It is normal for a companys strategy to end up being
A. left unchanged from managements original planned set of actions and business
approaches since making on-the-spot changes is too risky.
B. a combination of defensive moves to protect the companys market share and
offensive initiatives to set the companys product offering apart from rivals.
C. like the strategies of other industry members since all companies are confronting
much the same market conditions and competitive pressures.
D. a blend of deliberate planned actions to improve the companys competitiveness and
financial performance and as-needed unplanned reactions to unanticipated
developments and fresh market conditions.
E. a mirror image of its business model, so as to avoid impairing company profitability.
Which one of the following is inaccurate as concerns a distinctive competence?
A. A distinctive competence is a competitively important activity that a company
performs better than its competitors.
B. A distinctive competence is typically less difficult for rivals to copy than a core
competence.
C. A distinctive competence can be a basis for sustainable competitive advantage.
D. A distinctive competence has potential for being the cornerstone of the companys
strategy.
E. A distinctive competence gives a company competitively valuable capability that is
unmatched by rivals.
A low-cost leaders basis for competitive advantage is
A. lower prices than rival firms.
B. using a low-cost/low-price approach to gain the biggest market share.
C. high buyer switching costs.
D. lower overall costs than competitors.
E. higher unit sales than rivals.
In which of the following circumstances is a strategy to be the industrys overall
low-cost provider not particularly well matched to the market situation?
A. When the offerings of rival firms are essentially identical, standardized,
commodity-like products
B. When there are few ways to achieve differentiation that have value to buyers
C. When price competition is especially vigorous
D. When buyers have widely varying needs and special requirements and when the cost
of switching purchases from one seller to another are relatively high
E. When industry newcomers use introductory prices to build a customer base
Which one of the following statements about backward vertical integration is false?
A. What makes backward vertical integration such an attractive strategic option is the
opportunity to capture the profit margins of suppliers and thereby increase the
companys own profitability.
B. Backward vertical integration can produce a differentiation-based competitive
advantage when a company, by performing activities internally rather than utilizing
outside suppliers, ends up with a better-quality product/service offering, improves the
caliber of its customer service, or in other ways enhances the performance of its final
product.
C. For backward integration to be a viable and profitable strategy, a company must be
able to (1) achieve the same scale economies as outside suppliers and (2) match or beat
suppliers production efficiency with no drop in quality.
D. The best potential for being able to reduce costs via a backward integration strategy
exists in situations where suppliers have outsized profit margins, where the item being
supplied is a major cost component, and where the requisite technological skills are
easily mastered or can be gained by acquiring a supplier with the desired technological
know-how.
E. Potential advantages of backward integration include sparing a company the
uncertainty of being dependent on suppliers for crucial components or support services
and lessening a companys vulnerability to powerful suppliers inclined to raise prices at
every opportunity.
Putting together a capable top management team
A. should take top priority in building competitively valuable core competencies.
B. is particularly important when the firm is pursuing unrelated diversification or
making a number of new acquisitions in related businesses.
C. is important in building an organization capable of proficient strategy execution, but
is nearly always less crucial than doing a superior job of training and retraining
employees.
D. entails filling key managerial slots with people who are good at figuring out what
needs to be done and skilled in “making it happen” and delivering good results.
E. is particularly essential for executing a strategy to keep a companys costs lower than
rivals and become the industrys low-cost leader.
The character of a companys corporate culture is a product of
A. the companys core values and business principles.
B. its style of operating and ingrained behaviors and attitudes.
C. the “chemistry” that permeates its work environment.
D. the work practices and behaviors that define “how we do things around here.”
E. All of these.
A balanced scorecard that includes both strategic and financial performance targets is a
conceptually strong approach for judging a companys overall performance because
A. financial performance measures are lagging indicators that reflect the results of past
decisions and organizational activities whereas strategic performance measures are
leading indicators of a companys future financial performance.
B. it entails putting equal emphasis on good strategy execution and good business
model execution.
C. a balanced scorecard approach pushes managers to avoid setting objectives that
reflect the results of past decisions and organizational activities and, instead, to set
objectives that will serve as leading indicators of a companys future financial
performance.
D. it assists managers in putting roughly equal emphasis on short-term and long-term
performance targets.
E. it more or less forces managers to put equal emphasis on financial and strategic
objectives.
When companies adopt the strategy-making and strategy execution process it requires
they start by
A. developing a strategic vision, mission and values.
B. developing a proven business model, deciding on the companys top management
team, and crafting a strategy.
C. setting objectives, developing a business model, crafting a strategy, and deciding
how much of the companys resources to employ in the pursuit of sustainable
competitive advantage.
D. coming up with a statement of the companys mission and communicating it to all
employees, setting objectives, selecting a business model, and monitoring
developments and initiating corrective adjustments to the business model when
necessary.
E. deciding on the companys board of directors, setting financial objectives, crafting a
strategy, and choosing what business approaches and operating practices to employ.
The nature and strength of the competitive forces that prevail in an industry is generally
a joint product of the
A. pressures associated with rivalry among sellers to attract buyer patronage.
B. threat that firms outside the industry will decide to enter the market.
C. attempts of companies in other industries to win buyers over to their own substitute
products.
D. competitive pressures stemming from the bargaining power of both suppliers and
buyers.
