In adaptive corporate cultures:
A. the prevailing view is that the best way to look out for the interests of employees is
to change core values and cultural norms in whatever ways are needed to fit the
changing requirements of an evolving strategy.
B. company personnel are amenable to changing policies and operating practices as
long as the core elements of the company’s strategic vision and strategy remain intact.
C. members are willing to embrace a proactive approach to trying new ideas, altering
operating practices, and changing pieces of the strategy provided it doesn’t imperil their
job security, entail cuts in compensation, or require different work practices.
D. there’s a spirit of doing what’s necessary to ensure long-term organizational success
provided that core values and business principles are not compromised and provided
top management undertakes the changes in a manner that exhibits genuine concern for
the legitimate interests of stakeholders.
E. there is little need for policies and procedures because group members willingly
accept experimentation and innovation.
Answer:
Cost-efficient management of a company’s overall value chain activities requires that
management:
A. ferret out cost-saving opportunities in every part of the value chain.
B. undertake an operations functionality redesign.
C. establish sales productivity and operating practices guidelines.
D. re-create rivals’ assembly plant structuration savings.
E. pursue a differentiation strategy that can be easily copied.
Answer:
The managerial task of effectively conveying the essence of the strategic vision is made
easier by:
A. having operating strategies that are easy for company personnel to understand and
execute.
B. combining the strategic vision and the company’s values statement into a single
document.
C. adopting a catchy slogan and then using it repeatedly to illuminate the direction and
purpose of “where we are headed and why.”
D. waiting until the company realizes its mission and ensures the existing corporate
culture is compatible with the new vision and direction.
E. distributing written statements that explain “where we are going and why.”
Answer:
Which of the following statements about fluctuating exchange rates and the related
effects on companies competing in foreign markets is true?
A. Fluctuating exchange rates pose significant risks to a company’s competitiveness in
foreign markets.
B. The advantages of manufacturing goods in a particular country are largely unaffected
by fluctuating exchange rates.
C. Companies that are manufacturing goods in a particular country and are exporting
much of what they produce lose out when that country’s currency grows weaker relative
to the currencies of the countries that the goods are being exported to.
D. The advantages of manufacturing goods in a particular country improve when that
country’s currency grows stronger relative to the currencies of the countries where the
output is being sold.
E. Domestic companies under pressure from lower-cost imports are hurt even more
when their government’s currency grows weaker in relation to the currencies of the
countries where the imported goods are being made.
Answer:
An environmental sustainability strategy consists of a company’s deliberate actions to:
A. operate in an honorable manner, provide good working conditions for employees,
and to actively work to enhance the quality of life in the local communities where it
operates and in society at large.
B. meet the current needs of customers, suppliers, shareholders, employees, and other
stakeholders in a manner that protects the environment, provides for the longevity of
natural resources, maintains ecological support systems for future generations, and
guards against ultimate endangerment of the planet.
C. protect and enhance natural resources and ecological support systems, taking into
account the current consumption for the current generation.
D. apply universal norms regarding the protection of the environment to its everyday
operations and to function below the levels required by prevailing environmental
regulations.
E. balance commonly held views about what constitutes environmentally appropriate
actions against its ability to make a profit.
Answer:
The decision to pursue diversification requires management to resolve which industries
to enter and whether to enter, and includes such decisions as the following, EXCEPT:
A. selecting the appropriate value chain operating practices to improve the financial
outlook.
B. starting a business from the ground up.
C. acquiring a company already established in the target industry.
D. forming a joint venture or partnership with another company.
E. structuring a strategic alliance with another company to take advantage of the
opportunity.
Answer:
A company needs performance targets or objectives:
A. to help guide managers in deciding what strategic path to take in the event that a
strategic inflection point is encountered.
B. because they give the company clear-cut strategic intent.
C. in order to unify the company’s strategic vision and business model.
D. for its operations as a whole and also for each of its separate businesses, product
lines, functional departments, and individual work units.
E. in order to prevent lower-level organizational units from establishing their own
objectives.
Answer:
Which of the following questions tests the merits of the firm’s strategy and distinguishes
it as a winning strategy?
A. Is the company’s strategy ethical and socially responsible and does it put enough
emphasis on good product quality and good customer service?
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 helping the company achieve a sustainable competitive advantage and
is it resulting in better company performance?
E. Does the strategy strike a good balance between maximizing shareholder wealth and
maximizing customer satisfaction?
Answer:
Company managers can significantly advance the cause of superior strategy execution
by doing all of the following EXCEPT:
A. employing best practices methods and using process management tools to drive
continuous improvement in how internal operations are conducted.
B. adopting benchmarking of the company’s operating activities and business processes
against “best-in-industry” and “best in world” performers.
C. adopting “best-in-company” operating activities and processes when a company’s
various organizational units are performing the same functions differently.
D. instituting operating practices that generate economies of scale and scope with
current value chain activities.
E. develop performance yardsticks for judging effectiveness and efficiency for
particular value chain activities and business processes deemed strategically critical.
Answer:
Which of the following companies would have the LEAST bargaining power with its
suppliers?
A. A company that is involved in mass production of goods to cater its expanding
customer base
B. A company that actively caters to a broad price-sensitive customer base
C. A company that generates high quality product components from easily available raw
materials for a broad customer base
D. A company whose products are highly popular and easily available across most
supermarkets
E. A company that offers high-cost specialized products that could be used only by
customers of a certain age group
Answer:
Which of the following is NOT a purpose of a defensive strategy?
