In competing in foreign markets, companies find it advantageous to concentrate their
activities in a limited number of locations in all of these situations, EXCEPT when:
A. there are significant scale economies in performing an activity.
B. the costs of manufacturing or other activities are significantly lower in some
geographic locations than in others.
C. when there is a steep learning or experience curve associated with performing an
activity in a single location (thus making it economical to serve the whole world market
from just one or maybe a few locations).
D. certain locations have superior resources, allow better coordination of related
activities, or offer other valuable advantages.
E. the addition of new production capacity will not adversely impact the supply-demand
balance in the local market.
Answer:
The concept of strategic groups is relevant to industry and competitive analysis
because:
A. firms in the same strategic groups are rarely close competitorsa firm’s closest
competitors are usually in distant strategic groups.
B. strategic group maps help identify how each competing firm is positioned and the
relationship to their closest competitors.
C. competition grows in intensity as the number and diversity of the strategic groups in
an industry increases.
D. the profit potential of firms in the same strategic group is usually very similar.
E. competitive pressures tend to be weaker within strategic groups than across strategic
groups.
Answer:
Well-conceived, state-of-the-art information and operating systems:
A. are essential because business process reengineering efforts, TQM, Six Sigma, and
benchmarking programs can’t be carried out effectively without them.
B. not only enable better strategy execution but also strengthen organizational
capabilities (perhaps enough to provide a competitive edge over rivals).
C. make it simple and easy to spot cost overruns and inefficiencies.
D. are valuable tools for shortening a company’s value chain, boosting workforce
morale and productivity, and simplifying the task of adopting best practices.
E. help managers run a tight ship and preserve strong, centralized control over internal
activities
Answer:
Which of the following is NOT part of a senior executive’s agenda in big organizations
with geographically scattered operating units?
A. Communicating the case for change
B. Directing resources to the right places
C. Building consensus for how to proceed
D. Establishing deadlines and measures of progress
E. Orchestrating the action steps and implementation sequence
Answer:
The business case for an ethical strategy:
A. focuses primarily on costs that are difficult to quantify (for example, customer
defections and adverse effects on employee productivity) but can often be the most
devastating.
B. emphasizes that pursuing unethical strategies not only damages a company’s
reputation but can also have costly consequences that are wide-ranging.
C. starts with numerous ethical rules and guidelines and an environment where
employees rely on these rules for moral guidance.
D. starts with managers who understand there is a big difference between adopting
values statements and codes of ethics that serve merely as window dressing and those
that truly paint the white lines for a company’s actual strategy and business conduct.
E. begins with ethical guidelines that help send the message that management takes the
observance of ethical norms seriously and that behavior falling outside ethical
boundaries will have negative consequences.
Answer:
If one concurs with the school of ethical universalism, then one believes that:
A. many basic moral standards travel well across cultures and countries and really do
not vary significantly according to local cultural beliefs, social mores, religious
convictions, and/or the circumstances of the situation.
B. since ethical standards are subjectively determined, each company has a window
within which it can define and implement its own ethical principles of right and wrong.
C. what is deemed right or wrong, fair or unfair, moral or immoral, ethical or unethical
in business situations should be judged in light of local customs and social mores and
can legitimately vary from one culture or nation to another.
D. each country should have some degree of latitude in setting its own ethical standards
for judging the ethical correctness of business actions/behaviors within its borders.
E. concepts of right and wrong as they apply to business behavior are purely based on
an individual’s understanding of ethics and differ from person to person.
Answer:
An umbrella brand:
A. is a generalized resource that can be leveraged in unrelated diversification.
B. is a brand name that can steer a narrow assortment of business types.
C. represents a public disclosure spotlighting the corporate image.
D. represents an overall corporate marker covering its overriding image of
sustainability and responsibility.
E. is a specialized resource designed to influence profit growth.
Answer:
Which of the following statements about a weak company culture is true?
A. In a weak-culture company, there is virtually no employee support for the company’s
strategic vision and strategy.