E. All of these.
When a company performs a particular competitively important activity truly well in
comparison to its competitors, it is said to have
A. a competence.
B. a strategic resource.
C. a distinctive competence.
D. a core competence.
E. a resource-based strategy.
Functional strategies
A. specify what actions a company should take to resolve specific strategic issues and
problems.
B. concerns the actions, approaches, and practices related to particular functions or
processes within a business.
C. are concerned with how to unify the firms several different operating strategies into a
cohesive whole.
D. are normally crafted by the companys CEO and other senior executives.
E. None of these.
A “think local, act local” multidomestic type of strategy
A. is very risky, given fluctuating exchange rates and the propensity of foreign
governments to impose tariffs on imported goods.
B. is usually defeated by a “think global, act global” type of strategy.
C. is more appealing the bigger the country-to-country differences in buyer tastes,
cultural traditions, and marketing methods.
D. is generally an inferior strategy when one or more foreign competitors is pursuing a
global low-cost strategy.
E. can defeat a global strategy if the “think local, act local” multidomestic strategist
concentrates its efforts exclusively in those foreign markets where it has profit
sanctuaries.
A companys resource weaknesses can relate to
A. inferior or unproven skills, lack of expertise, or intellectual capital shortfalls in
competitively important parts of the business.
B. something that it lacks or does poorly (in comparison to rivals).
C. deficiencies in competitively important physical, organizational, or intangible assets.
D. missing or competitively inferior capabilities in key areas.
E. All of these
The strategic options for expansion into foreign markets include
A. employing a franchising strategy.
B. maintaining a national (one-country) production base and exporting goods to foreign
markets.
C. licensing foreign firms to produce and distribute ones products.
D. establishing a subsidiary in a foreign market.
E. All of these.
The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is
A. an improvement system for existing processes falling below specification and
needing incremental improvement; the DMAIC process is a particularly good vehicle
for improving performance when there are wide variations in how well an activity is
performed.
B. an improvement system used to develop new processes or products at 100%
defect-free levels.
C. a system of statistical procedures for achieving 100% control over how a task is
performed.
D. an improvement system used to develop new processes or products at Six Sigma
levels.
E. a system of statistical procedures for eliminating 100% of the variability in how a
task is performed.
Which one of the following is not a means of building and strengthening competitively
valuable resources and capabilities?
A. Engaging in experience-building activities such as collaborative efforts in R&D
engineering and design.
B. Shifting from decentralized to centralized decision making so as to give senior
executives more authority and control in driving cultural change.
C. Acquiring capabilities through mergers and acquisitions.
D. Entering into collaborative partnerships with suppliers, competitors or other
companies that possess needed expertise.
E. None of these.
The most important payoff of doing a thorough SWOT analysis is
A. identifying whether the companys value chain is cost effective vis-à-vis the value
chains of rivals.
B. helping strategy makers benchmark the companys resource strengths against industry
key success factors.
C. enabling a company to assess its leverage in negotiations with buyers.
D. revealing whether a companys market share, measures of profitability, and sales
compare favorably or unfavorably vis-à-vis key competitors.
E. assisting strategy makers in drawing conclusions about the companys overall
situation and crafting a strategy that is well-matched to the companys resources and
capabilities, its market opportunities, and the external threats to its future well-being.
Once a company has diversified into a collection of related or unrelated businesses and
concludes that some strategy adjustments are needed, which one of the following is not
one of the main strategy options that a company can pursue?
A. Stick closely with the existing business lineup
B. Restructure the companys business lineup
C. Craft new initiatives to build/enhance the companys reputation
D. Divest some businesses and retrench to a narrower diversification base
E. Broaden the diversification base
Which of the following are most unlikely to qualify as driving forces?
A. Changes in the long-term industry growth rate, the entry or exit of major firms, and
changes in cost and efficiency
B. Increasing globalization of the industry and product innovation
C. New Internet technology applications, new government regulations, and significant
changes in government policy toward the industry
D. Mounting competition from substitutes and increasing efforts to collaborate with
suppliers via strategic alliances
E. Changes in who buys the industrys product and how they use it
The advantages of using a licensing strategy to participate in foreign markets include
A. being especially well suited to the use of cross-market subsidization.
B. being able to charge lower prices than rivals.
C. enabling a company to achieve competitive advantage quickly and easily.
D. being able to leverage the companys technical know-how or patents without
committing significant additional resources to markets that are unfamiliar, politically
volatile, economically uncertain, or otherwise risky.
E. being able to achieve higher product quality and better product performance than
with an export strategy.
The rivalry among competing sellers tends to be less intense when
A. industry conditions tempt competitors to use price cuts or other competitive weapons
to boost unit sales.
B. buyer demand is weak and many sellers have excess capacity and/or inventory.
C. industry rivals are not particularly aggressive in drawing sales and market share
away from rivals.
D. rivals have diverse strategies and objectives and are located in different countries.
E. rival sellers have weakly differentiated products.
Leading the strategy execution process requires
A. senior managers to be out in the field, seeing for themselves how well operations are
going.
B. company managers to be diligent and adept in ferreting out problems and issues.
C. managers to push for better results when the strategy execution effort is not going
well.
D. managers to have good business judgment in deciding what actions to take when
corrective actions are necessary.
E. All of these.