A fast-food restaurant stocks bread, meat, sauces, and other main ingredients, but does
not assemble and cook its burgers and sandwiches until a customer places an order.
Which cost driver is the restaurant efficiently using to cut costs?
A. Supply chain efficiencies
B. Economies of scale
C. Incentive systems and culture
D. Bargaining power
E. Capacity utilization
Which of the following is NOT one of the elements of crafting corporate strategy for a
diversified company?
A. Picking new industries to enter and deciding on the means of entry
B. Choosing the appropriate value chain for each business the company has entered
C. Pursuing opportunities to leverage cross-business value chain relationships and
strategic fit into competitive advantage
D. Establishing investment priorities and steering corporate resources into the most
attractive business units
E. Initiating actions to boost the combined performance of the businesses the firm has
entered
A “think-local, act local” multidomestic strategy entails:
A. offering a narrow product line aimed at serving buyers in the same segments of
country markets worldwide.
B. giving local managers considerable strategy-making latitude and often producing
different product versions for different countries.
C. adopting aggressive efforts to locate facilities in those country markets that have
superior resources.
D. pursuing strong product differentiation and competing in many buyer segments.
E. extensive efforts to transfer a company’s competencies and resource strengths from
one country to another so as to keep entry costs into new country markets low.
Accessing capabilities through an external source can be accomplished through all of
these EXCEPT:
A. outsourcing, but depends on what can safely be delegated to outside suppliers.
B. joint ventures, which depend on how well the partners will work together.
C. strategic alliances, which should be selected as much for management style, culture,
and goals as for their resources and capabilities.
D. learning-based collaborative partnerships for the purpose of learning how the partner
does things, internalizing its methods, and thereby acquiring its capabilities.
E. promoting qualified people with the right know-how in a timely and cost-effective
manner.
Focusing carries several risks, one of which is the:
A. chance that niche customers will bargain more aggressively for good deals than
customers in the overall marketplace.
B. chance that competitors will find effective ways to match the focused firm’s
capabilities in serving the target market.
C. potential for the segment to be highly vulnerable to economic cycles.
D. potential for the segment to become too specialized for other multi-segmented rivals
to enter.
E. inability of a company to compete industry-wide.
Senior executives can ensure compliance with the ethical code of conduct by
considering:
A. whether the proposed action is fully compliant and in harmony with the code of
ethical conduct and whether stakeholders would consider anything ethically
objectionable.
B. whether the code of conduct is rejected by the market and accepted by employees.
C. whether the code of conduct was accepted by rivals.
D. whether the creation of the code of conduct should be handled by executives or
employees.
E. whether to eliminate the need to execute a code of conduct at all.
Which of the following ways are employed by defending companies to fend off a
competitive attack?
A. Remain steadfast to current product features and models to ensure resources are not
diverted toward unproductive efforts.
B. Exclude volume discounts or better financing terms from the strategic response in
order to maintain current profitability levels.
C. Gain product line exclusivity to force competitors to use other distributors.
D. Trimming the length of warranties to save money.
E. Stay away from competitor’s clients since their loyalty will not allow them to switch.
Best-cost provider strategies are appealing in those market situations where:
A. diverse buyer preferences make product differentiation the norm and where a large
number of value-conscious buyers can be induced to purchase mid-range products.
B. a company is positioned between competitors who have ultra-low prices and
competitors who have top-notch products in terms of both quality and performance.
C. buyers are more quality-conscious than price-conscious.
D. there are numerous buyer segments, buyer needs are diverse across these segments,
only a few of the segments are growing rapidly, and sellers’ products are strongly
differentiated.
E. buyers are more performance-conscious than value-conscious.
A company’s strategy is increasingly effective the more it can match the company
strategy to competitive conditions, so the firm can:
A. pursue avenues that expose the firm to as many of the different competitive
pressures as possible.
B. shift the competitive battle in favor of the firm by altering the underlying factors
driving the five forces.
C. pursue ways to identify and complement the five forces contradictions and
inferences to attract competitive growth opportunities.
D. pursue avenues that promote strategic thinking about how to contest competitor
strengths and weaknesses and to create a checklist of potential profitability preferences.
E. shift societal concerns, attitudes, and lifestyles by altering the pattern of competition.
Buyer bargaining power is stronger when:
A. winning the business of certain high-profile customers offers a seller important
market exposure or prestige.
B. the extent and importance of collaborative partnerships and alliances between
particular sellers and buyers is credible.
C. buyers cannot integrate backward into the product market of sellers.
D. sellers’ products are differentiated, making it easy and inexpensive for buyers to
switch to competing brands.
E. the industry’s products are standardized or undifferentiated.
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.
A company’s strengths are important because they:
A. pave the way for establishing a low-cost advantage over rivals.
B. represent the quality of its competitive assets that enhance its competitiveness in the
marketplace.
C. provide extra muscle in helping lengthen the company’s value chain.
D. give it competitive protection against the industry’s driving forces.
E. provide extra organizational muscle in turning a core competence into a key success
factor.
How do ethical principles apply to businesses?
A. They chiefly deal with the actions and behaviors required to operate companies in a
socially responsible manner.
B. They chiefly deal with the rules each company’s top management and board of
directors make about “what is right” and “what is wrong.”
C. They are not materially different from ethical principles in general.
D. They are generally less stringent than the ethical principles for society at large.
E. They are generally more stringent than the ethical principles for society at large.
Explain why a company’s strategy is really a collection of strategies.
List the 10 principal managerial components of the
strategy-implementing/strategy-executing process.
Why is it important for company managers to develop a “worry list” of strategic issues
and problems that they need to address and resolve? What should they consider to
develop this list?
Explain how the keys to sustaining a broad differentiation strategy differ from the keys
to sustaining a best-cost producer strategy.
Identify and explain three actions that top executives can take to help instill a spirit of
high achievement into the corporate culture and mobilize organizational energy behind
the drive for good strategy execution and operating excellence.
Which of the five generic competitive strategies are most likely to be best suited for an
industry whose product may be customized to create a cheaper version? Explain.