sales and marketing,
and finance.
E. are generally considered the best tool for reengineering strategy-critical business
processes.
Outsourcing strategies
A. are nearly always a more attractive strategic option than merger and acquisition
strategies.
B. carry the substantial risk of raising a company’s costs.
C. carry the substantial risk of making a company overly dependent on its suppliers.
D. increase a company’s risk exposure to changing technology and/or changing buyer
preferences.
E. involve farming out value chain activities presently performed in-house to outside
specialists and strategic allies.
The primary building blocks within a company’s organizational structure
A. are almost always the departments performing such key administrative support
functions as finance, accounting, information technology, human resource management,
and R&D.
B. can include a functional or departmental structure that includes process, geographic,
product, or customer groups performing one or more major processing steps along the
value chain.
C. typically consist of an un-empowered employee department, an empowered
employee department, teams of front-line supervisors, teams of middle-level managers
and administrators, and the group of top-level executives that comprise the company’s
“executive suite.”
D. usually consist of supply chain management, components manufacture, assembly,
distribution, and administration.
E. usually consist of two divisionsa division charged with performing primary value
chain activities and a division charged with performing support activities.
The strength of a “think local, act local” multidomestic strategy is that
A. it matches a company’s competitive approach to prevailing market and competitive
conditions in each country market.
B. each of a company’s country strategies is almost totally different from and unrelated
to its strategies in other countries.
C. the plants located in different countries can be operated independent of one another,
thus promoting greater achievement of scale economies.
D. it avoids host-country ownership requirements and import quotas.
E. it eliminates the costs and burdens of trying to coordinate the strategic moves
undertaken in one country with the moves undertaken in the other countries.
The cost-of-entry test for evaluating whether diversification into a particular industry is
likely to build shareholder value involves
A. determining whether a newly entered business presents opportunities to
cost-efficiently transfer competitively valuable skills or technology from one business
to another.
B. determining whether the cost to enter the target industry will strain the company’s
credit rating.
C. considering whether a company’s costs to enter the target industry are so high that
the potentials for good profitability and return on investment are eroded.
D. determining whether the cost to enter the target industry will raise or lower the
company’s total profits.
E. determining whether the cost a company incurs to enter the target industry will raise
or lower production costs.
Conditions that may make corporate restructuring strategies appealing include
A. an excessive debt burden with interest costs that eat deeply into profitability.
B. a business lineup that consists of too many businesses competing in slow-growth,
declining, or low-margin industries.
C. a lineup containing too many competitively weak businesses.
D. ill-chosen acquisitions that haven’t lived up to expectations.
E. All of these.
Total quality management (TQM)
A. is a philosophy of managing a set of business practices that emphasizes continuous
improvement in all phases of operations, 100% accuracy in performing tasks,
involvement and empowerment of employees at all levels, team-based work design,
benchmarking, and total customer satisfaction.
B. is a valuable tool for helping company managers identify what the best practice is for
performing a particular activity.
C. works best when used in conjunction with Six Sigma quality control techniques.
D. is an excellent tool for reengineering business processes and making quantum gains
in the efficiency and effectiveness with which the processes are performed.
E. is a philosophy of doing things that aims at mistake-free management of a company’s
entire business.
Which of the following is not one of the strategy options for expanding into markets of
foreign countries?
A. A profit sanctuary strategy
B. An export strategy
C. A licensing strategy
D. Establish a subsidiary in a foreign market strategy
E. A franchising strategy
In identifying an industry’s key success factors, strategists should
A. try to single out all factors that play a major role in shaping whether buyer demand
grows rapidly or slowly.
B. consider on what basis customers choose between competing brands, what resources
and competitive capabilities firms need to be competitively successful, and what
shortcomings are almost certain to put a company at a significant competitive
disadvantage.
C. consider whether the number of strategic groups is increasing or decreasing and
whether the five competitive forces are powerful or relatively weak.
D. consider what it will take to overtake the company with the industry’s overall best
strategy.
E. focus their attention on what it will take to capitalize on impacts of the industry’s
driving forces.
A “cash cow” type of business
A. generates unusually high profits and returns on equity investment.
B. is so profitable that it has no long-term debt.
C. generates positive cash flows over and above its internal requirements, thus
providing a corporate parent with cash flows that can be used for financing new
acquisitions, investing in cash hog businesses, funding share buyback programs, and/or
paying dividends.
D. is a business with such a strong competitive advantage that it generates big profits,
big returns on investment, and big cash surpluses after dividends are paid.
E. has good strategic fit with a cash hog business.
The steps involved in driving forces analysis are
A. developing a comprehensive list of all the potential causes of changing industry
conditions.
B. predicting which new driving forces will emerge next.
C. determining which of the five competitive forces is the biggest driver of industry
change.
D. identifying the driving forces, assessing whether their impact will make the industry
more or less attractive, and determining what strategy changes are needed to prepare for
the impact of the driving forces.
