The “driving forces” in an industry
A. are usually triggered by changing technology or stronger learning/experience curve
effects.
B. usually are spawned by growing demand for the product, the outbreak of
price-cutting, and big reductions in entry barriers.
C. are major underlying causes of change in industry and competitive conditions and
have the biggest influences in reshaping the industry landscape and altering competitive
conditions.
D. appear when an industry begins to mature but are seldom present during early stages
of the industry life cycle.
E. are usually triggered by shifting buyer needs and expectations or by the appearance
of new substitute products.
Successful differentiation allows a firm to
A. command the largest market share in the industry.
B. set the industry ceiling on price.
C. avoid being overly concerned about whether entry barriers into the industry are high
or low.
D. command a premium price for its product and/or increase unit sales and/or gain
buyer loyalty to its brand.
E. take sales and market share away from rivals by undercutting them on price.
Which of the following are common shortcomings of company vision statements?
A. Too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on
superlatives
B. Unrealistic, unconventional, and unbusinesslike
C. Too specific, too inflexible, and can’t be achieved in five years
D. Too broad, too narrow, and too risky
E. Not customer-driven, out-of-step with emerging technological trends, and too
ambitious
Which of the following is a frequently used strategic approach to setting a company
apart from rivals and achieving a sustainable competitive advantage?
A. Striving to be the industry’s low-cost provider, thereby aiming for a cost-based
competitive advantage.
B. Outcompeting rivals on the basis of such differentiating features as higher quality,
wider product selection, added performance, better service, more attractive styling, or
technological superiority.
C. Developing competitively valuable resources and capabilities that rivals can’t easily
match, copy, or trump with capabilities of their own.
D. Focusing on a narrow market niche and winning a competitive edge by doing a
better job than rivals of serving the special needs and tastes of buyers comprising the
niche.
E. All of these.
A competitive strategy of striving to be the low-cost provider is particularly attractive
when
A. buyers are not price sensitive.
B. the industry is made up of a large number or equal-sized rivals.
C. there are many ways to achieve product differentiation that have value to buyers.
D. price competition is especially vigorous, buyers have low switching costs, and the
majority of industry sales are made to a few, large volume buyers.
E. switching costs are high, price competition is strong, and buyers tend to use the
industry’s products in many different ways.
To use location to build competitive advantage when competing in both domestic and
foreign markets, a company must
A. scatter its production plants across many different country markets so as to minimize
the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers.
B. consider (1) whether to concentrate each activity it performs in a few select countries
or to disperse performance of the activity to many nations and (2) in which countries to
locate particular activities.
C. concentrate buyer-related activities in a few well-chosen locations so as to maximize
the capture of distribution-related scale economies.
D. disperse both production and distribution activities across many nations in order to
hedge against fluctuating exchange rates and lessen the risks of adverse political
developments.
E. avoid selling in countries where there are high trade barriers or where buyers
purchase in small quantities.
Which of the following is not one of the five questions that comprise the task of
evaluating a company’s competitive strength and cost structure?
A. What are the company’s most profitable geographic market segments?
B. How well is the company’s strategy working?
C. Is the company’s cost structure and customer value proposition competitive?
D. Is the company competitively stronger or weaker than key rivals?
E. What strategic issues and problems merit front-burner management attention?
A belief in ethical relativism leads to the conclusion that
A. because ethical standards are subjective, it is perfectly appropriate for each company
to define and implement its own ethical principles of right and wrong as concerns the
use of underage labor and the payment of bribes and kickbacks.
B. ethical standards are determined objectively (rather than subjectively).
C. whether the payment of bribes/kickbacks should be deemed ethical or unethical
depends on the moral standards, values, beliefs, convictions, and business norms that
prevail in particular cultures, societies, countries, or circumstances.
D. ethical standards are objective and universal; thus, whether the use of underage labor
and the payment of bribes and kickbacks should be deemed ethical or unethical
definitely is not dependent on the moral standards, values, beliefs, convictions, and
business norms that prevail in particular cultures, societies, countries, or circumstances.
E. standards of right and wrong are governed by what is legal in a given country; thus,
whether the use of underage labor and the payment of bribes and kickbacks is ethical or
unethical is governed by local law.
The reasons firms enter into strategic alliances is to
A. expedite the development of new technologies.
B. overcome deficits in their operation.
C. improve supply chain efficiency.
D. acquire or improve market access.
E. All of these.
Unhealthy company cultures typically have such characteristics as
A. tight budget controls, overly strict enforcement of longstanding policies and
procedures, and low ethical standards.
B. a preference for conservative strategies, an aversion to incentive compensation, and
excessive emphasis on profitability.
C. a politicized internal environment, hostility to change, an insular, inwardly focused
culture, and unethical or greed-driven behavior on the part of executives.
D. overemphasis on employee empowerment, a complacent approach to building
competencies and capabilities, no coherent business philosophy, and excessively
bureaucratic policies and procedures.
