In a diversified company, the strategy-making hierarchy consists of:
A. corporate strategy and a group of business strategies (one for each line of business
the corporation has diversified into).
B. corporate or managerial strategy, a set of business strategies, and divisional strategies
within each business.
C. business strategies, functional strategies, and operating strategies.
D. corporate strategy, business strategies, functional strategies, and operating strategies.
E. its diversification strategy, its line of business strategies, and its operating strategies.
Answer:
The leadership challenges that top executives face in making corrective adjustments
when things are not going well include:
A. knowing when to replace poorly performing workers and when to do a better job of
coaching them to do the right things.
B. being able to discern whether to emphasize adjustments that will promote better
achievement of strategic performance targets or whether to emphasize adjustments that
will promote better achievement of financial performance targets.
C. undertaking a thorough analysis of the situation, exercising good business judgment
in deciding what actions to take, and then ensuring good implementation of the
corrective actions that are initiated.
D. having the analytical skills to separate the problems due to a bad strategy from the
problems due to bad strategy execution.
E. deciding whether the company would be better off making adjustments that curtail
the achievement of strategic objectives or that curtail the achievement of financial
objectives or that curtail the achievement of some of both.
Answer:
A broad differentiation strategy works best in situations where:
A. technological change is slow-paced and new or improved products are infrequent.
B. buyer needs and uses of the product are very similar.
C. buyers incur low costs in switching their purchases to rival brands.
D. buyers have a low degree of bargaining power and purchase the product frequently.
E. technological change is fast-paced and competition revolves around rapidly evolving
product features.
Answer:
A low-cost leader’s basis for competitive advantage is:
A. lowest possible prices for comparable products.
B. a low-cost/moderate price approach to gain the biggest market share.
C. high buyer switching costs.
D. meaningful lower overall costs than rivals on comparable products.
E. higher unit sales than rivals.
Answer:
Kimberly-Clark, the manufacturer of Kleenex tissues and Huggies diapers, streamlines
its healthcare business by listing Halyard Health as a separately traded company. The
company’s move is likely to:
A. promote healthcare wings of rival companies.
B. increase the cost of manufacturing medical devices.
C. curtail the cost of manufacturing medical devices.
D. enhance the strategy execution capabilities of the company.
E. increase the demand for personal protective equipment.
Answer:
A company that has greater success in managing its strategic alliance can credit all of
the following, EXCEPT:
A. establishing strong interpersonal relationships to facilitate communication.
B. incorporating contractual safeguards.
C. making opportunities for learning a routine management process.
D. establishing a system to manage alliances in a systematic fashion.
E. creating organizational learning barriers across boundaries.
Answer:
Visible costs that are incurred by companies and imposed for ethical wrongdoing
include all of the following EXCEPT:
A. government fines and penalties.
B. civil penalties arising from class-action lawsuits or other litigation.
C. lower dividends for shareholders.
D. lower stock prices.
E. legal and investigative costs.
Answer:
Obtaining cost information is a primary difficulty associated with benchmarking. The
following are typical sources for collecting information, EXCEPT:
A. from published reports, industry research firms, and trade groups.
B. from talking to knowledgeable industry leaders.
C. from field trips to the facilities of competitors or non-competing firms.
D. from independent firms and consulting firms to gather best practices and
comparative cost data without identifying competing firms.
E. from the classified government documents.
Answer:
A focused differentiation strategy aims at securing competitive advantage by:
A. providing niche members with a top-of-the-line product at a premium price.
B. catering to buyers looking for an upscale product at an attractively low price.
C. offering a product carefully designed to appeal to the unique preferences and needs
of a narrow, well-defined group of buyers.
D. developing product attributes that no other company in the industry has.
E. convincing a narrow, well-defined group of buyers that the company has a truly
world-class product.
Answer:
The biggest and most important differences among the competitive strategies of
different companies boil down to:
A. how they go about building a brand name image that buyers trust and whether they
are a risk-taker or risk-avoider.
B. the different ways the companies try to cope with the five competitive forces.
C. whether a company’s market target is broad or narrow and whether the company is
pursuing a competitive advantage linked to low cost or differentiation.
D. the kinds of actions companies take to improve their competitive assets and reduce
their competitive liabilities.
E. the relative emphasis they place on offensive versus defensive strategies.
Answer:
The business case for why companies should act in a socially responsible manner
includes such reasons as:
A. it generates internal operating benefits (as concerns employee recruiting, workforce
retention, employee morale, and training costs).
B. it increases the risk of reputation-damaging incidents.
C. it is not in the best interest of shareholders.
D. it can lead to decreased buyer patronage.
E. it can increase costs and reduce employee retention.
Answer:
What does business ethics concern?
A. Developing a consensus among companies worldwide as to what ethical principles
businesses should be expected to observe in the course of conducting their operations
B. What ethical behaviors are imposed on company personnel by governments in the
course of doing their jobs
C. The application of general ethical principles to the actions and decisions of
companies and the conduct of their personnel
D. Developing a special set of ethical standards for different types of businesses to
observe in conducting their affairs
E. Picking and choosing among the consensus ethical standards of society to arrive at a
set of ethical standards that apply directly to operating a business
Answer:
A rival’s strategic moves and countermoves are:
A. indicators for the visualization of strategic mapping techniques.
B. enabled and constrained by the set of capabilities they have at hand.
C. measured by the extent to which they can unveil financial objectives.
D. responses to the broader definition of the industry opportunities.
E. signs of the competitive pressures from the industry.
Answer:
The primary difference between a company’s mission statement and the company’s
strategic vision is that:
A. a mission statement explains why it is essential to make a profit, whereas the
strategic vision explains how the company will be a moneymaker.
B. a mission statement typically concerns a company’s present business scope and
purpose, whereas a strategic vision sets forth “where we are going and why.”
C. a mission deals with how to please customers, whereas a strategic vision deals with
how to please shareholders.
D. a mission statement deals with “where we are headed,” whereas a strategic vision
provides the critical answer to “how will we get there?”
E. a mission statement addresses “how we are trying to make a profit today,” while a
strategic vision concerns “how will we make money in the markets of tomorrow?”
Answer:
Total quality management (TQM) emphasizes all of the following EXCEPT which?
A. 100 percent accuracy in performing tasks
B. Continuous improvement in all phases of operations
C. Adoption of industry standard operating practices
D. Benchmarking and total customer satisfaction
E. Empowerment of employees and team-based work design
Answer:
The organizing challenge of a decentralized structure that stresses employee
empowerment is:
A. how to keep empowered employees from making lots of stupid decisions.
B. establishing a collegial, collaborative culture so that decisions can be made by
gaining a quick consensus on what to do and when to do it.
C. how to avoid de-motivating employees (because empowered employees are expected
to take responsibility for their actions and decisions).
D. how to exercise control over the actions and decisions of empowered employees so
that the business is not put at risk while trying to capture the benefits of empowerment.
E. how to convince lower-level managers and employees that they are empowered.
Answer:
Establishing investment priorities and steering corporate resources into the most
attractive business units typically requires the company to decide on all of the following
options, EXCEPT:
A. the pursuit of rapid growth strategies in its most promising businesses.
B. initiating profit improvement or turnaround strategies in weak-performing businesses
with potential.
C. the divestiture of unattractive businesses.
D. the pursuit of debt reduction opportunities that can lower the debt/equity ratio while
maintaining asset levels.
E. the divestiture of businesses that do not fit into the company’s longer term plans.
Answer:
Transferring core competencies and resource strengths from one country market to
another is:
A. a good way for companies to develop broader or deeper competencies and
competitive capabilities that can become a strong basis for sustainable competitive
advantage.
B. best accomplished with a multidomestic strategy as opposed to a global strategy.
C. feasible only with a global strategy; it can’t be done with a multidomestic strategy.
D. unlikely to result in a competitive advantage.
E. nearly always the easiest and most sure-fire way to build competitive advantage in
trying to compete successfully in foreign markets.
Answer:
The managerial purpose of setting objectives includes all of the following EXCEPT:
A. converting the strategic vision into specific performance targetsresults and outcomes
the organization wants to achieve.
B. using the objectives as yardsticks for tracking the company’s progress and
performance.
C. challenging and helping stretch the organization to perform at its full potential and
deliver the best possible results.
D. pushing company personnel to be more inventive and to exhibit more urgency in
improving the company’s financial performance and business position.
E. delineating management’s aspirations for the business and providing a panoramic
view of “where we are going.”
Answer:
When it is difficult or impossible to out-strategize rivals (beat them with a superior
strategy), the other main avenue to competitive advantage is to:
A. do a better job of empowering employees and flattening the organization structure.
B. outcompete rivals with a stronger corporate culture.
C. out execute them (beat them by performing certain value chain activities in superior
fashion).
D. beat them with a healthy corporate culture based on such core values as high ethical
standards, a strong sense of corporate social responsibility, and genuine concern for
customer well-being.
E. institute a more motivating and cost-efficient compensation and reward system.
Answer:
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.
B. an improvement system used to develop new processes or products at 100 percent
defect-free levels.
C. a system of statistical procedures for achieving 100 percent 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 percent of the variability in
how a task is performed.
Answer:
Which of the following is NOT an example of an external threat to a company’s future
profitability?
A. The lack of a distinctive competence
B. New legislation that entails burdensome and costly government regulations
C. Slowdowns in market growth
D. More intense competitive pressures
E. The introduction of restrictive trade policies in countries where the company does
business
Answer:
Identify and briefly explain what is meant by each of the following terms:
a. a first-mover advantage
b. a first-mover disadvantage (or late-mover advantage)
Answer:
Every corporation should have a strong independent board of directors that does all of
the following EXCEPT:
A. is well informed about the company’s performance and exercises its fiduciary duty to
protect shareholders responsibly
B. guides management in choosing a strategic direction and makes independent
judgments about the validity and wisdom of management’s proposed strategic actions
C. evaluates the leadership skills of the CEO and other senior executives
D. has the courage to curb management actions deemed inappropriate or unduly risky
E. is responsible for leading the strategy-making, strategy-executing process
Answer:
Which of the following is the most unlikely element of a localized multidomestic
strategy?
A. Granting country managers fairly wide strategy-making latitude
B. Scattering plants across many host countries, each producing product versions for
local area markets
C. Adapting marketing and distribution to the buying habits, customs, and culture of
each host country
D. Considering the preference for local suppliers (use of some local suppliers may be
mandated by host governments)
E. Selling directly to buyers (perhaps via the company’s website) to avoid having to
establish networks of wholesale/retail dealers in each country market
Answer:
The chief difference between a low-cost provider strategy and a focused low-cost
strategy is:
A. whether the product is strongly differentiated or weakly differentiated from rivals.
B. the degree of bargaining power that buyers have.
C. the size of the buyer group that a company is trying to appeal to.
D. the type of value chain being used to achieve a low-cost competitive advantage.
E. the number of upscale attributes incorporated into the product offering.
Answer:
In formulating an action agenda to implement and execute a new or different strategy,
the place for managers to begin is with:
A. the task of revising and enhancing the company’s core competencies.
B. choosing which leadership style to employ in trying to carry out the strategy
successfully.
C. evaluating whether existing policies and procedures are adequately
strategy-supportive.
D. allocating more resources to strategy-critical parts of the business.
E. a probing assessment of what the organization must do differently and better to carry
out the strategy successfully.
Answer:
A competitively valuable resource or capability is a company’s:
A. enabling foundation of its business model.
B. equally valuable substitute resource providing a competitive advantage.
C. assessment of the availability of superior substitutes.
D. unsurpassed worker productivity and product quality.
E. unique piecework incentive system, providing a competitive advantage.
Answer:
How valuable a low-cost leader’s cost advantage is depends on:
A. whether it is easy or inexpensive for rivals to copy the low-cost leader’s methods or
otherwise match its low costs.
B. how easy it is for the low-cost leader to gain the biggest market share.
C. the aggressiveness with which the low-cost leader pursues converting the cost
advantage into the absolute lowest possible costs.
D. the leader’s ability to combine the cost advantage with a reputation for good quality.
E. the low-cost leader’s ability to be the industry leader in manufacturing innovation so
as to keep lowering its manufacturing costs.
Answer:
A blue-ocean strategy:
A. is an offensive strike employed by a market leader that is directed at pilfering
customers away from unsuspecting rivals to boost profitability.
B. involves an unexpected (out-of- the-blue) 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. involves abandoning efforts to beat out competitors in existing markets and instead
invent a new industry or new market segment that renders existing competitors largely
irrelevant and 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.
Answer:
The traits of the capability building process involve all of the following EXCEPT:
A. evolving changes in customer needs and competitive conditions that often require
tweaking and adjusting a company’s portfolio of competencies and intellectual capital to
keep its capabilities freshly honed and on the cutting edge.
B. a core competence or capability that emerges incrementally out of company efforts
either to bolster skills that contributed to earlier successes or to respond to customer
problems, new technological and market opportunities, and the competitive
maneuverings of rivals.
C. core competencies or capabilities that are most often bundles of skills and know-how
that grow out of the combined efforts of cross-functional work groups and departments
performing complementary activities at different locations in a firm’s value chain.
D. the key to leveraging a core competence into a distinctive competence (or
transforming a capability into a competitively superior capability), which concerns
concentrating more effort and talent than rivals on deepening and strengthening a
competence or capability so as to achieve the dominance needed for competitive
advantage.
E. saving time by creating capabilities from scratch to remain aligned with external
conditions and company strategy rather than updating and remodeling existing
capabilities.
Answer:
What does the scope of the firm refer to?
A. The range of activities the firm performs externally and its social responsibility
activities
B. To gain competitive advantage based on where it locates its various value chain
activities
C. The firm’s capability to employ vertical integration strategies
D. The range of activities the firm performs internally and the breadth of its product
offerings, the extent of its geographic market, and its mix of businesses
E. To prevent foreign competition from affecting the market
Answer:
Which of the following rationales for pursuing unrelated diversification is likely to
increase shareholder value?
A. To reduce risk by way of spreading the company’s investments over a set of truly
diverse industries
B. To enable a company to achieve rapid or continuous growth
C. To chance that market downtrends in some of the company’s businesses will be
partially offset by cyclical upswings in its other businesses
D. To provide benefits to managers such as high compensation and reduced
unemployment risk
E. To restructure an underperforming business
Answer:
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 when the country-to-country differences in buyer tastes, cultural
traditions, and market conditions are diverse.
D. is generally an inferior strategy when one or more foreign competitors are pursuing a
global low-cost strategy.
E. can defeat a global strategy if the “think local, act local” multicountry strategist
concentrates its efforts exclusively in those foreign markets which have superior
resources.
Answer:
Which of the following is NOT accurate as concerns a company’s competencies and
capabilities?
A. Competencies and capabilities that grow stale can impair competitiveness unless
they are refreshed, modified, or even phased out and replaced in response to ongoing
market changes and shifts in company strategy.
B. Core competencies have to be tweaked and adjusted to keep them fresh and
responsive to changing customer needs and market conditions.
C. The imperatives of keeping capabilities in step with ongoing strategy and market
changes make it appropriate to view a company as a bundle of evolving competencies
and capabilities.
D. Even after core competencies and competitive capabilities are in place and
functioning, company managers can’t relax. They still have to wrestle with when and
how to recalibrate existing competencies and capabilities and when and how to develop
new ones.
E. When a company succeeds in hiring talented employees and training them properly,
competencies and capabilities tend to develop quickly and, once put in place, can last
for a decade or more.
Answer: