Which of the following is not a common trait of an unhealthy company culture?
A. A politicized internal environment
B. Hostility to change and a wariness of people who champion new ways of doing
things
C. An aversion to looking outside the company for best practices, new managerial
approaches, and innovative ideas
D. An aversion to incentive compensation, failure to recruit the best and brightest
employees, subpar support for employee training, overemphasis on working in teams,
and low ethical standards
E. A disregard for high ethical standards and an overzealous pursuit of wealth and status
on the part of key executives
Being first to initiate a strategic move can have a high payoff in all but which one of the
following instances?
A. When pioneering helps build a firm’s image and reputation with buyers
B. When first-time customers remain strongly loyal to pioneering firms in making
repeat purchases
C. When early commitments to new technologies, new-style components, new or
emerging distribution channels, and so on can produce an absolute cost advantage over
rivals
D. When moving first can constitute a preemptive strike, making imitation extra hard or
unlikely
E. When pioneering leadership is more costly than followership
Industry conditions change
A. because of such powerful driving forces as swings in buyer demand, changing
interest rates, ups and downs in the economy, and higher/lower entry barriers.
B. because of newly emerging industry threats and industry opportunities that alter the
composition of the industry’s strategic groups.
C. because new industry key success factors emerge.
D. because forces create pressures or incentives for industry participants (competitors,
customers, suppliers) to alter their actions in important ways.
E. chiefly because of changes in the barriers to entry and the degree of competition
from substitute products.
Perceived value and signaling value are often an important part of a successful
differentiation strategy when
A. the nature of differentiation is hard to quantify.
B. buyers are making a first-time purchase.
C. repurchase of the product or service is infrequent.
D. buyers are unsophisticated and unfamiliar with the capabilities of competing brands.
E. All of these.
Which of the following factors should a company consider when determining if an
industry offers good prospects for attractive profits?
A. The industry’s growth potential, whether competition appears destined to become
stronger or weaker, how the industry’s driving forces might affect overall industry
profitability, the company’s competitive position relative to rivals, and the company’s
proficiency in performing industry key success factors
B. An assessment of which firms in the industry have the best and worst competitive
strategies, whether the number of strategic groups in the industry is increasing or
decreasing, and whether economies of scale and experience curve effects are a key
success factor
C. Whether there are more than five key success factors and more than five barriers to
entry
D. Constructing a strategic group map and assessing the attractiveness of the
competitive position of each strategic group
E. Whether the market leaders enjoy competitive advantages and how hard it is to
develop a strongly differentiated product
A “think global, act global” approach to crafting a global strategy involves
A. pursuing the same basic competitive strategy theme (low-cost, differentiation,
best-cost, focused) in all countries where the firm does business.
B. selling much the same products under the same brand names everywhere and
expanding into most, if not all, nations where there is significant buyer demand.
C. integrating and coordinating the company’s strategic moves worldwide.
D. utilizing the same competitive capabilities, distribution channels, and marketing
approaches worldwide.
Which of the following questions ought to be used to distinguish a winning strategy
from a so-so or flawed strategy?
A. Does the strategy contain a sufficient number of emergent/reactive elements?
B. Is the company putting too little emphasis on growth and profitability and too much
emphasis on behaving in an ethical and socially responsible manner?
C. Is the strategy resulting in the development of additional competitive capabilities?
D. Is the strategy well-matched to the company’s situation, helping the company
achieve a sustainable competitive advantage, and resulting in better company
performance?
E. Does the strategy strike a good balance between maximizing shareholder wealth and
maximizing customer satisfaction?
To create value for shareholders via diversification, a company must
A. get into new businesses that are profitable.
B. diversify into industries that are growing rapidly.
C. spread its business risk across various industries by only acquiring firms that are
strong competitors in their respective industries.
D. diversify into businesses that can perform better under a single corporate umbrella
than they could perform operating as independent, stand-alone businesses.
E. diversify into businesses that have either key success factors or value chains that are
similar to its present businesses.