E. too little emphasis on innovation, a strong preference for hiring managers from
outside the company, very few core values and traditions, and a weakly enforced code
of ethics.
Which of the following is not one of the five typical sources of competitive pressures?
A. The power and influence of industry driving forces
B. The bargaining power of suppliers and seller-supplier collaboration
C. The threat of new entrants into the market
D. The attempts of companies in other industries to win customers over to their own
substitute products
E. The market maneuvering and jockeying for buyer patronage that goes on among rival
sellers in the industry
A vertically integrated firm is one that performs value chain activities along more than
one stage of the industry’s overall value chain and such integration is not considered to
be
A. backward integration (industry value chain activities performed previously by
buyers).
B. either partial integration (building positions in selected stages of the value chain) or
tapered integration, which is a strategy that involves both outsourcing and performing
the activity internally.
C. tapered forward (e.g., engaged directly in the sales operating activity to end users at
the same time selling to third parties).
D. full integration (participating in all stages of the industry vertical chain).
E. forward integration (value chain activities performed by distributors) or forward
toward end users.
Which of the following is not one of the pitfalls of a low-cost provider strategy?
A. Overly aggressive price cutting
B. Using a cost-based advantage to improve the company’s bargaining position with
high-volume buyers
C. Relying on an approach to reducing costs that can be easily copied by rivals
D. Cutting prices more than the size of a company’s cost advantage
E. Becoming too fixated on cost reductions so that the company’s products are too
features-poor
The advantages of focusing a company’s entire competitive effort on a single market
niche allows for
A. going after a national customer base with a ‘something for everyone” lineup of
models.
B. scaling operations to serve the customer market segment.
C. utilizing the full depth of the company’s resources across a broad base of customers.
D. executing competencies and capabilities better than competitors.
E. All of these.
A company’s values relate to such things as
A. how it will balance its pursuit of financial objectives against the pursuit of its
strategic objectives.
B. how it will balance the pursuit of its business purpose/mission against the pursuit of
its strategic vision.
C. fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch
quality, superior customer service, social responsibility, and community citizenship.
D. whether it will emphasize stock price appreciation or higher dividend payments to
shareholders, and whether it will put more emphasis on the achievement of short-term
performance targets or long-range performance targets.
E. All of these
Accurately assessing the competitiveness of a company’s cost structure and value
proposition requires
A. that managers understand an industry’s entire value chain system.
B. that managers understand the detail of their own company’s value chain.
C. that managers are involved in functional strategy development.
D. that managers understand the firm’s profitability outlook.
E. All of these.
A company needs financial objectives
A. to overtake key competitors on such important measures as net profit margins and
return on investment.
B. because without adequate profitability and financial strength, the company’s ultimate
survival is jeopardized.
C. to indicate to employees that financial objectives always take precedence over
strategic objectives.
D. to convince shareholders that top management is acting in their interests.
E. to translate the company’s business model into action items.
When a company is confronted with significant industry change that mandates radical
revision of its strategic course, the company is said to have encountered
A. a learning and growth perspective.
B. a strategic inflection point.
C. a strategic roadblock.
D. a new strategic opportunity.
E. an opportunity for corporate entrepreneurship.
Which of the following is not an option for remedying a forward channel-related cost
disadvantage?
A. Negotiate more favorable prices with suppliers
B. Integrate forward into company-owned retail outlets
C. Collaborate closely with forward channel allies to identify mutual cost-saving
opportunities
D. Change to a more economical distribution strategy
E. Pressure dealer-distributors to reduce their costs and markups
Companies with change-resistant cultures
A. are typically opposed to performance-based incentive compensation and employee
empowerment.
B. are prone to be preoccupied with avoiding risks, are unlikely to pursue bold actions
to capture emerging opportunities, have a widespread aversion to continuous
improvement in performing value chain activities, and prefer following rather than
leading market change.
C. are often overly gung-ho about looking outside the company for best practices, new
managerial approaches, and innovative ideas.
D. tend to be preoccupied with making sure the company has a safe,
follow-the-industry-leader type of strategic vision and it avoids risky business
strategies.
E. are typically run by amoral managers who have little regard for high ethical
standards.
A company that lacks a stand-alone resource that is competitively powerful may
attempt to develop a competitive advantage through
A. improved employee training programs, new marketing promotions, or technological
enhancements to production processes.
B. the development of a new business strategy that draws upon existing resource
strengths.
C. extensive strategic planning and resource identification sessions involving managers
at all levels of the organization.
D. bundled resources that enable superior performance of cross-functional capabilities
that can be leveraged to support its business model and strategy.
E. devising clever approaches to turning resource weaknesses into resource strengths.
A company’s resources are competitive assets that are owned or controlled by the
company and include
A. financial resources such as a company’s credit rating and borrowing capacity.
B. tangible resources such as plants, distribution centers, and manufacturing equipment.
C. intangible assets such as brand recognition and buyer loyalty.
D. intangible assets such as having a results-oriented culture.
E. All of these.
MBWA refers to
A. modifying businesses with action.
B. a mission, balanced scorecard, and weighted assessment.
C. the managerial practice of making regular visits to field operations and talking with
many people at many different levels.
D. the balanced scorecard perspectives of a company’s strategy map.
E. managing businesses with authority.
The contentions that (1) many of the same standards of what’s ethical and what’s
unethical resonate with peoples of most cultures, societies, and religions and (2) to the
extent there is common moral agreement about right and wrong actions, there exist a set
of common ethical standards to which organizations and individuals can be held
accountable are defining beliefs of
A. the school of ethical relativism.
B. the school of ethical universalism.
C. integrated social contracts theory.
D. the School of Morally Correct Thinking and Behavior in Paris, France.
E. the Global Code of Ethical and Social Morality developed in 1925 at a worldwide
convention of distinguished religious clerics.
The purpose of managing by walking around is to
A. learn more about company operations and see how activities are really being done.
B. gather information about what is happening from people at different organizational
levels and learn firsthand how well the strategy execution process is proceeding.
C. give employees a chance to make suggestions for improvement.
D. gather information about what strategy to follow and to learn what competitors are
doing.
E. be visible and accessible to employees.
In expanding outside its domestic market, a company can gain competitive advantage
by
A. not pursuing costly efforts to build multiple profit sanctuaries.
B. deliberately choosing not to compete in countries with high tariffs and high taxes
(which then have to be passed along to buyers in the form of higher prices), thus
keeping costs and prices lower than rivals.
C. using an export strategy to circumvent the risks of adverse exchange rate
fluctuations.
D. using location to lower costs or help achieve greater product differentiation and it
can use cross-border coordination in ways a domestic-only competitor cannot.
E. employing a multidomestic strategy instead of a global strategy.
A resource-based strategy
A. focuses on exploiting a company’s best-executed operating strategy.
B. is based upon efficient performance of the company’s primary value chain activities.
C. concentrates on minimizing the costs associated with the design of a product or
service.
D. attempts to exploit resources in a manner that offers value to customers in ways
rivals are unable to match.
E. focuses on working with forward channel allies to develop capabilities to outmatch
the capabilities of rivals.
One of the biggest strategic challenges to competing in the international arena include
A. how to avoid the risks of shifting exchange rates.
B. whether to charge the same price in all country markets.
C. how many foreign firms to license to produce and distribute the company’s products.
D. whether to offer a mostly standardized product worldwide or whether to customize
the company’s offerings in each different country market to match the tastes and
preferences of local buyers.
E. whether to pursue a global strategy or an international strategy.
Which of the following is not among the types of actions and initiatives undertaken by
management in the strategy execution process?
A. Building an organization capable of executing the strategy
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. 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
The overriding aim in building a management team should be to
A. select people who are committed to decentralizing decision making and empowering
employees.
B. assemble a critical mass of talented managers who can function as agents of change
and further the cause of first-rate strategy execution.
C. choose managers experienced in controlling costs and flattening the organization
structure.
D. select people who have similar management styles, leadership approaches, business
philosophies, and personalities.
E. choose managers who believe in having a strong corporate culture and deeply
ingrained core values.
Doing a competitive strength assessment entails
A. determining whether a company has a cost-effective value chain.
B. ranking the company against major rivals on each of the important factors that
determine market success and ascertaining whether the company has a net competitive
advantage or disadvantage versus major rivals.
C. identifying a company’s core competencies and distinctive competencies (if any).
D. analyzing whether a company is well positioned to gain market share and be the
industry’s profit leader.
E. developing quantitative measures of a company’s chances for future profitability.
Which one of the following is not part of a company’s broad macro-environment?
A. conditions in the economy at large.
B. population demographics and societal values and lifestyles.
C. technological and ecological factors.
D. governmental regulations and legislation.
E. the company’s resource strengths, resource weaknesses, and competitive capabilities.
An industry’s driving forces
A. are generally determined by competitive pressures, the sizes of strategic groups, and
the power of rival firms’ competitive strategies.
B. generally act in ways that will strengthen or weaken market demand, make
competition more or less intense, and lead to higher or lower industry profitability.
C. frequently cause a leveling off of industry growth and a reduction in the bargaining
power of buyers.
D. are normally triggered by ups and downs in the economy, higher or lower inflation
rates, higher or lower interest rates, or important new strategic alliances.
E. can be triggered by such factors as growing competitive pressures from substitute
products, greater seller-supplier collaboration, and the efforts of rival firms to employ
new or different offensive strategies.
One of the most telling signs of whether a company’s market position is strong or
precarious is
A. whether its product is strongly or weakly differentiated from rivals.
B. whether its prices and costs are competitive with those of key rivals.
C. whether it has a lower stock price than key rivals.
D. the opinions of buyers regarding which seller has the best product quality and
customer service.
E. whether it is in a bigger or smaller strategic group than its closest rivals.