A company needs financial objectives to:
A. spur company personnel to help the company overtake key competitors on such
important measures as net profit margins and return on investment.
B. communicate management’s targets for financial performance and achieve strategic
objectives.
C. indicate to employees whether the emphasis should be on earnings per share, return
on investment, return on assets, or positive cash flow.
D. convince shareholders that top management is acting in their interests.
E. counterbalance its pursuit of strategic objectives and have a balanced scorecard for
judging the caliber of its overall performance.
Answer:
When an industry member is a major customer of the supplier, and the relationship
(partnership) is unusually effective and mutually advantageous:
A. it is rare for such partnerships to have much competitive impact on those industry
members not having such partnerships.
B. one unfortunate outcome is that it tends to give the supply partners much enhanced
bargaining power in their dealings with these industry members.
C. there is a strong likelihood such partnerships will put increased competitive pressure
on those industry members who lack productive collaborative relationships with their
suppliers.
D. there is a high likelihood of such partnerships reducing competitive pressures on
ALL industry members, provided technological change in the suppliers’ business is
rapid and the item being supplied is a commodity.
E. the usual result is to reduce competitive pressures on all industry members, provided
the costs of the items furnished by supply chain partners amount to 50 percent or more
of total cost.
Answer:
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 or active in making fresh moves to
improve their market standing and business performance.
D. rivals have diverse strategies and objectives and are located in different countries.
E. rival sellers have weakly differentiated products.
Answer:
Which of the following is an activity a company engages in to enhance the quality of
life for its employees in an attempt to fulfill its corporate social responsibility?
A. It fires suppliers that use child labor.
B. It provides work-at-home opportunities.
C. It donates a percentage of its profits to a national charity.
D. It pays to have litter removed from a state highway.
E. It sells its products at a discounted price in underdeveloped countries.
Answer:
The broad areas that internal information business systems need to cover include all of
the following EXCEPT:
A. financial performance data.
B. supplier/strategic partner data.
C. customer data.
D. operations data.
E. competitor data.
Answer:
The two approaches that can make the process of uncovering and identifying a firm’s
capabilities more systematic are:
A. resources assessment and the functional approach.
B. strengths valuations and weaknesses estimations.
C. sustainability resource allocation and resource bundling.
D. cross-functional analysis and collaborative resource methodology.
E. financial statement analysis and management support analysis.
Answer:
Opportunities to differentiate a company’s product offering:
A. are most reliably found in the R&D portion of the value chain.
B. are typically located in the sales and marketing portion of the value chain.
C. can exist in activities all along an industry’s value chain.
D. usually are tied to product quality and customer service.
E. are most frequently attached to a company’s manufacturing expertise and to its
ability to achieve economies of scale in production.
Answer:
Outsourcing critics contend that shifting responsibility for performing value chain
activities to outside specialists:
A. has the disadvantage of raising fixed costs and reducing variable costs and makes it
harder to develop distinctive competencies.
B. can hollow out a company’s knowledge base and capabilities, leaving it at the mercy
of outsider suppliers, and short of the resource strengths to be a master of its own
destiny.
C. results in less organizational flexibility and leads to sometimes exorbitant costs in
collaborating with outside suppliers and strategic partners.
D. slows down decision making on key strategic issues because outside suppliers have
to be consulted first.
E. lowers the morale of company employees, dampens a company’s ability to
implement best practices, and results in greater bureaucracy and slower decision
making.
Answer:
Integrated social contracts theory maintains that:
A. there is no such thing as “moral free space”all ethical standards are determined by
societal norms, and individuals have an implied social contract to live up to these
standards.
B. few nations or cultures have common moral agreement on what is ethically right and
wrong.
C. there should be no absolute limits put on what actions and behaviors fall inside the
boundaries of what is ethically or morally right and which actions/behaviors fall
outside.
D. adherence to universal ethical norms always takes precedence over local ethical
norms.
E. .ethical relativism should always be adhered to before ethical universalism when
dealing within boundaries of a country’s culture and norms.
Answer:
The competitive battles among rival sellers striving for better market positions, higher
sales and market shares, and competitive advantage, suggest the rivalry force:
A. is stronger when firms strive to be low-cost producers than when they use
differentiation and focus strategies.
B. is often weak when rivals have emotional stakes in business or face high exit
barriers.
C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or
other competitive weapons to boost unit sales.
D. tends to intensify when strong companies with sizable financial resources, proven
competitive capabilities, and respected brand names hurdle entry barriers looking for
growth opportunities and launch aggressive, well-funded moves to transform into
strong market contenders.
E. is weaker when more firms have weakly differentiated products, buyer demand is
growing slowly, and buyers have moderate switching costs.
Answer:
Achieving a differentiation-based competitive advantage does NOT involve:
A. incorporating product attributes and user features that lower a buyer’s overall cost of
using the product.
B. incorporating features that raise the performance a buyer gets from using the
product.
C. incorporating features that enhance buyer satisfaction in noneconomic or intangible
ways.
D. delivering value to customers via competencies and competitive capabilities that
rivals don’t have or can’t afford to match.
E. appealing to buyers on the basis of attributes that rivals are emphasizing
Answer:
Easy DriveIn, a fast food facility, offers products at lower prices than its competitors in
the market and has a drive-through-only operation with no indoor seating. What
strategy is Easy DriveIn using to gain competitive advantage?
A. A low-cost provider strategy
B. A broad differentiation strategy
C. A focused low-cost strategy
D. A focused differentiation strategy
E. A best-cost provider strategy
Answer:
With a strategy of unrelated diversification, an acquisition is deemed to have potential if
it:
A. can achieve at least existing profit margins into the near future.
B. has the opportunity to generate positive buzz in the industry, even if it may not be
able to contribute to the parent firm’s bottom line
C. can pass the industry attractiveness test and the cost-of-entry test, and if it has good
prospects for profit growth.
D. can pass at least the industry attractiveness test if not the cost of entry test.
E. can add economic value for managers.
Answer:
A strategy to be the industry’s overall low-cost provider tends to be more appealing than
a differentiation or best-cost or focus/market niche strategy when:
A. there are many ways to achieve product differentiation that buyers find appealing.
B. buyers use the product in a variety of different ways and have high switching costs in
changing from one seller’s product to another.
C. the offerings of rival firms are essentially identical, standardized, commodity-like
products.
D. entry barriers are high and competition from substitutes is relatively weak.
E. the market is composed of many distinct segments with varying buyer needs and
expectations.
Answer:
In moving to alter a problem culture, management should do all of the following
EXCEPT:
A. identify which aspects of the present culture are supportive of good strategy
execution and which ones are not.
B. specify what new actions, behaviors, and work practices should be prominent in the
“new” culture.
C. talk openly about the problems of the present culture and how new behaviors will
improve performance.
D. employ visible, forceful actionsboth substantive and symbolicto ingrain a new set of
behaviors, practices, and cultural norms.
E. avoid cross-unit cooperation.
Answer:
Which of the following is NOT true about why codes of conduct based on ethical
relativism are ethically dangerous for multinational companies?
A. They create a maze of conflicting ethical standards.
B. They justify conflicting ethical standards for operating in different countries.
C. They establish little moral basis for establishing ethical standards for a company
worldwide.
D. They restrict enforcement of ethical standards worldwide.
E. They create standards that mostly relate to ethical codes in a company’s home
market, which might trigger compliance issues in the local market.
Answer:
The difference between political risks and economic risks is that:
A. political risks stem from instability or weakness in national governments, while
economic risks stem from the stability of a country’s monetary system, and its economic
and regulatory policies.
B. political risks stem from stability in foreign business, while economic risks stem
from an excess of property right protections.
C. political risks stem from hostility to foreign currencies, while economic risks stem
from the instability of the monetary system.
D. political risks stem from exchange rate fluctuations, while economic risks stem from
hostility to foreign business.
E. political risks stem from the stability of a country’s monetary system, while
economic risks stem from instability in national business.
Answer:
Strategies to restructure a diversified company’s business lineup involve:
A. revamping the value chains of each of a diversified company’s businesses.
B. focusing on restoring the profitability of its money-losing businesses and thereby
improving the company’s overall profitability.
C. revamping the strategies of its different businesses, especially those that are
performing poorly.
D. divesting low-performing businesses that do not fit and acquiring new ones where
opportunities are more promising to put a new face on the company’s business makeup.
E. broadening the scope of diversification to include a larger number of smaller and
more diverse businesses.
Answer:
Which of the following is NOT a typical characteristic of a weak company culture?
A. A lack of values and principles that are consistently preached or widely shared
B. A tendency among employees to view their jobs as just a way of making a living
C. Co-worker peer pressure to do things in a particular way
D. Few widely revered traditions and few culture-induced norms
E. No strong employee allegiance to what the company stands for or to operating the
business in well-defined ways
Answer:
In companies where intellectual capital is crucial to good strategy execution, which of
the following is generally NOT among the practices companies use to establish a
talented knowledge base?
A. Providing promising employees with challenging, interesting, and skill-stretching
assignments and also rotating them through jobs that not only have great content but
also span functional and geographic boundaries
B. Providing employees promotions, salary increases, performance bonuses, stock
options, and other perks
C. Coaching underperformers and benchwarmers to improve their skills and capabilities
D. Encouraging employees to challenge existing ways of doing things, to be creative
and innovative in proposing better ways of operating, and to push their ideas for new
products or businesses
E. Fostering a stimulating and engaging work environment such that employees will
consider the company a great place to work
Answer:
Which of the following is an example of an export strategy?
A. The popular Disney character Mickey Mouse can only be leased or rented for use by
companies.
B. Subway allows small-business owners to use its trademarks, services, and products
for a fee.
C. The Unites States is the world’s largest producer and supplier of artificial fur.
D. American Airlines’ common stock, owned by AMR Corp., is not available for public
purchase.
E. Walmart earns a quarter of its revenue outside the United States.
Answer:
The big issue an acquisition-minded firm must consider is whether:
A. to acquire the firm at a price that cannot recapture the investment.
B. to require the acquired firm’s resources and management capability to sustain the
ongoing struggling operation.
C. to pay a premium price for a successful local company or to buy a struggling firm at
a discount price.
D. to pay a price that builds in all the synergistic advantages to the acquired firm.
E. to pay a very high premium price that sends a signal to the market that the new firm
has arrived.
Answer:
A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons
as a gimmick when their bathtubs did not sell. Their bubble foam became famous
among some women and led to a line of exclusive bath products for women. They
established shops in various regional locations and roped in celebrities to market their
products to enhance sales. Now its products are sold through retail outlets and online
sites throughout the world. Which of the following is accurate?
A. Offering scented bubble bath foams and massage coupons was an emergent strategy.
B. Creating a sub-brand that offered exclusive bath products for women was an
emergent strategy.
C. Establishing shops in regional locations was an emergent strategy.
D. Roping in celebrities to market their products was an emergent strategy.
E. Creating a worldwide presence through retail outlets and online sites was an
emergent strategy.
Answer:
Putting together a capable top management team with the right mix of experiences,
skills, and abilities:
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 smart people who are clear thinkers, good at
figuring out what needs to be done, and who are skilled in “making it happen” and
delivering good results.
E. is particularly essential for executing a strategy to keep a company’s costs lower than
rivals and become the industry’s low-cost leader.
Answer:
Management’s strategic vision for an organization:
A. charts a strategic course for the organization (“where we are going”) and provides a
rationale for why this directional path makes good sense.
B. describes in fairly specific terms the organization’s strategic objectives, and strategy.
C. spells out how the company will become a big moneymaker and boost shareholder
value.
D. addresses the critical issue of “why our business model needs to change and how we
plan to change it.”
E. spells out the organization’s strategic intent and the actions and moves that will be
undertaken to achieve it.
Answer:
If a company doesn’t possess standalone resource strengths capable of contributing to
competitive advantage:
A. all potential for competitive advantage is lost.
B. it is unlikely to survive in the marketplace and should exit the industry.
C. it may have a bundle of resources that can be leveraged to develop a distinctive
competence.
D. it is virtually blocked from using offensive strategies and must rely on defensive
strategies.
E. its best strategic option is to revamp its value chain in hopes of creating stronger
competitive capabilities.
Answer:
A company that pursues and achieves strategic objectives:
A. is likely to weaken the achievement of its short-term and long-term financial
objectives.
B. believes that the company’s financial performance is not as important as it really is.
C. is generally not strongly focused on its true mission of making a profit.
D. is frequently in a better position to improve its future financial performance because
of the increased competitiveness that flows from the achievement of strategic
objectives.
E. is likely to be a weak financial performer because diverting resources to the pursuit
of strategic objectives takes away from the achievement of financial performance
targets.
Answer:
Which of the following is a typical characteristic of a weak company culture?
A. Enthusiastic support for the company’s strategic vision and strategy
B. No code of ethics and deep hostility to change and to people who champion new
ways of doing things
C. A complicated value chain that acts to create multiple subcultures
D. A lack of values and principles that are consistently preached or widely shared
E. A dedicated sense of teamwork
Answer:
A company racing to seize opportunities on the frontiers of advancing technology often
utilizes strategic alliances and collaborative partnerships to:
A. discourage rival companies from merging with or acquiring the very companies that
it is partnering with.
B. reduce overall business risk and raise entry barriers into the newly emerging
industry.
C. help master new technologies and build new expertise and competencies, establish a
stronger beachhead for participating in the target industry, and open up broader
opportunities in the target industry.
D. help defeat competitors that are employing broad differentiation strategies.
E. enhance its chances of achieving global low-cost leadership.
Answer:
Ultimate responsibility for seeing that a strategy is executed successfully primarily falls
upon the shoulders of:
A. a company’s chief executive officer, its chief operating officer, and the heads of
major units (business divisions, functional departments, and key operating units).
B. first-line supervisors who have the day-to-day responsibility of seeing that key value
chain activities are done properly.
C. the company’s board of directors because board members are the final authority in
overseeing and conducting daily operations.
D. a company’s whole management teameach manager is responsible for attending to
what needs to be done in his/her respective area of authority and thus should be held
accountable for the strategy’s success or failure.
E. all company personnel because all employees are active participants in the strategy
execution process and the caliber of their actions have a huge impact on the ultimate
outcome.
Answer: