The aim of the best-cost provider strategy is to create a competitive advantage by
A. incorporating attractive or upscale product attributes at a lower cost than rivals.
B. offering buyers the industry’s best-performing product at the best cost and best
(lowest) price in the industry.
C. attracting buyers on the basis of having the industry’s overall best-performing
product at a price that is slightly below the industry-average price.
D. outcompeting rivals using low-cost provider strategies.
E. translating its best-cost status into achieving the highest profit margins of any firm in
the industry.
Which of the following is not a major consideration in evaluating the pluses and
minuses of a diversified company’s strategy?
A. Checking whether the company’s resources fit the requirements of its present
business lineup
B. Scrutinizing each industry/business to determine where driving forces are
strongest/weakest and how many profitable strategic groups the company has
diversified into
C. Ranking the performance prospects of the various businesses from best to worst and
determining what the corporate parent’s priorities should be in allocating resources to its
different businesses
D. Evaluating the extent of cross-business strategic fits
E. Assessing the competitive strength of each business the company has diversified into
Ethical principles in business
A. deal chiefly with the actions and behaviors required to operate companies in a
socially responsible manner.
B. deal chiefly with the rules each company’s top management and board of directors
make about “what is right” and “what is wrong.”
C. are not materially different from ethical principles in general.
D. are generally less stringent than the ethical principles for society at large.
E. are generally more stringent than the ethical principles for society at large.
The Achilles’ heel (or biggest danger/pitfall) of relying heavily on alliances and
cooperative strategies is
A. that partners will not divide profits from the alliance in an equitable manner.
B. becoming dependent on other companies for essential expertise and capabilities.
C. incurring excessive administrative expenses associated with engaging in
collaborative efforts.
D. having to compromise the company’s own priorities and strategies in reaching
agreements with partners.
E. that strategic allies frequently become rivals in the marketplace.
Which of the following is not one of the suggested appeals of an unrelated
diversification strategy?
A. The ability to spread business risk over truly diverse businesses (as compared to
related diversification, which is limited to spreading risk only among businesses with
strategic fit)
B. An ability to employ the company’s financial resources to maximum advantage by
investing in whatever industries/businesses offer the best profit prospects
C. Superior top management ability to cope with the wide variety of problems
encountered in managing a broadly diversified group of businesses
D. A potential for achieving somewhat more stable corporate sales and profits over the
course of economic upswings and downswings (to the extent the company diversifies
into businesses whose ups and downs tend to occur at different times)
E. The potential to grow shareholder value by investing in bargain-priced companies
with big upside profit potential
A company’s strategic vision concerns
A. a company’s directional path and future product-customer-market-technology focus.
B. why the company does certain things in trying to please its customers.
C. management’s story line of how it intends to make a profit with the chosen strategy.
D. “who we are and what we do.”
E. what future actions the enterprise will likely undertake to outmaneuver rivals and
achieve a sustainable competitive advantage.
Which of the following is not an appropriate guideline for developing a strategic group
map for a given industry?
A. The variables chosen as axes for the map should indicate big differences in how
rivals have positioned themselves to compete in the marketplace.
B. The variables chosen as axes for the map can be quantitative, qualitative, or discrete
and defined in terms of distinct classes and combinations.
C. The variables chosen as axes for the map should be highly correlated.
D. Several maps should be drawn if more than one pair of variables can help illuminate
differences in the competitive positioning of industry members.
E. The sizes of the circles on the map should be drawn proportional to the combined
sales of the firms in each strategic group.
Which of the following is a good example of a manufacturing-related key success
factor?
A. Global distribution capabilities
B. High labor productivity (especially if the production process has high labor content)
C. Low distribution costs
D. Accurate filling of buyer orders
E. Short delivery time capability
A company’s ability to marshal adequate resources in support of new strategic
initiatives and steer them to the appropriate organizational units is important to the
strategy execution process because
A. changes in strategy often require resource reallocation and, therefore, directing the
proper amounts of resources to strategy-critical organizational units because they need
the proper funding to carry out their part of the strategic plan effectively and efficiently.
B. accurate budgets are the key to exercising tight financial controls over organizational
units.
C. tight budget control is management’s most powerful tool for first-rate strategy
execution.
D. lean, carefully managed budgets protect the company’s financial condition and
eliminate wasteful use of cash.
E. lean, strictly enforced budgets are management’s best and most used means of getting
organizational units to exercise fiscal discipline.
Which of the following is not an example of an unhealthy company culture?
A. Insular inwardly focused cultures
B. Change-resistant cultures
C. Unethical and greed-driven cultures
D. Politicized cultures
E. Hyper-adaptive cultures
Which is not one of the four conditions that make an internal start-up strategy
appealing?
A. When creating an internal start-up is cheaper than making an acquisition
B. When adding new production capacity will adversely impact the supply-demand
balance in the local market
C. Having the ability to gain good distribution access
D. Having scale economies to compete against local rivals
E. All of these
Which of the following is not a typical reason that many alliances prove unstable or
break apart?
A. Diverging objectives and priorities
B. An inability to work well together
C. The emergence of more attractive technological paths
D. Disagreement over how to divide the profits gained from joint collaboration
E. Changing conditions that make the purpose of the alliance obsolete
The competitive moves and business approaches a company’s management is using to
grow the business, compete successfully, attract and please customers, conduct
operations, respond to changing economic and market conditions, and achieve
organizational objectives is referred to as its
A. strategy.
B. mission statement.
C. strategic intent.
D. business model.
E. strategic vision.
A broad differentiation strategy works best in situations where
A. technological change is slow paced and new or improved products are infrequent.
B. buyer needs and uses of the product are very similar.
C. buyers incur low costs in switching their purchases to rival brands.
D. buyers have a low degree of bargaining power and purchase the product frequently.
E. technological change is fast paced and competition revolves around rapidly evolving
product features.
Which of the following is not a typical strategic objective or benefit that drives mergers
and acquisitions?
A. To gain quick access to new technologies or other resources and capabilities
B. To create a more cost-efficient operation out of the combined companies
C. To fundamentally alter a company’s trajectory and improve its business outlook
D. To expedite shifting from one strategy to another and gain better access to additional
financial capital
E. To extend a company’s business into new product categories and/or expand a
company’s geographic coverage
Ethical principles as they apply to business conduct and business decisions
A. deal chiefly with a company’s standards about what is right and wrong insofar as the
conduct of its business is concerned and about what behaviors are expected of company
personnel.
B. deal chiefly with the behaviors that a company’s board of directors expects of all
company personnel in both their conduct on the job and their conduct off the job.
C. involve the rules a company’s top management and board of directors make about
“what is right” and “what is wrong.”
D. are not materially different from ethical principles in general.
E. are generally less stringent than the ethical principles for society at large because it is
well understood that businesses should not be expected to operate any differently from
what the law requires of them.
Not all positions on a strategic group map are equally attractive because
A. entry and exit barriers are different for each strategic group.
B. key success factors are usually quite different for differently positioned industry
participants.
C. small strategic groups are always less profitable than large strategic groups.
D. across-group rivalry is strongest at the outer edges of the strategic group map.
E. industry driving forces and competitive pressures favor some companies or groups
and hurt others and the profit potential of different strategic groups varies because of
strengths and weaknesses in each strategic group’s position.
The big risk of employing an outsourcing strategy is
A. the increased time it takes to respond effectively to the fresh strategic moves of rival
firms.
B. hollowing out the competitive capabilities a company needs to be a master of its own
destiny.
C. impairing a company’s capability to be a leader in product innovation.
D. increased vulnerability to shifts in buyer demand.
E. increased costs of differentiating the company’s product/service from those of
competitors.
According to integrative social contracts theory, the ethical standards a company should
try to uphold
A. are governed by the school of ethical universalism.
B. are governed both by (1) a limited number of universal ethical principles that are
widely recognized as putting legitimate ethical boundaries on actions and behavior in
all situations and (2) the circumstances of local cultures, traditions, and shared values
that further prescribe what constitutes ethically permissible behavior and what does
notbut universal norms always take precedence over local ethical norms.
C. are governed by each country’s Code of Required Ethical Conduct, which sets forth
that each individual/group/business/organization has a ‘social contract” to observe the
ethical and moral standards that the country has adopted.
D. should be determined by the company’s board of directors.
E. should never be absolute but rather always provide some wiggle room according to
the circumstances of the situation.
The options for allocating a diversified company’s financial resources include
A. making acquisitions to establish positions in new businesses or to complement
existing businesses.
B. investing in ways to strengthen or grow existing businesses.
C. funding long-range R&D ventures aimed at opening market opportunities in new or
existing businesses.
D. paying off existing debt, increasing dividends, building cash reserves, or
repurchasing shares of the company’s stock.
E. All of these.
When looking at the entire industry, the main areas in a company’s overall value chain
where important differences between firm’s cost and value do not occur are in
A. a company’s own internal activities.
B. the suppliers industry value chain.
C. the forward channel portion of the industry chain.
D. restoring cost parity of deficiencies.
E. None of these.
Which of the following most accurately reflect a company’s resource strengths?
A. Its core competencies, competitive capabilities, and valuable intangible assets
B. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals
C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals
D. Whether it has more primary activities in its value chain than close rivals and a
better overall value chain than these rivals
E. Whether it has a more profitable business model than close rivals
A company achieves sustainable competitive advantage when
A. it has a profitable business model.
B. a sufficiently large number of buyers have a lasting preference for its products or
services as compared to the offerings of competitors.
C. it is able to maximize shareholder wealth.
D. it is consistently able to achieve both its strategic and financial objectives.
E. its strategy and its business model are well-matched and in sync.
Effectively communicating the strategic vision down the line to lower-level managers
and employees has the value of
A. not only explaining “where we are going and why” but, more importantly, also
inspiring and energizing company personnel to unite to get the company moving in the
intended direction.
B. helping company personnel understand why “making a profit” is so important.
C. making it easier for top executives to set strategic objectives.
D. helping lower-level managers and employees better understand the company’s
business model.
E. All of these.
The most popular strategy for entering new businesses and accomplishing
diversification is
A. forming a joint venture with another company to enter the target industry.
B. internal start-up.
C. acquisition of an existing business already in the chosen industry.
D. forming a strategic alliance with another company to enter the target industry.
E. None of these; strategic alliances and joint ventures are equally popular and rank
well ahead of acquisition and internal start-up in terms of frequency of use.
The pitfalls of a differentiation strategy include
A. trying to differentiate on the basis of attributes or features that are easily copied.
B. choosing to differentiate on the basis of attributes that buyers do not perceive as
valuable or worth paying for.
C. trying to charge too high a price premium for the differentiating features.
D. being timid and not striving to open up meaningful gaps in quality or service or
performance features relative to the products of rivals.
E. All of these.
A strategy of diversifying into unrelated businesses
A. is aimed at achieving good financial fit (whereas related diversification aims at good
strategic fit).
B. is the best way for a company to pass the attractiveness test in choosing which types
of businesses/industries to enter.
C. discounts the importance of strategic fit and instead focuses on building and
managing a group of businesses in attractive industries that can acquired on financial
terms that allow for acceptable returns on investment.
D. concentrates on diversifying into businesses where a company can leverage use of a
well-known brand name in ways that create added value for shareholders.
E. generally offers more competitive advantage potential than related diversification.
Business strategy concerns
A. strengthening the company’s market position and building competitive advantage.
B. ensuring consistency in strategic approach among the businesses of a diversified
company.
C. selecting a business model to use in pursuing business objectives.
D. selecting a set of financial and strategic objectives for a particular line of business.
E. choosing appropriate internal business processes for a specific line of business.
Which one of the following is not a part of the business case for why companies should
act in a socially responsible manner?
A. Every business has a moral duty to be a good corporate citizen.
B. Acting in a socially responsible manner reduces the risk of reputation-damaging
incidents.
C. Acting in a socially responsible manner is in the overall best interest of shareholders.
D. To the extent that a company’s socially responsible behavior wins applause from
consumers and fortifies its reputation, a company may win additional patronage.
E. Acting in a socially responsible manner can generate internal benefits (as concerns
employee recruiting, workforce retention, training, and improved worker productivity).
Which of the following statements about adaptive corporate cultures is false?
A. The hallmark of adaptive corporate cultures is willingness on the part of
organizational members to accept change and take on the challenge of introducing and
executing new strategies.
B. The standout cultural traits are a “can-do” spirit, pride in doing things right,
no-excuses accountability, and a pervasive results-oriented work climate where people
go the extra mile to meet or beat stretch objectives.
C. Change is willingly embraced by management and nonmanagerial employees.
D. Adaptive cultures are exceptionally well suited to companies with fast-changing
strategies and market environments.
E. For an adaptive culture to remain intact over time, top management must orchestrate
organizational changes in a manner that (1) does not compromise core values and
long-standing business principles and (2) tries to satisfy all their legitimate interests
simultaneously.
The competitive attraction of entering into strategic alliances and collaborative
partnerships is
A. in allowing companies to bundle resources and competencies that are more valuable
in a joint effort than when kept separate.