E. All of these.
The value of doing competitive strength assessment is to
A. determine how competitively powerful the company’s core competencies are.
B. learn if the company’s market opportunities are better than those of its rivals.
C. learn whether a company has a distinctive competence.
D. learn how the company ranks relative to rivals on each of the important factors that
determine market success and ascertain whether the company has a net competitive
advantage or disadvantage vis-à-vis key rivals.
E. determine whether a company’s resource strengths are sufficient to allow it to earn
bigger profits than rivals.
A winning strategy is one that
A. builds strategic fit, is socially responsible, and maximizes shareholder wealth.
B. is highly profitable and boosts the company’s market share.
C. results in a company becoming the dominant industry leader.
D. fits the company’s internal and external situation, builds sustainable competitive
advantage, and improves company performance.
E. can pass the ethical standards test, the strategic intent test, and the profitability test.
When a company is good at performing a particular internal activity, it is said to have
A. a competitive advantage over rivals.
B. a competitive capability.
C. a distinctive competence.
D. a resource-based strategy.
E. a competence.
Which of the following is a diversified business with one major “core” business and a
collection of small related or unrelated businesses?
A. Broadly diversified enterprise
B. Narrowly diversified enterprise
C. Multibusiness enterprise
D. High-compensation/low-risk enterprise
E. Dominant business enterprise
A company’s strategy is a “work in progress” and evolves over time because of
A. the ongoing need of company managers to react and respond to changing industry
and competitive conditions.
B. the ongoing need to imitate the new strategic moves of the industry leaders.
C. the need to make regular adjustments in the company’s strategic vision.
D. the importance of developing a fresh strategic plan every year.
E. the frequent need to modify key elements of the company’s business model.
A “think global, act global” approach to strategy making is preferable to a “think local,
act local” approach when
A. a big majority of the company’s rivals are pursuing localized multidomestic
strategies.
B. country-to-country differences are small enough to be accommodated with the
framework of a mostly uniform global strategy.
C. plants need to be scattered across many countries to avoid high shipping costs.
D. market growth rates vary considerably from country to country.
E. host governments enact regulations requiring that products sold locally meet strict
manufacturing specifications or performance standards.
The big difference between business process reengineering and continuous
improvement programs such as TQM or Six Sigma is that
A. reengineering is a tool for installing process organization whereas TQM and Six
Sigma concern defect-free production methods and delivering world-class customer
service.
B. reengineering helps create core competencies whereas TQM and Six Sigma are tools
for making a core competence stronger and more efficient.
C. reengineering is a tool for achieving onetime quantum improvements whereas TQM
and Six Sigma programs aim at incremental progress improvement (striving for
inch-by-inch gains again and again in a never-ending stream).
D. business process reengineering requires benchmarking whereas TQM and Six Sigma
do not.
E. reengineering represents an effort to totally revamp a firm’s value chain whereas
TQM looks at incrementally improving the performance of two or three targeted value
chain activities.
The elements of a company’s business model are
A. its customer value proposition as well as the company’s profit formula.
B. its business strategy, its collection of competitively valuable resources, and a strong
management team.
C. its deliberate strategy, its emergent strategy, and its realized strategy.
D. its actions to capture emerging market opportunities and defend against threats to the
company’s business prospects, its actions to strengthen competitiveness via strategic
alliances, and its actions to enter new geographic or product markets.
E. management’s answers to “Where are we now?” “Where do we want to go?” and
“How are we going to get there?”.
Carefully explain the difference between a strategy of related diversification and a
strategy of unrelated diversification.
Answer:
Answer may vary
Why does a company’s budget need to be closely linked to the needs of good strategy
execution? Why might a change in strategy call for budget reallocations?
Answer:
Answer may vary
What are the strengths and weaknesses of the thesis that ethical standards are (or should
be) universal?
Answer:
Answer may vary
Explain why a company’s strategy is really a collection of strategies.
Answer:
Answer may vary
What is meant by integrative social contracts theory? How does such an approach
ensure a strong commitment to business ethics in companies with international
operations?
Answer:
Answer may vary
In doing driving forces analysis, is it sufficient to simply identify the driving forces that
are operating to alter industry and competitive conditions? Why or why not? If not, then
explain what else is required for a complete driving forces assessment.
Answer:
Answer may vary
List five elements of an enterprise’s business strategy.
Answer:
Answer may vary
Can an industry be attractive to one company and unattractive to another company?
Why or why not?
Answer:
Answer may vary
What three principles underlie the statistical thinking of Six Sigma quality control
programs?
Answer:
Answer may vary
Identify and briefly explain any three of the factors that influence the bargaining
strength and leverage of suppliers.
Answer:
Answer may vary
What are the five stages of the strategy-making, strategy-executing process and what
does each one involve?
Answer:
Answer may vary
Give at least three nonmonetary examples of motivation and rewards practices that have
the capability to foster good strategy execution and explain how they act to produce
such a result.
Answer:
Answer may vary
What are the strategic advantages of a forward vertical integration strategy?
Answer:
Answer may vary