Dispersing the performance of value chain activities to many different countries rather
than concentrating them in a few country locations tends to be advantageous in all of
the following situations, EXCEPT:
A. when high transportation costs make it expensive to operate from central locations.
B. whenever buyer-related activities are best performed in locations close to buyers.
C. if diseconomies of large size exist, thereby making it more economical to perform an
activity on a smaller scale in several different locations.
D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2)
supply interruptions or (3) adverse political developments.
E. if resources retain their foreign contexts so there is competitive advantage over a
broader domain.
Organizational capabilities are virtually always:
A. knowledge-based, residing in people and in the company’s intellectual capital, or in
organizational processes and systems, which embody tacit knowledge.
B. more complex than resources and are exercised only through key personnel.
C. require constant evaluation to ensure cooperative support from management.
D. are easier and less challenging to categorize than resources because there are fewer
to be concerned about.
E. reflective of the industry’s driving forces.
Which of the following is NOT true of implementing a strategy?
A. It is critical to ensure strategy-supportive resources and capabilities are in place.
B. The level of personnel competence is irrelevant to proficient strategy execution.
C. It is important to assemble a strong management team.
D. Strengthening the firm’s core competencies is a top priority.
E. A poorly structured organization can lead to higher bureaucratic costs.
In expanding into foreign markets, a company can strive to gain competitive advantage
(or offset domestic disadvantages) by:
A. building a state-of-the-art facility to fully capture scale economies via an export
strategy.
B. using export, licensing, or franchising strategies so as to minimize risk and capital
investment.
C. locating buyer-related activities in all countries where it sells its product.
D. dispersing its activities among various countries in a manner that lowers costs or else
helps achieve greater product differentiation and transferring competitively valuable
competencies and capabilities from its domestic operations to its operations in foreign
markets.
E. avoiding the use of strategies that entail coordinating its domestic strategic moves
with its strategic moves in the various foreign markets it enters.
A company attempting to be successful with a broad differentiation strategy has to:
A. study buyer needs and behavior carefully to learn what buyers consider important,
what they think has value, and what they are willing to pay for.
B. incorporate more differentiating features into its product/service than rivals.
C. concentrate its differentiating efforts on marketing and advertising (where almost all
differentiating features are created).
D. over-differentiate so that product quality, features, or service levels exceed the needs
of most buyers
E. concentrate on offering advanced features, whether or not they have value to the
customers, to create unique products
When trade-offs have to be made between achieving long-term and achieving
short-term objectives:
A. long-term objectives should take precedence unless the short-term performance
targets have unique importance.
B. long-term objectives should take precedence because of the need for future survival.
C. short-term objectives should take precedence because they focus attention on
delivering performance improvement.
D. short-term objectives should take precedence unless the long-term performance
targets are not achievable.E. long-term objectives should never take precedence until
the short-term objective is achieved.
Televisa, a Mexican media company, became the world’s most prolific producer of
Spanish-language soap operas owing to its expertise in Spanish culture and linguistics.
Which of the following strategies did Televisa employ to defend against global giants?
A. Develop business models that exploit shortcomings in local distribution networks or
infrastructure.
B. Utilize keen understanding of local customer needs and preferences to create
customized products or services.
C. Take advantage of aspects of the local workforce with which large international
companies may be unfamiliar.
D. Transfer company expertise to cross-border markets and initiate actions to contend
on an international level.
E. Use acquisition and rapid-growth strategies to better defend against
expansion-minded internationals.
The strategic role of a company’s reward system is to:
A. compensate employees for performing their assigned duties in a diligent fashion.
B. boost employee morale in ways that create widespread job satisfaction.
C. enlist employees’ commitment to successful strategy execution by rewarding them,
both monetarily and non-monetarily, for their valuable contributions.
D. relieve managers of the burden of closely monitoring each employee’s
performance.E. boost labor productivity and help lower the firm’s overall labor costs.
Activity-based costing:
A. is an accounting system that assigns a company’s expenses to whichever activity in a
company’s value chain is responsible for creating the cost.
B. involves using benchmarking techniques to develop cost estimates for the value
chain activities of each major rival.
C. is a powerful tool for identifying the different pieces of a company’s value chain and
classifying them as primary activities and support activities.
D. involves determining which value chain activities represent variable costs and which
represent fixed costs.
E. is a tool for identifying the activities that cause a company’s product to be strongly
differentiated from the products of rivals.
In which of the following instances is rivalry among competing sellers NOT more
intense?
A. When certain competitors are dissatisfied with their market position and make
moves to bolster their standing
B. When strong companies outside the industry acquire weak firms in the industry and
launch aggressive moves to transform their newly acquired competitors into stronger
market contenders
C. When competitors are fairly equal in size and capability
D. When the products of rivals are weakly differentiated, buyer switching costs are low,
and market demand is growing slowly
E. When there are vast numbers of small rivals so the impact of any one company’s
actions is spread thinly across all industry members
Which of the following is NOT an example of a company that uses blue-ocean market
strategy?
A. eBay’s online auction industry
B. NetJets’ fractional jet ownership
C. Drybar’s hair blowouts
D. Cirque de Soleil’s live entertainment
E. Walmart’s logistics and distribution
The retelling of legendary stories does a lot for establishing a company’s core values,
but it should
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.
When should a business NOT be divested?
A. When the business is worth more to another company than to the parent company
B. When the business is a cash cow
C. When the business provides valuable strategic or resource fits for another company
D. When shareholders would be better served if the company sells the business for a
generous premium
E. When the business lacks the cross-boundary presence of shared values and cultural
compatibility
What does a good strategy execution require?
A. A team effort with all managers having strategy executing responsibility in their
areas of authority, and making all employees active participants in the strategy
execution process
B. Incremental changes to current operating practices be implemented to ensure
existing resource capabilities are not impacted too severely
C. Little consensus building, despite the magnitude of the proposed changes, because
employees know the benefits gained from the planning process
D. The strategy-critical value chain activities to be simplified so that all company
personnel can be cognizant of the benefits of the execution parameters
E. Additional investments in capital projects rather than adding to a company’s talent
base and building intellectual capital
Which of the following is NOT a method that company managers can use to promote
operating excellence in performing value chain activities?
A. Utilize benchmarking.
B. Adapt best practices.
C. Install TQM and/or Six Sigma quality control techniques.
D. Undertake business process reengineering.
E. Adopt standard industry techniques.
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.
Six Sigma quality control:
A. is a strategy implementer’s best, most reliable tool for simultaneously achieving
top-notch product quality and low manufacturing costs.
B. consists of a disciplined, statistics-based system aimed at producing not more than
2.5 defects per million iterations for a manufacturing or assembly process.
C. consists of a disciplined, statistics-based system aimed at producing not more than
3.4 defects per million iterations for any business process.
D. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints
per million customer transactions.
E. is a powerful tool for companies whose customers are very picky about product
quality and product performance and who can’t afford for the product they use to break
down and require repairs.
Increasing globalization of the industry can be a driving force because:
A. the products of foreign competitors are nearly always cheaper or of better quality
than those of domestic companies.
B. foreign producers typically have lower costs, greater technological expertise, and
more product innovation capabilities than domestic firms.
C. companies need to spread their operating reach into more and more country markets
to meet consumer demand and take advantage of available operating activities.
D. it results in companies having fewer competitors and a strategic group map with
fewer circles.
E. market growth rates go up, product innovation speeds up, and new firms are likely to
enter the industry.
Which of the following is NOT a characteristic of a highly centralized organizational
structure?
A. Top-level managers retain decision authority for most strategic and operating
activities.
B. Strict control and enforcement of detailed procedures backed by rigorous managerial
accountability is the most reliable way to keep the daily execution of strategy on track.
C. Tight control from the top is a more effective means for coordinating company
actions and makes it easy to fix accountability when things do not go well.
D. One of the basic tenets is that most company personnel have neither the time nor the
inclination to direct and properly control the work they are performing and, further, they
lack the knowledge and judgment to make wise decisions about how best to do their
work.
E. The decision about where to draw the divisional lines depends foremost on the nature
of the relatedness and the strategy-critical building blocks, in terms of which businesses
have key value chain activities in common.