B. Weak-culture companies do not usually have a code of ethics and have little regard
for high ethical standards.
C. Weak cultures provide little assistance in executing strategy because there are no
traditions, values, or behavioral norms that management can use as levers to mobilize
commitment to executing the chosen strategy.
D. Weak-culture companies are fairly receptive to change and to people who champion
new ways of doing things.
E. In a weak-culture company, there is usually a dearth of intellectual capital and
inattention to building core competencies.
Answer:
An industry’s key success factors can always be deduced by asking what factors:
A. are a function of market share, entry barriers, and economies of scale, degree of
vertical integration, and industry profitability that are advantageous.
B. vary according to whether an industry has high or low long-term attractiveness.
C. such as product attributes and service characteristics are crucial, and what resources
and competitive capabilities are needed, and what shortcomings are evident to put a
company at a competitive disadvantage.
D. can be determined from studying the “winning” strategies of the industry leaders and
ruling out as potential key success factors the strategy elements of those firms
considered to have “losing” strategies.
E. depend on the relative competitive strengths of the industry leaders and how
vulnerable they are to competitive attack.
Answer:
Which of the following topics would least likely be contained in a company’s code of
ethics?
A. Prohibiting giving or accepting bribes, kickbacks, or gifts
B. Expecting all company personnel to display honesty and integrity in their actions and
avoid conflicts of interest
C. Barring dealing with suppliers that employ child labor or engage in other unsavory
practices
D. Committing to a no-layoff policy and to adequate funding of employee retirement
programs
E. Avoiding use of company assets, resources, and property for personal or other
inappropriate purposes
Answer:
Which of the following is NOT a tool or method that managers can use to promote
operating excellence and further the cause of good strategy execution?
A. Benchmarking
B. Business process reengineering
C. Strategic resource training
D. TQM and Six Sigma quality control techniques
E. Best practices
Answer:
A pharmaceutical company functioning in France for the last 10 years has moderate
sales in a crowded market with competitors offering drugs with similar efficacy and
safety precautions, but with better sales. The greatest challenge is to increase the
prescription of their drugs. What would be the MOST effective strategy to improve
sales performance in the existing market?
A. Modifying marketing communication to increase brand familiarity within key
physician segments
B. Relocating all the existing drug manufacturing facilities to developing countries to
reduce operational costs
C. Employing hiring plans that aim at acquiring drug designers from rival companies
D. Exiting the market and entering a new unexplored geographical location
E. Engaging in new contract talks with suppliers about price breaks
Answer:
Resource and capability analysis is designed to:
A. ascertain the internal marketplace of non-distinct divisions of the company.
B. ascertain which of a company’s resources and capabilities are competitively valuable.
C. stimulate demand for a product.
D. ascertain to what extent a competitor can sustain a competitive advantage.
E. stimulate economic growth for companies within the industry.
Answer:
A company requires a dynamically evolving portfolio of resources and capabilities to:
A. assist the strategic planning team in overall direction.
B. sustain complex manufacturing systems as a strategic recall.
C. sustain its competitiveness and help drive improvements in its performance.
D. sustain benefits of high market share as an interest in growth strategies.
E. transform knowledge into a management style supporting competition in a globally
diverse world.
Answer:
Benchmarking involves:
A. comparing how different companies perform various value chain activities and then
making cross-company comparisons of the costs and effectiveness of these activities.
B. checking whether a company has achieved more of its financial and strategic
objectives over the past five years relative to the other firms it is in direct competition
with.
C. studying whether a company’s resource strengths are more/less powerful than the
resource strengths of rival companies.
D. studying how a company’s competitive capabilities stack up against the competitive
capabilities of selected companies known to have world-class competitive capabilities.
E. comparing the best practices in one industry against the best practices in another
industry.
Answer:
Which of the following is NOT among the principal managerial components of the
strategy execution process?
A. Building an organization with the competencies, capabilities, and resource strengths
needed to execute strategy successfully
B. Instituting policies and procedures that facilitate rather than impede strategy
execution
C. Deciding which core competencies and value chain activities to leave as is and
which ones to overhaul and improve
D. Adopting best practices and pushing for continuous improvement in how value chain
activities are performed
E. Tying rewards directly to the achievement of strategic and financial targets and to
good strategy execution
Answer:
An acquisition premium is the amount by which the price offered for an existing
business exceeds:
A. the fair market value of similar companies in the same geographic locale.
B. the preacquisition market value of the target company.
C. the comparable value of similar companies within the same market.
D. the amount paid as a down payment to be held in escrow until closing.
E. the difference between the amount that was offered and the amount that is escrowed.
Answer:
A “best practice” refers to:
A. a method of performing an activity or business process that at least one company has
demonstrated works particularly well in terms of delivering some highly positive
operating outcome.
B. the best-known procedure for performing a specific task or activity so as to achieve
the lowest possible costs.
C. performing activities in a manner that conforms to established industry standards.
D. a company’s core competence.
E. performing a particular value chain activity in “world-class” fashion (one unmatched
by any other company in the world).
Answer:
The principal advantages of strategic alliances over vertical integration or horizontal
mergers/acquisitions are:
A. resource pooling and risk sharing, more adaptive response capabilities, and greater
speed of deployment.
B. potential profitability of the alliance and related experience-curve economics.
C. the facilitation of best practices, more production capacity, and relevant synergistic
savings.
D. the transactional and relational concept of operating practices and competencies.
E. E)material additions to a company’s technological capabilities, strengthening of the
firm’s competitive position, and boosting of its profitability.
Answer:
Being the overall low-cost provider in an industry has the attractive advantage of:
A. building strong customer loyalty and locking customers into its product because
customers have high switching costs.
B. giving the firm a very appealing brand image.
C. putting a firm in the best position to win the business of price-sensitive customers
and earn profits by setting the floor on market price.
D. putting the company in a strong position to be more profitable than companies
pursuing a differentiation strategy.
E. greatly reducing the strong bargaining power of rivals with the key distributors.
Answer:
Calculating competitive strength ratings for a company and comparing them against
strength ratings for its key competitors helps indicate:
A. which weaknesses and vulnerabilities of competitors the company might be able to
attack successfully.
B. which competitors are in profitable strategic groups and which competitors are in
unprofitable strategic groups.
C. which competitors are employing offensive strategies and which competitors are
employing defensive strategies.
D. which competitors are likely to make money and which are likely to lose money in
the years ahead.
E. what the industry’s key success factors are.
Answer:
Which of the following is NOT the result of a well-conceived and communicated
strategic vision?
A. Senior executives solidify their own view of the firm’s long-term direction.
B. The risk of rudderless decision-making is minimized.
C. Organizational members support the changes internally that will help make the
vision a reality.
D. The vision assists the organization in preparing for the future.
E. Stockholders protest that the business is rudderless.
Answer:
The difference between a merger and an acquisition relates to:
A. strategy and competitive advantage.
B. the presence of available resources and competitive capabilities.
C. whether the end result is related to horizontal or vertical scope.
D. creating a more cost-efficient operation out of the combined companies.
E. the details of ownership, management control, and the financial arrangements.
Answer:
The difference between a resource and a capability is:
A. a resource is a productive input or competitive asset, whereas a capability is the
capacity of the firm to perform some internal activity competently.
B. a resource is a reserve supply or back-up supply function, whereas a capability is the
ability to manage the resource function.
C. a resource is a mechanism used for carrying out some responsibility, whereas a
capability possesses the ability to monitor the resource
D. a resource represents the firm’s fixed assets, whereas a capability defines whether the
firm is competent to perform some function with these assets.
E. a resource represents the firm’s human assets, whereas a capability defines the skills
and knowledge of these human resources.
Answer:
Which of the following contribute to the emergence and sustainability of a strong
culture?
A. Senior executives that walk the talk of high ethical standards
B. A strong emphasis on developing innovative core competencies and competitive
capabilities
C. A sincere, long-standing company commitment to operating the business according
to established traditions, thereby creating an internal environment that supports decision
making and strategies based on cultural norms
D. Centralized decision making and strict enforcement of company policies
E. A long-standing commitment to strict enforcement of established policies and
procedures and steadfast unwillingness to change these policies and procedures
Answer:
Which of the following is NOT a characteristic of a network structure?
A. It ensures that the right partners are included and the activities are coordinated.
B. It encourages a more effective collaboration and cooperation among partners.
C. It includes a hand-picked, integrated network of suppliers.
D. It is an arrangement of independent organizations involved in a common
undertaking.
E. It established that no one firm has a central control over the others.
Answer:
Which of the following would NOT lead to cost savings?
A. A company that sets up its own direct sales force
B. A company that eliminates low-value-added work steps
C. A company that motivates employees through incentives
D. A company that conducts sales operations at its website
E. A company that sources the best from suppliers across the world
Answer:
Which of the following is the BEST guideline for deciding what the priorities should be
for allocating resources to the various businesses of a diversified company?
A. Businesses with high industry attractiveness ratings should be given top priority and
those with low industry attractiveness ratings should be given low priority.
B. Business subsidiaries with the brightest profit and growth prospects, attractive
positions on the nine-cell matrix, and solid strategic and resource fits generally should
head the list for corporate resource support.
C. The positions of each business in the nine-cell attractiveness-strength matrix should
govern resource allocation.
D. Businesses with the most strategic and resource fits should be given top priority and
those with the fewest strategic and resource fits should be given low priority.
E. Businesses with high competitive strength ratings should be given top priority and
those with low competitive strength ratings should be given low priority.
Answer:
Reward and incentive systems serve as a(n):
A. direct stimulus for satisfying the basic expectations of the standard job and
mechanisms.
B. indirect motivational tool designed to convert employee commitment into
high-powered incentives.
C. indirect type of control mechanism that conserves on more costly control
mechanisms of supervisory oversight.
D. direct base-pay financial compensation mechanism that competes with rival
companies’ salary bands for similar work efforts.
E. negative motivational element.
Answer:
The heart and soul of a company’s strategy-making effort is determining how to:
A. become the industry’s low-cost provider.
B. maximize profits and shareholder value.
C. improve the efficiency of its business model.
D. maximize profits while simultaneously operating in a socially responsible manner
that keeps the company’s prices as low as possible.
E. come up with moves and actions that produce a durable competitive edge over rivals.
Answer:
A route to take in developing a differentiation advantage includes:
A. incorporating product attributes and user features that raise the buyer’s overall costs,
but keep the price minimal.
B. incorporating tangible features that add functionality, increase customer satisfaction
with the product specifications, functions, and styling.
C. signaling value by targeting sophisticated buyers.
D. incorporating intangible features that enhance buyer satisfaction in economic ways.
E. emphasizing high quality and performance of products through a standard and
simple, no-fuss packaging.
Answer:
Internal administrative costs which are incurred by companies for ethical wrongdoing
include all of the following EXCEPT:
A. costs attached to adverse effects on employee productivity.
B. costs of remedial education and ethics training to company personnel.
C. costs incurred in taking corrective actions.
D. administrative costs associated with future compliance.
E. legal and investigative costs.
Answer:
Competing companies deploy whatever means necessary to strengthen market position,
including all of the following EXCEPT:
A. marketing tactics including special sales promotions such as introducing new or
improved features or increasing the number of styles to provide greater product
selection.
B. differentiating their products by offering better performance features than rivals.
C. improving innovation to increase product performance and quality.
D. making efforts to expand dealer networks.
E. reducing distribution capabilities and market presence.
Answer:
A strategic vision constitutes management’s view and conclusions about the company’s:
A. long-term direction and what product-market-customer mix seems optimal.
B. business model and the kind of value that it is trying to deliver to customers.
C. justification of why the business will be a moneymaker.
D. past and present scope of work.
E. long-term plan for outcompeting rivals and achieving a competitive advantage.
Answer: