With an unrelated diversification strategy, the types of companies that make particularly
attractive acquisition targets are:
A. struggling companies with good turnaround potential, undervalued companies that
can be acquired at a bargain price, and companies that have bright growth prospects but
are short on investment capital.
B. companies offering the biggest potential to reduce labor costs.
C. cash cow businesses with excellent financial fit.
D. companies that are market leaders in their respective industries.
E. companies that employ the same basic type of competitive strategy as the parent
corporation’s existing businesses.
Answer:
A company’s strategic vision describes:
A. “who we are and what we do.”
B. why the company does certain things in trying to please its customers.
C. management’s storyline of how it intends to make a profit with the chosen strategy.
D. management’s aspirations for the future and the company’s strategic course and
long-term direction.
E. what future actions the enterprise will likely undertake to outmaneuver rivals and
achieve a sustainable competitive advantage.
Answer:
The strength of integrated social contracts theory is that it:
A. correctly recognizes that all soundly reasoned ethical standards are universal.
B. accommodates the best parts of ethical universalism and ethical relativism.
C. puts no absolute limits on what actions and behaviors fall inside the boundaries of
what is ethically or morally right and which actions/behaviors fall outside.
D. recognizes the importance of allowing local ethical norms to always take precedence
over universal ethical norms.
E. recognizes that individuals and businesses have a basic right to “moral free space”
and that it is inappropriate to specify ethically permissible and ethically impermissible
actions and behaviors.
Answer:
A company’s social responsibility strategy typically comprises all of the following
EXCEPT:
A. actions to enhance workforce diversity and make the company a great place to work.
B. making charitable contributions and donating money and the time of company
personnel to community service endeavors.
C. actions to protect or enhance the environment.
D. conscious efforts to ensure that all elements of the company’s strategy are ethical and
that its actions protect or enhance the environment (beyond what is legally required).
E. actions to keep the company’s profits at a reasonable and acceptable level to ensure
the company’s products/pricing will not be viewed by the general public as obscenely
high or exorbitant.
Answer:
Discuss the meaning of each of the following levels of strategy and indicate what level
of management tends to take the lead responsibility for crafting the strategy at each of
the four levels.
a. corporate strategy
b. business strategy
c. functional-area strategy
d. operating strategy
Answer:
The objective of differentiation is to:
A. offer customers something rivals can’t, at least in terms of the level of satisfaction.
B. develop strategies that are different from those of rivals.
C. establish objectives that are measurable and meaningful when it comes to sales
growth.
D. offer customers a sustainable competitive advantage.
E. offer a diverse range of comparable products with low switching costs.
Answer:
Which of the following is NOT an example of a company’s dynamic capability?
A. A capacity to improve existing resources and capabilities
B. Upgrades to R&D resources to drive product innovation
C. A capacity to add new resources and capabilities to the competitive asset portfolio
D. An ability to replace degraded resources with acquired capabilities
E. An ability to keep antiquated resources by disregarding innovative capabilities
Answer:
Different companies across different industries adopt any one of the five generic
strategies to gain competitive advantage. Which of the following is most likely to use a
low-cost provider strategy?
A. A fashion clothing line uses sought-after designers and natural fabrics.
B. A mortgage company specializes in lending money for second homes.
C. An online retailer delivers organic groceries overnight.
D. A baby products retailer sells unassembled baby furniture produced in China.
E. A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy
products.
Answer:
The retelling of legendary stories does a lot for establishing a company’s core values,
but it should NOT:
A. place pressure on company personnel to display core values and to do their part in
keeping the companies traditions alive.
B. illustrate the kind of behavior the company reveres.
C. inspire company personnel to perform similarly and reinforce the depth of
commitment that people have displayed.
D. reflect an aspect of company culture no longer current.
E. steer company personnel toward both doing things right and doing the right thing.
Answer:
A disadvantage of the centralized organization is that it:
A. lengthens response times by those closest to the market conditions because they
must seek approval for their actions.
B. does not encourage responsibility among lower-level managers and rank-and-file
employees.
C. discourages lower-level managers and rank-and-file employees from exercising any
initiative.
D. diverts authority away from those closest to, and most knowledgeable about, the
situation for actions.
E. results in higher-level managers being unaware of actions taken by empowered
personnel under their supervision.
Answer:
Managerial jobs with strategy-making responsibility:
A. extend throughout the managerial ranks and exist in every part of a
companybusiness units, operating divisions, functional departments, manufacturing
plants, and sales districts.
B. are primarily located in the strategic planning departments of large corporations.
C. are relatively rare because most strategy-making is done by the members of a
company’s board of directors.
D. seldom exist within a functional department (e.g., marketing and sales) or in an
operating unit (a plant or a district office) because these levels of the organization
structure are well below the level where strategic decisions are typically made.
E. are found only at the vice-president level and above in most companies.
Answer:
Changing a problem culture to create better alignment with strategy generally does
NOT involve:
A. replacing old-culture managers with new-breed managers.
B. designing compensation incentives that boost the pay of teams and individuals who
display the desired cultural behaviors and hit change-resisters in the pocketbook.
C. altering the company’s financial objectives.
D. using company gatherings and ceremonial occasions to praise individuals and groups
that display the desired new cultural traits and behaviors.
E. both symbolic and substantive actions by executives to implant new cultural
behaviors.
Answer:
The objective of a best-cost provider strategy is to:
A. deliver superior value to value-conscious buyers at a comparatively lower price than
rivals.
B. offer buyers the industry’s best-performing product at the best cost and best (lowest)
price in the industry.
C. attract buyers on the basis of having the industry’s overall best-performing product at
a price that is slightly below the industry-average price.
D. out-compete rivals using low-cost provider strategies.
E. translate its best-cost status into achieving the highest profit margins of any firm in
the industry.
Answer:
A company that promotes carpooling among its employees, has cut its printer-paper
usage in half, and has installed solar panels on its roof is an example of a corporate
social responsibility action to:
A. promote workforce diversity.
B. ensure the company operates honorably and ethically.
C. support philanthropy and participate in community service.
D. protect and sustain the environment.
E. enhance workplace amenities and employee well-being.
Answer:
A creative and distinctive strategy that sets a company apart from rivals and that gives it
a sustainable competitive advantage:
A. is a reliable indicator that the company has a socially responsible business model.
B. is achievable in emerging but not mature industries.
C. is a company’s most reliable ticket to above-average profitability.
D. signals that the company has a bold, ambitious strategic intent that places the
achievement of strategic objectives ahead of the achievement of financial objectives.
E. is the best indicator that the company’s strategy and business model are well-matched
and properly synchronized.
Answer:
64. A company that sets aside 2 percent of its pre-tax profits to build and then fund a
cancer-recovery facility for teens is an example of a corporate social responsibility
action to:
A. enhance employee well-being.
B. support philanthropy.
C. protect and sustain the environment.
D. ensure honorable and ethical action.
E. promote workforce diversity.
Answer:
Whatever strategic approach is adopted by a company to deliver value, it nearly always
requires:
A. that management undertake formal planning sessions with functional departments to
ensure productivity improvement.
B. the identification of strengths and weaknesses within the company.
C. matching corporate identity with the corporate culture in order to integrate effort and
build sales momentum.
D. performing value chain activities differently than rivals and building competitively
valuable resources and capabilities that rivals cannot readily match.
E. constant efforts to thwart entry of new rivals and their attempts to create
differentiated products with unit costs above price premium.
Answer:
What is the foremost question in running a business enterprise?
A. What must managers do, and do well, to make a company a winner in the
marketplace?
B. What can employees do, and do well, to ensure customer satisfaction?
C. What can shareholders do, and do well, to ensure a profitable company?
D. What do customers do, how to profile customers who buy a company’s product, and
tailor sales strategy around them?
E. What do suppliers do, and how to get supplies at the lowest cost to build a profitable
business?
Answer:
The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and
cooperative strategies is:
A. that partners will not fully cooperate or share all they know, preferring instead to
guard their most valuable information and protect their more valuable know-how.
B. becoming dependent on other companies for essential expertise and capabilities.
C. the added time and extra expenses associated with engaging in collaborative efforts.
D. having to compromise the company’s own priorities and strategies in reaching
agreements with partners.
E. the collaborative arrangements will not live up to expectations.
Answer:
A company’s realized strategy evolves from one version to the next due to:
A. changing management direction because of understanding several appealing strategy
alternatives.
B. the proactive efforts of company managers to improve the current strategy, a need to
respond to changing customer requirements and expectations, and a need to react to
fresh strategic maneuvers on the part of rival firms.
C. ongoing turnover in the managerial and executive ranks (new managers often decide
to shift to a different strategy).
D. pressures from shareholders to boost profit margins and pay higher dividends.
E. the importance of keeping the company’s business model fresh and up-to-date.
Answer:
A company can best accomplish diversification into new industries by:
A. outsourcing most of the value chain activities that have to be performed in the target
business/industry.
B. acquiring a company already operating in the target industry, creating a new business
from scratch, or forming a joint venture with one or more companies to enter the target
industry.
C. integrating forward or backward into the target industry.
D. shifting from a strategic group comprised mostly of single-business companies to a
strategic group comprised of diversified companies.
E. employing an offensive strategy with new product innovation as its centerpiece.
Answer:
From the standpoint of promoting successful strategy execution, it is important that the
firm’s motivation and reward system:
A. be completely free of such elements as tension, pressure, anxiety, job insecurity, and
tight deadlinesa no-pressure/no-adverse-consequences work environment is essential.
B. emphasize only positive types of rewards.
C. accentuate positive rewards but also carry out the “up-or-out” policy for performance
that does not meet expectations.
D. not deny rewards to employees who put forth good effort and try hard, though
performance is subpar.
E. reduce job insecurity and give employees an incentive to stay busy and work hard.
Answer:
The competitive moves and business approaches a company’s management is using to
grow the business, stake out a market position, attract and please customers, compete
successfully, conduct operations, and achieve organizational objectives is referred to as
its:
A. strategy.
B. mission statement.
C. strategic intent.
D. cost-price framework.
E. market vision.
Answer:
A low-cost leader can translate its low-cost advantage over rivals into superior profit
performance by:
A. underpricing rivals and attracting quality-sensitive buyers in great enough numbers.
B. maintaining the present price, and using the lower-cost edge to earn a higher profit
margin on each unit sold.
C. going all out to use its cost advantage to capture a dominant share of the market.
D. spending heavily on advertising to promote its cost advantage to build strong
customer loyalty.
E. out-producing rivals and thus having more available units for sale.
Answer:
A company’s operating budget must:
A. be strategy-driven in order to amply fund the performance of key value chain
activities.
B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building
the needed competencies and capabilities.
C. be employee-driven to gain commitment to strengthening the company’s core
competencies and competitive capabilities.
D. trim costs of key value chain activities to achieve cost efficiency in new strategic
initiatives.
E. follow traditional and time-tested methods of budgeting to support rapid adjustments
in strategy.
Answer:
Management’s most powerful tool for mobilizing organizational commitment to
competent strategy execution and operating excellence is the:
A. diligent and persistent use of benchmarking and best practices.
B. proper use of a reward structure with motivational incentives.
C. implementation of TQM and/or Six Sigma programs.
D. periodic giving of inspirational speeches aimed at arousing employees’ emotional
energy.
E. process of providing employees with a high degree of job security (ideally, via a
no-layoff policy).
Answer:
Which of the following is NOT a technique that companies employ to embed core
values and ethical standards?
A. Incorporating the statement of values and the code of ethics into orientation
programs for new employees and training courses for managers and employees
B. Making the display of core values and ethical principles a factor in evaluating each
person’s job performance
C. Encouraging everyone to use their influence in helping enforce observance of core
values and ethical standards
D. Using ceremonial occasions to recognize individuals and groups who display the
values and ethical principles
E. Instituting standard practices and procedures for employees to follow as a foundation
for maintaining ethical and cultural norm conflict clashes and behavioral lapses
Answer:
Larger firms with more complex organizational structures are:
A. less decentralized in their decision making than smaller firms.
B. more decentralized in their decision making than smaller firms.
C. less decentralized in their decision making than larger firms with simpler structures.
D. more centralized in their decision making than smaller firms.
E. not decentralized due to their operating size.
Answer:
Which of the following is NOT a frequently used strategic approach to set a company
apart from rivals and achieve a sustainable competitive advantage?
A. Striving to be the industry’s low-cost provider
B. Outcompeting rivals on the basis of differentiating features that will appeal to a
broad spectrum of buyers
C. Developing a best-cost provider strategy that gives customers more value for the
money
D. Focusing on a narrow market niche and serving buyers’ special needs and tastes
E. Striving to be the industry’s high-price provider
Answer:
Which of the following statements regarding multidomestic competition is false?
A. Buyers in different countries are attracted to different product attributes.
B. The benefits from global integration and standardization are high.
C. Industry conditions and competitive forces in each national market differ in
important respects.
D. The mix of competitors in each country market varies from country to country.
E. Winning in one country market does not necessarily signal the ability to fare well in
other countries.
Answer:
A differentiation-based competitive advantage:
A. nearly always is attached to the quality and service aspects of a company’s product
offering.
B. usually is the result of highly effective marketing and advertising to enhance the
brand, raise awareness, and build consistent customer experience.
C. requires developing at least one distinctive competence that buyers consider
valuable.
D. hinges on a company’s success in developing top-of-the-line product features that
will command the highest price premium in the industry.
E. often hinges on incorporating features that raise the performance of the product or
lower the buyer’s overall costs of using the company’s product, or enhances buyer
satisfaction in intangible or noneconomic ways, or delivers value to customers by
differentiating on the basis of competencies and capabilities that rivals can’t match.
Answer:
An offensive to yield good results can be short if:
A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad
campaign).
B. competition creates an appealing new product.
C. the technology needs debugging.
D. new production capacity needs to be installed.
E. consumer acceptance of an innovative product takes time.
Answer:
The degree of cross-country variability in paying bribes and kickbacks to grease
business transactions:
A. violates ethical principles of right and wrong in all countries.
B. is ethically acceptable according to the principle of ethical universalism and ethically
unacceptable according to the principle of ethical relativism.
C. is acceptable to immoral managers but not to amoral managers.
D. is one of the thorniest ethical problems that multinational companies face because
paying bribes is normal and customary in some countries and ethically or legally
forbidden in others.
E. is more acceptable in dealing with a company’s suppliers than in dealing with a
company’s customers.
Answer:
Which of the following is NOT one of the ways that a company that a
non-capital-intensive can achieve a cost advantage by revamping its value chain?
A. Creating a direct sales force and bypassing activities and costs of distributors and
dealers
B. Conducting sales operations at the company’s website
C. Increasing production capacity and then striving hard to operate at full capacity
D. Relocating facilities so as to curb the cost for shipping and handling activities
E. Streamlining operations by eliminating low value-added or unnecessary work steps
and activities
Answer: