The options for internally performed value chain activities and improve a company’s
cost competitiveness include:
A. investing in productivity-enhancing, cost-saving technological improvements.
B. outsourcing internally performed activities to those able to perform the activities at a
lower cost.
C. implementing the use of best practices, particularly for high-cost activities.
D. eliminating some cost-producing activities from the value chain, especially low
value-added activities.
E. All of these.
With an unrelated diversification strategy, the types of companies that make particularly
attractive acquisition targets are
A. financially distressed companies with good turnaround potential, undervalued
companies that can be acquired at a bargain price, and companies that have bright
growth prospects but are short on investment capital.
B. companies offering the biggest potential to reduce labor costs.
C. cash cow businesses with excellent financial fit.
D. companies that are market leaders in their respective industries.
E. companies that are employing the same basic type of competitive strategy as the
parent corporation’s existing businesses.
The two biggest drawbacks or disadvantages of unrelated diversification are
A. underemphasizing the importance of resource fit and the strong likelihood of
diversifying into businesses that top management does not know all that much about.
B. insufficient cash flows to finance so many different lines of business and a lack of
uniformity among the strategies of the businesses it has diversified into.
C. volatile sales and profits and making the mistake of diversifying into too many cash
cow businesses.
D. the difficulties of competently managing a set of fundamentally different businesses
and having a very limited competitive advantage potential that cross-business strategic
fit provides.
E. overinvesting in the achievement of economies of scope and the difficulties of
achieving a good mix of cash cow and cash hog businesses.
Which one of the following is not something that can be learned from doing a
competitive strength assessment?
A. The factors on which a company is competitively strongest and weakest vis-à-vis
key rivals
B. Whether a company should correct its weaknesses by adopting best practices and
revamping the makeup of its value chain
C. Which of the rated companies is competitively strongest and what size competitive
advantage it enjoys
D. Whether a company has a net competitive advantage or a net competitive
disadvantage relative to key rivals (with the size of the advantage/disadvantage being
indicated by the differences among the companies’ competitive strength scores)
E. Which rival company is competitively weakest and the areas where it is most
vulnerable to competitive attack
Companies committed to environmental sustainability
A. consider the commitment to shareholders as a “first-order” priority, commitment to
employees as a ‘second-order” priority, and commitment to the environmental
protection as a “third-order” commitment.
B. consider the commitment to the environment as a “first-order” priority, commitment
to employees as a ‘second-order” priority, and commitment to shareholders as a
“third-order” commitment.
C. consider the commitment to the environment as a “first-order” priority, commitment
to shareholders as a ‘second-order” priority, and commitment to shareholders as a
“third-order” commitment.
D. undertake initiatives directed at improving the company’s triple bottom line (TBL),
which places importance on economic, environmental, and social metrics.
E. believe that it is important to convince consumers to change buying habits that first
consider meeting the consumer’s needs to first considering whether the product is
environmentally friendly.
When trying to change a problem culture, management should undertake such steps as
A. selecting a team of key employees to lead the culture change effort and design a plan
for cultural change.
B. identifying which aspects of the present culture are supportive of good strategy
execution and which ones are not.
C. drawing up an action plan to change the present culture and then persuading
company personnel why this plan of action is good and will be successful.
D. conducting an employee survey to determine the organization’s cultural norms and
what company personnel like and dislike about the current culture.
E. employing a consultant with expertise in culture change and following his/her advice
on how to proceed.
While there are many routes to competitive advantage, they all involve
A. building a brand name image that buyers trust.
B. delivering superior value to buyers in ways rivals cannot readily match.
C. achieving lower costs than rivals and becoming the industry’s sales and market share
leader.
D. finding effective and efficient ways to strengthen the company’s competitive assets
and to reduce its competitive liabilities.
E. getting in the best strategic group and dominating it.
The big risk of employing an outsourcing strategy is
A. causing the company to become partially integrated instead of being fully integrated.
B. hollowing out a firm’s own capabilities and losing touch with activities and expertise
that contribute fundamentally to the firm’s competitiveness and market success.
C. hurting a company’s R&D capability.
D. putting the company in the position of being a late mover instead of an early mover.
E. increasing the firm’s risk exposure to both supply chain management failures and
shifts in the composition of the industry value chain.
Moves to improve a diversified company’s overall performance include
A. broadening the company’s business scope by making new acquisitions in new
industries.
B. divesting weak-performing businesses and retrenching to a narrower base of
business operations.
C. restructuring the company’s business lineup and putting a whole new face on the
company’s business makeup.
D. sticking closely to the existing business lineup and pursuing the growth opportunities
presented by these businesses.
E. All of these.
Which one of the following is not part of conducting a SWOT analysis?
A. Identifying a company’s resource strengths and competitive capabilities
B. Benchmarking the company’s resource strengths and competitive capabilities against
industry key success factors
C. Identifying a company’s market opportunities
D. Drawing conclusions about the company’s overall business situation
E. Matching the company’s strategy to its resource strengths and market opportunities,
correcting problematic weaknesses, and defending against worrisome threats
In competing in foreign markets, companies find it advantageous to concentrate their
activities in a limited number of locations when
A. there are significant scale economies in performing an activity.
B. the costs of manufacturing or other activities are significantly lower in some
geographic locations than in others.
C. there is a steep learning or experience curve associated with performing an activity
in a single location (thus making it economical to serve the whole world market from
just one or maybe a few locations).
D. certain locations have superior resources, allow better coordination of related
activities, or offer other valuable advantages.
E. All of these.
A diversified company has a good financial fit when the excess cash generated by its
A. cash cow businesses is sufficient to fund the needs of its cash hog businesses.
B. cash cow businesses is sufficient to fund its needs to turn into potential young stars.
C. self-supporting stars use their cash flow to fund cash cows.
D. cash hog businesses is sufficient to fund the needs of its cash cow businesses.
E. potential young stars is sufficient to help stars.
The competitive strategy of a firm pursuing a “think global, act local” approach to
strategy making
A. entails little or no strategy coordination across countries.
B. usually involves cross-subsidizing the prices in those markets where there are
significant country-to-country differences in the product attributes that customers are
most interested in.
C. involves selling a mostly standardized product worldwide, but varying a company’s
use of distribution channels and marketing approaches to accommodate local market
conditions.
D. is essentially the same in all country markets where it competes but it may
nonetheless give local managers room to make minor variations where necessary to
better satisfy local buyers and to better match local market conditions.
E. involves having strongly differentiated product versions for different countries and
selling them under distinctly different brand names (one for each country or group of
neighboring countries) so that there will be no doubt in customers’ minds that the
product is more local than global.
A focused low-cost strategy seeks to achieve competitive advantage by
A. outmatching competitors in offering niche members an absolute rock-bottom price.
B. delivering more value for the money than other competitors.
C. performing the primary value chain activities at a lower cost per unit than can the
industry’s low-cost leaders.
D. dominating more market niches in the industry via a lower cost and a lower price
than any other rival.
E. serving buyers in the target market niche at a lower cost and lower price than rivals.
In which of the following circumstances are competitive pressures associated with the
bargaining power of buyers not relatively strong?
A. When buyer demand is growing rapidly
B. When buyers are relatively well informed about sellers’ products, prices, and costs
C. When buyers pose a major threat to integrate backward into the product market of
sellers
D. When sellers’ products are weakly differentiated, making it easy for buyers to switch
to competing brands
E. When buyers have considerable discretion over whether and when they purchase the
product
For decentralized decision making to be successful it is predicated on a belief that
A. top executives should establish a collegial, collaborative culture where decisions are
made by general consensus on what to do and when.
B. strict enforcement of detailed procedures backed by rigorous managerial oversight is
necessary because company personnel cannot be counted on to act wisely or keep costs
to a bare-bones level.
C. decision-making authority should be pushed down to the lowest organizational level
capable of making timely, informed, competent decisions.
D. most company personnel have neither the time nor the inclination to direct and
properly control the work they are performing and that they lack the knowledge and
judgment to make wise decisions about how best to do their work.
E. lower-level managers and employees should go up the ladder of command for
approval on most all strategic and operating issues of much importance.
The major avenues for achieving a cost advantage over rivals include
A. eliminating or curbing nonessential cost-producing activities and performing
essential value chain activities more cost-effectively that rivals.
B. having a management team that accepts below-market salaries.
C. being a first mover in adopting the latest state-of-the-art technologies, especially
those relating to low-cost manufacture.
D. outsourcing high-cost activities to offshore vendors.
E. paying lower wages to hourly workers than what rivals are paying workers.
Which one of the following is not one of the major drivers of unethical managerial
behavior?
A. Intense competitive pressures
B. Overzealous pursuit of personal gain, wealth, and other selfish interests
C. A company culture that puts the profitability and good business performance ahead
of ethical behavior
D. Heavy pressures on company managers to meet or beat earnings targets
E. The attitude among management that “the business of business is business, not
ethics”
The advantages of manufacturing goods in a particular country and exporting them to
foreign markets
A. are largely unaffected by fluctuating exchange rates.
B. are greatest when local distributors and dealers in that country can be convinced not
to carry products that are made outside the country’s borders.
C. can be wiped out when that country’s currency grows weaker relative to the
currencies of the countries where the output is being sold.
D. are weakened when that country’s currency grows stronger relative to the currencies
of the countries where the output is being sold.
E. are seriously compromised by the potential for local government officials to raise
tariffs on the imports of foreign-made goods into their country.
Which one of the following is not a fundamental part of a company’s culture?
A. The work practices and behaviors that define “how we do things around here”
B. The “chemistry” that permeates its work environment
C. The company’s core values and business principles
D. The company’s strategic vision, strategic intent, and strategy
E. The style of operating and ingrained behaviors and attitudes
Which of the following is not a good example of a substitute product that triggers
stronger competitive pressures?
A. Artificial sweetener as a substitute for sugar
B. Wireless phone service as a substitute for a landline telephone
C. Coca-Cola as a substitute for Pepsi
D. Digital cameras as substitutes for film cameras
E. Video-on-demand services as a substitute for renting movies from a movie rental
store
The advantages of using a franchising strategy to pursue opportunities in foreign
markets include
A. having franchisees bear most of the costs and risks of establishing foreign locations
and requiring the franchisor to expend only the resources to recruit, train, and support
foreign franchisees.
B. being particularly well suited to the global expansion efforts of companies with
multicountry strategies.
C. helping build multiple profit sanctuaries.
D. being well suited to companies that employ cross-market subsidization.
E. being well suited to the global expansion efforts of manufacturers.
Which of the following is a potential defensive move to ward off challenger firms?
A. Granting volume discounts or better financing terms to dealers/distributors and
providing discount coupons to buyers to help discourage them from experimenting with
other suppliers/brands
B. Signaling challengers that retaliation is likely in the event they launch an attack
C. Making an occasional strong counter-response to the moves of weak competitors to
enhance the firm’s image as a tough defender
D. Maintaining a war chest of cash and marketable securities
E. All of these
A hit-and-run or guerrilla warfare type offensive strategies involve
A. random offensive attacks used by a market leader to steal customers away from
unsuspecting smaller rivals.
B. undertaking surprise moves to secure an advantageous position in a fast-growing and
profitable market segment; usually the guerrilla signals rivals that it will use deep price
cuts to defend its newly won position.
C. work best if the guerrilla is the industry’s low-cost leader.
D. pitting a small company’s own competitive strengths head-on against the strengths of
much larger rivals.
E. unexpected attacks (usually by a small competitor) to grab sales and market share
from complacent or distracted rivals.
The major drivers of unethical business behavior include
A. greed, pervasive managerial immorality, and a general lack of scruples on the part of
top executives regarding how customers and suppliers should be treated.
B. corporate cultures that put the bottom line ahead of ethics, heavy pressures on
company managers to meet or beat performance targets, and overzealous or obsessive
pursuit of wealth accumulation, power, status, and other selfish interests.
C. widespread managerial belief in the ethical relativism school of thinking.
D. an aversion to ethical correctness on the part of top executives and a belief that
unethical behavior is unimportant and probably won’t be discovered.
E. intense competitive pressures.
The ability of a multinational or global competitor to shift production from country to
country to take advantage of exchange rate fluctuations, energy costs, wage rates, or
changes in tariffs is an example of
A. a profit sanctuary.
B. cross-border coordination.
C. an international strategic alliance.
D. cross-market subsidization.
E. cross-market differences in cultural, demographic, and market conditions.
Dispersing the performance of value chain activities to many different countries rather
than concentrating them in a few country locations tends to be advantageous
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 (such
risks are greater when activities are concentrated in a single location) or (2) supply
interruptions (due to strikes, mechanical failures, or transportation delays) or (3)
adverse political developments.
E. All of these.
The advantages of manufacturing goods in a particular country
A. are significantly impacted by where its production, distribution, and customer
service activities are located.
B. can be affected by differences in operating costs and profitability due to wage rate
and worker productivity.
C. can be affected by differences in energy costs, environmental regulations, tax rates,
and inflation rates.
D. can be influenced by cheaper access to essential natural resources.
E. All of these.
Two drawbacks of a “think local, act local” multidomestic strategy are
A. that it is especially vulnerable to fluctuating exchange rates and that it can usually be
defeated by companies employing cross-market subsidization tactics.
B. excessive vulnerability to fluctuating exchange rates and having to craft a separate
strategy for each country market in which the company competes.
C. hindering a company’s transfer of competencies and resources across country
boundaries (since somewhat different competencies and capabilities are likely to be
employed in different host countries) and not promoting the building of a single, unified
competitive advantage in all country markets where a company competes.
D. greater exposure to both increases in tariffs and restrictive trade barriers and added
difficulty in accommodating the diverse trade restrictions and regulatory requirements
of host governments.
E. not being able to export products manufactured in one country to markets in other
countries and being largely unsuitable for competing in the markets of emerging
countries.
Which one of the following is not a reason industry members are often motivated to
enter into collaborative partnerships with key suppliers?
A. To reduce the costs of switching suppliers
B. To speed the availability of next-generation components
C. To enhance the quality of parts and components being supplied and reduce defect
rates
D. To squeeze out important cost savings for both themselves and their suppliers
E. To reduce inventory and logistics costs
Which one of the following is not a factor that affects the strength of supplier
bargaining power?
A. Whether needed inputs are in short or ample supply
B. Whether industry members are a strong threat to integrate backward into the business
of suppliers
C. Whether industry members are struggling to make good profits because of
slow-growing market demand
D. Whether the costs of industry members to switch their purchases to alternative
suppliers or substitutes are high or low
E. Whether the item being supplied is a commodity that is readily available from many
suppliers
An important consideration in designing a strategy-supportive motivation and reward
system is to
A. link the payment of all monetary rewards to the company’s profitability.
B. employ incentives that will help motivate employees to work hard at performing
their assigned duties and activities.
C. choose those types of rewards and incentives that focus employees’ attention on
“what to do.”
D. make across-the-board wage and salary increases the cornerstone of monetary
rewards.
E. make both monetary and nonmonetary rewards integral parts of the reward system.
Identify and explain the three common social responsibility programs.
Answer:
Answer may vary
Identify the six questions that form the framework of evaluating a company’s resources
and competitive position.
Answer:
Answer may vary
Explain the difference between ethical universalism and integrative social contracts
theory. Which school of thought do you think is most valid? Explain the reasons for
your answer.
Answer:
Answer may vary
In what market and competitive circumstances are focused low-cost and focused
differentiation strategies attractive?
Answer:
Answer may vary
What are the three criteria for determining whether a company has a winning strategy?
Answer:
Answer may vary
What is the value of striving for continuous improvement in internal processes? How
does TQM differ from business process reengineering?
Answer:
Answer may vary
What is meant by the term ‘strategic fit”? What are the advantages of pursuing strategic
fit in choosing which industries to diversify into?
Answer:
Answer may vary
Identify five objectives that a merger and acquisition strategy can achieve.
Answer:
Answer may vary
Briefly discuss when it makes good strategic sense for a company to consider
diversification.
Answer:
Answer may vary
What are the most common reasons companies enter into strategic alliances and
collaborative partnerships?
Answer:
Answer may vary
Identify five factors that tend to weaken the intensity of competitive rivalry among an
industry’s member firms.
Answer:
Answer may vary
Why does a company’s strategy tend to evolve over time?
Answer:
Answer may vary
What constitutes effective managerial leadership in achieving superior strategy
execution?
Answer:
Answer may vary
Explain why an organization needs a strategic vision. What purpose does a strategic
vision serve?
Answer:
Answer may vary
What is the essence of the theory of corporate social responsibility? How does the
theory of corporate social responsibility differ from concept of corporate citizenship?
Answer:
Answer may vary
What is a blue ocean strategy and what is its appeal?
Answer:
Answer may vary
What is benchmarking and why is it a strategically important analytical tool?
Answer:
Answer may vary
Identify at least five common driving forces and briefly explain how each one can
produce important changes in industry and competitive conditions.
Answer:
Answer may vary