B. reducing costs, transferring skills, and expanding the product line.
C. enabling greater vertical integration.
D. in allowing the partners to transfer intellectual property rights and proprietary
information.
E. in helping the partners to increase their respective market shares.
The hallmarks of a high-performance corporate culture include
A. frequently revised and updated values and ethics statements, a deep commitment to
employee training, and unusually attractive fringe benefit packages for company
personnel.
B. a “can-do” spirit, pride in doing things right, no-excuses accountability, and a
pervasive results-oriented work climate where people go the extra mile to meet or beat
stretch objectives.
C. a balanced scorecard approach to measuring performance, strong emphasis on
teamwork, strict enforcement of company policies and procedures, and incentive
compensation for all employees.
D. a deep commitment to pioneering new best practices, a preference for being a fast
follower as opposed to a first mover or late mover (because the risks are more
acceptable), and across-the-board bonuses for all personnel when the company meets or
beats stretch objectives.
E. a deep commitment to top-notch quality and superior customer service, dedicated use
of TQM and/or Six Sigma quality control programs, and the payment of big
performance bonuses and stock options.
The one factor that is not relevant for company managers to worry about when their
company has many unrelated firms, especially when they are very diverse is to
A. stay abreast of what’s happening in each industry and subsidiary.
B. pick business-unit heads having requisite combination of managerial skills and
know-how to motivate people.
C. understand the true value of strategic investment proposals by business-unit
managers.
D. know what to do if a business unit stumbles.
E. rely on the skills and expertise of business-level managers to build competitive
advantage.
A joint venture is an attractive way for a company to enter a new industry when
A. the pool of attractive acquisition candidates in the target industry is relatively small.
B. it needs better access to economies of scope in order to be cost-competitive.
C. the industry is growing slowly and adding too much capacity too soon could create
oversupply conditions.
D. the firm has no prior experience with diversification and the industry is on the verge
of explosive growth.
E. the opportunity is too risky or complex for a company to pursue alone or when a
company lacks some important resources or competencies and needs a partner to supply
them.
A company that succeeds in differentiating its product offering from those of its rivals
can usually
A. avoid having to compete on the basis of simply a low price.
B. charge a price premium for its product (because buyers see its differentiating features
as worth something extra).
C. increase unit sales (because of the attraction of its differentiating product attributes).
D. gain buyer loyalty to its brand (because some customers will have a strong
preference for the company’s differentiating features).
E. All of these.
What circumstances call for use of a multidomestic strategy for competing in
international markets?
Answer:
Answer may vary
A global strategy embraces the theme “think global, act global” whereas a
multidomestic strategy relies more on a “think global, act local” mentality. True or
false? Explain.
Answer:
Answer may vary
What is meant by empowerment of employees? How does it differ from delegation of
authority? In what ways can empowerment of employees aid the cause of good strategy
execution?
Answer:
Answer may vary
What benefits might management expect to gain from benchmarking the “best
practices” of those in other industries?
Answer:
Answer may vary
Explain what is meant by ‘sustainable business practices” and using that explanation,
provide three examples of companies that pursue sustainability strategies.
Answer:
Answer may vary
Identify and briefly explain any three factors that lead to weak bargaining power on the
part of buyers.
Answer:
Answer may vary
Describe some ways that a company can improve (1) its supplier-related value chain
activities and (2) activities of its forward channel allies.
Answer:
Answer may vary
Identify five indicators of whether a company’s present strategy is working well.
Answer:
Answer may vary
Under what circumstances might an already diversified company chose to pursue
corporate restructuring?
Answer:
Answer may vary
Why is a company’s strategy partly proactive and partly reactive?
Answer:
Answer may vary
Draw a typical company value chain and briefly explain the difference between primary
activities and support activities.
Answer:
Answer may vary
Briefly identify three types of unhealthy corporate cultures.
Answer:
Answer may vary
What are the possible benefits and risks of using strategic alliances to try to enhance a
company’s ability to compete in foreign markets?
Answer:
Answer may vary
What are the chief causes of unethical strategies and unethical business behavior?
Answer:
Answer may vary
Under what circumstances is it advantageous for a company competing in foreign
markets to disperse certain internal processes across many countries?
Answer:
Answer may vary
Identify five factors that tend to intensify competitive rivalry among an industry’s
member firms.
Answer:
Answer may vary
What are the distinctive features of a focused differentiation strategy? How is it
different from a broad differentiation strategy?
Answer:
Answer may vary