The rivalry among competing firms tends to be more intense when
A. demand for the product is growing slowly, one or maybe several industry members
become dissatisfied with their market position, buyers have low switching costs, and
when strong companies outside the industry acquire weak firms in the industry and
launch aggressive moves to build market share.
B. the products/services of rival sellers are strongly differentiated and buyer demand is
strong.
C. rivals are relatively content with their market position.
D. there are so many industry rivals that the impact of any one company’s actions is
spread thinly across all industry members.
E. there are fewer firms in the industry that have unequal market shares.
Mergers and acquisitions
A. are nearly always successful in achieving their desired purpose (unlike strategic
alliances and collaborative partnerships).
B. all too frequently do not produce the hoped-for outcomes.
C. are generally more effective in securing a new competitive advantage than in
protecting an existing competitive advantage.
D. are highly risky because of the financial drain that comes from using the company’s
cash resources to pay for the costs of the merger or acquisition.
E. are usually more successful in helping a company’s shift from one competitive
strategy to another than in improving a company’s competitive strength and resource
capabilities.
Which one of the following increases the competitive pressures associated with the
threat of entry?
A. When incumbent firms are likely to launch competitive initiatives to strongly contest
the entry of newcomers
B. When buyers have a high degree of loyalty to the brands and product offerings of
existing industry members
C. When buyer demand for the product is growing fairly slowly
D. When few outsiders have the expertise and resources to hurdle whatever entry
barriers exist
E. When newcomers can expect to earn attractive profits
Management is obligated to monitor new external developments, evaluate the
company’s progress, and make corrective adjustments in order to
A. determine whether the company has a balanced scorecard for judging its
performance.
B. decide whether to continue or change the company’s strategic vision, objectives,
strategy and/or strategy execution methods.
C. determine what changes should be made to its customer value proposition.
D. determine whether the company’s business model is well matched to changing
market and competitive circumstances.
E. stay on track in achieving the company’s mission and strategic vision.
Economies of scope
A. are cost reductions that flow from cost-saving strategic fits along the value chains of
related businesses in the business lineup of a multibusiness corporation.
B. arise only from strategic fit relationships in the production portions of the value
chains of sister businesses.
C. are more associated with unrelated diversification than related diversification.
D. are present whenever diversification satisfies the attractiveness test and the
cost-of-entry test.
E. arise mainly from strategic fit relationships in the distribution portions of the value
chains of unrelated businesses.
Identify and explain the meaning and strategic significance of each of the following
terms:
a) Related diversification
b) Strategic fit
c) Economies of scope
d) Retrenching
e) Unrelated diversification
Answer:
Answer may vary
The most powerful of the five competitive forces is usually
A. the competitive pressures that stem from the ready availability of attractively priced
substitute products.
B. the competitive pressures associated with rivalry among competing sellers in the
industry for buyer patronage.
C. the benefits that emerge from close collaboration with suppliers and the competitive
pressures that such collaboration creates.
D. the competitive pressures associated with the potential entry of new competitors.
E. the bargaining power and leverage that large customers are able to exercise.
Which of the following is not generally a “driving force” capable of producing
fundamental changes in industry and competitive conditions?
A. Changes in the long-term industry growth rate
B. Increasing globalization of the industry
C. Product innovation and technological change
D. Ups and downs in the economy and in interest rates
E. New government regulations or significant changes in government policy toward the
industry
A capability of the firm is not considered to be
A. the capacity of a firm to competently perform some internal activity.
B. referred to as a competence.
C. developed and enabled through the deployment of a company’s resources or some
combination of its resources.
D. a competitively valuable resource.
E. related to the level of resources available.
Diversification ought to be considered when
A. a company’s profits are being squeezed and it needs to increase its net profit margins
and return on investment.
B. a company lacks sustainable competitive advantage in its present business.
C. a company begins to encounter diminishing growth prospects in its mainstay
business.
D. a company has run out of ways to achieve a distinctive competence in its present
business.
E. a company is under the gun to create a more attractive and cost-efficient value chain.
Which of the following is not an action that a company can take to do a better job than
rivals of performing value chain activities more cost-effectively?
A. Striving to capture all available economies of scale
B. Trying to operate facilities at full capacity
C. Taking full advantage of experience and learning curve effects
D. Improving supply chain efficiency
E. Redesigning products to eliminate features that might have market appeal, but
excessively increase production costs
Establishing a subsidiary in a foreign market to take advantage of all essential value
chain activities requires a strategy that
A. establishes a wholly owned subsidiary.
B. acquires a foreign company.
C. supports direct control over all aspects of operating in a foreign market.
D. establishes a start-up operation.
E. All of these.
Total quality management (TQM) emphasizes all but which one of the following?
A. 100% accuracy in performing tasks
B. Continuous improvement in all phases of operations
C. Widespread adoption of industry standard operating practices
D. Benchmarking and total customer satisfaction
E. Empowerment of employees and team-based work design
A company needs performance targets or objectives
A. for its operations as a whole and also for each of its separate businesses, product
lines, functional departments, and individual work units.
B. because they provide parameters for the company’s strategy map.
C. in order to unify the company’s strategic vision and business model.
D. to help guide managers in deciding what strategic path to take in the event that a
strategic inflection point is encountered.
E. in order to prevent lower-level organizational units from establishing their own
objectives.
A competitive strategy to be the low-cost provider in an industry works well when
A. price competition among rival sellers is especially vigorous.
B. commodity-based product prevails and minimal differentiation exists.
C. buyers incur low costs in switching their purchases from one seller/brand to another.
D. industry newcomers use low introductory prices to attract buyers and build a
customer base.
Successfully leading the effort to instill a spirit of high achievement into a company’s
culture and put constructive pressure on the organization to achieve good results
A. entails such actions as treating employees with dignity and respect, celebrating
individual, group, and company successes, and setting stretch objectives.
B. hinges on the extent to which top management emphasizes a positive rather than a
negative reward system.
C. requires that top executives make operating excellence the company’s only core
value.
D. calls for top executives to stress the adoption of best practices, push for continuous
product innovation, and provide employees with a stream of suggestions for improving
company operations.
E. hinges on the degree to which lower-level managers and supervisors are good
practitioners of MBWA.
Companies racing for global market leadership
A. generally have to consider establishing competitive positions in the markets of
emerging countries.
B. are well advised to avoid all the risks and problems of competing in emerging
country markets.
C. seldom have the resource capabilities it takes to be effective in competing in
emerging country markets and usually are at a strong competitive disadvantage to the
domestic market leaders.
D. can usually be expected to earn sizable profits quickly in emerging country markets.
E. usually encounter very low barriers in entering the markets of emerging countries.
For backward vertical integration into the business of suppliers to be a viable and
profitable strategy, a company must
A. have considerable expertise in supply chain management, transportation logistics,
and inventory control techniques.
B. be able to achieve the same scale economies as outside suppliers and also match or
beat suppliers’ production efficiency with no drop in quality.
C. have large state-of-the-art production facilities so that it can fully capture all
economies of scale in producing parts and components.
D. have core competences in R&D, product design and engineering, and distribution
logistics so that it will have adequate capabilities to produce and distribute parts and
components in a timely and cost-effective manner.
E. have a distinctive competence in production process technology and at least a core
competence in manufacturing R&D.
Which one of the following falsely characterizes a centralized organizational structure?
A. Top executives should retain authority over most strategic and operating decisions
and keep a tight rein on business-unit heads, department heads, and the managers of key
operating units.
B. Strict enforcement of detailed procedures backed by rigorous managerial oversight is
the most reliable way to keep the daily execution of strategy on track.
C. Tight control by the manager in charge makes it easy to fix accountability when
things do not go well.
D. Most company personnel have neither the time nor the inclination to direct and
properly control they work they are performing, and they lack the knowledge and
judgment to make wise decisions about how best to do their work.
E. A company that draws on the combined intellectual capital of its people can
outperform a company that relies on command and control.
A core competence
A. makes a contribution to a company’s success in the marketplace.
B. is typically knowledge-based, residing in a company’s intellectual capital and not in
its tangible physical assets on the balance sheet.
C. is often grounded in cross-department combinations of knowledge and expertise.
D. is a competitively relevant activity that a firm performs especially well in
comparison to the other activities it performs.
E. All of these.
Competing in the markets of foreign countries generally does not involve which of the
following?
A. Country-to-country differences in consumer buying habits and buyer tastes and
preferences
B. Country-to-country variations in host-government restrictions and requirements and
fluctuating exchange rates
C. Whether to customize the company’s offerings in each different country market or
whether to offer a mostly standardized product worldwide
D. In which countries to locate company operations for maximum locational advantage
(given country-to-country variations in wages rates, worker productivity, energy costs,
tax rates, and the like)
E. Crafting a multicountry strategy that works just as well in one country as in another
and that also has the appeal of turning the world market into one big profit sanctuary
If management is to match a company’s organization structure to its strategy in an
effective way, then it is essential
A. that company personnel be empowered to make both strategic decisions and
operating decisions.
B. for strategy-critical value-chain activities to be the main building blocks on the
organization chart.
C. that value chain activities be deliberately organized so as to produce maximum
strategic fit.
D. to define the jobs of company personnel in terms of the functions to be performed
rather than in terms of the results to be achieved.
E. for the company to be organized around cross-functional teams rather than around
functional specialties and functional departments.
Operating systems that support company strategies and value-creating internal
processes include all of the following except
A. customer database systems.
B. information systems to track supplier/partner/collaborative ally data.
C. human resources systems that maintain employee data.
D. systems to record and report financial performance data.
E. data management systems for undertaking benchmarking, TQM, and Six Sigma
quality control.
What are the distinctive features of adaptive corporate cultures?
Answer:
Answer may vary
Explain the difference between a company’s business model and a company’s strategy.
Answer:
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Identify types of support systems that a company can install to support the execution of
its strategy.
Answer:
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Explain the difference between a cash cow business and a cash hog business.
Answer:
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Identify two benefits of constructing a strategic group map.
Answer:
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What is meant by the term “corporate culture”? Why is corporate culture an important
factor in implementing and executing strategy?
Answer:
Answer may vary
Briefly discuss why a domestic company desirous of entering foreign markets might see
attractive advantages in forming strategic alliances with foreign companies.
Answer:
Answer may vary
Identify at least four guidelines for creating incentive compensation systems that link
employee behavior to organizational objectives.
Answer:
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Identify and briefly explain five types of offensive strategies.
Answer:
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Should a company’s strategy be tightly connected to its quest for competitive
advantage? Why or why not? What difference does it makes whether a company has a
sustainable competitive advantage or not?
Answer:
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What are the distinctive features of a broad differentiation strategy? Under what
circumstances is a broad differentiation strategy appealing?
Answer:
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Identify and briefly discuss each of the three options for entering new businesses.
Which one is the most popular in the sense of being used most frequently?
Answer:
Answer may vary
A well-conceived strategic vision helps prepare a company for the future. True or false?
Explain and justify your answer.
Answer:
Answer may vary
Assume a firm is not cost competitive with rivals because of higher supplier-related
costs. Identify three strategic moves that it can make to restore cost parity.
Answer:
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Identify three actions that are key elements of leading the strategy execution process.
Answer:
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Identify and briefly describe the six steps involved in evaluating a diversified
company’s business lineup and diversification strategy.
Answer:
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Explain the key tenets of the concept of environmental sustainability. How does the
concept impact strategic initiatives involving a company’s shareholders, its employees,
and the environment?
Answer:
Answer may vary
Explain what circumstances make it necessary for a multinational company to
concentrate internal processes in a few locations.
Answer:
Answer may vary