A. To increase the risk of having to defend an attack
B. To weaken the impact of any attack that occurs
C. To pressure challengers to aim their efforts at other rivals
D. To help protect a competitive advantage
E. To decrease the risk of being attacked
Answer:
Successful broad differentiation allows a firm to:
A. be the industry’s best-cost provider.
B. set the industry ceiling on price.
C. avoid being dragged into a price war with industry rivals and not be overly
concerned about whether entry barriers into the industry are high or low.
D. command a premium price for its product, and/or increase unit sales, and/or gain
buyer loyalty to its brand.
E. take sales and market share away from rivals by undercutting them on price.
Answer:
A reward system that accentuates positive rewards for good performance:
A. works best in strong culture organizations, while negative motivational approaches
and reward systems tend to be most successful in weak culture organizations.
B. is especially effective in aligning the well-being of organizational members with
achieving the company’s performance targets; reward systems with negative elements
tend to be very dysfunctional in motivating employees.
C. seldom works very well because the threat of denying rewards to sub-par performers
is typically the most powerful motivator.
D. works fine so long as 100 percent emphasis is placed on monetary incentives.
E. has considerable appeal because when cooperation is positively enlisted and
rewarded, rather than strong-armed by orders and threats (implicit or explicit), people
tend to respond with more enthusiasm, dedication, creativity, and initiative.
Answer:
An industry contains one strategic group when all sellers:
A. are subject to the same driving forces.
B. place about the same emphasis on various distribution channels.
C. use the same key success factors to differentiate their products.
D. pursue essentially identical strategies and have similar market positions.
E. pursue varying distribution channels and product attributes, and have customer
service attributes that differentiate them in the marketplace.
Answer:
Which of the following is a disadvantage of a centralized organizational structure?
A. Lengthening response times and discouraging lower-level managers and
rank-and-file employees from exercising initiative
B. Losing top-level management control
C. Putting too much decision-making authority in the hands of lower-level company
personnel
D. Making it hard to fix accountability when things do not go well and putting the
organization at risk when bad decisions are made
E. Impeding cross-unit coordination and the capture of strategic fits
Answer:
The competitive pressures on companies within an industry come from all of the
following, EXCEPT:
A. those associated with the market maneuvering and jockeying for buyer patronage
that goes on among rival firms in the industry.
B. those companies in other industries attempting to win buyers over to their substitute
products.
C. those associated with the threat of new entrants into the marketplace.
D. those associated with the bargaining power of suppliers and customers.
E. those associated with environmental factors such as water shortages.
Answer:
The difference between a merger and an acquisition is that:
A. a merger involves one company purchasing the assets of another company with cash,
whereas an acquisition involves a company acquiring another company by buying all of
the shares of its common stock.
B. a merger is the combining of two or more companies into a single corporate entity,
whereas an acquisition involves one company (the acquirer) purchasing and absorbing
the operations of another company (the acquired).
C. in a merger, the companies retain their original names, whereas in an acquisition the
name of the company being acquired is changed to be the name of the acquiring
company.
D. a merger is a combination of three or more companies, whereas an acquisition is a
pooling of interests of just two companies.
E. a merger involves two or more companies deciding to adopt the same strategy,
whereas an acquisition involves one company taking over the strategy-making function
of another company.
Answer:
A competitive strategy of striving to be the low-cost provider is particularly attractive
when:
A. buyers are not very price-conscious.
B. most rivals are trying to be best-cost providers.
C. there are many ways to achieve product differentiation that have value to buyers.
D. most buyers use the product in much the same ways, with user requirements calling
for a standardized product.
E. most rivals are pursuing focused low-cost or focused differentiation strategies.
Answer:
The key duties of a company’s board of directors in the strategy-making,
strategy-executing process include:
A. coming up with compelling strategy proposals of their own to debate against those
put forward by top management.
B. overseeing the company’s financial accounting and financial reporting practices and
evaluating the caliber of senior executives’ strategy-making/strategy-executing skills.
C. taking the lead in developing the company’s business model and strategic vision.
D. taking the lead in formulating the company’s strategic plan but then delegating the
task of implementing and executing the strategic plan to the company’s CEO and other
senior executives.
E. approving the company’s operating strategies, functional-area strategies, business
strategy, and overall corporate strategy.
Answer:
A company achieves a competitive advantage when it:
A. provides buyers with superior value compared to rival sellers or offers the same
value at a lower cost.
B. has a profitable business model.
C. is able to maximize shareholder wealth.
D. is consistently able to achieve both its strategic and financial objectives.
E. has a strategy well-matched to its business model.
Answer:
Which of the following companies is using cost drivers effectively to manage value
chain activities cost efficiently?
A. Company A orders large amounts of supplies and keeps them stocked till customer
demand rises to prevent falling behind schedule in meeting customer needs.
B. Company B uses just-in-time inventories and produces made-to-order products as
and when customer demand rises.
C. Company C collects customer requests first and starts processing them only after
reaching a certain number.
D. Company D routes all its supplies to a warehouse for storage and then transports
them to individual factories for processing.
E. Company E substitutes lower-cost inputs with high-quality, high-cost inputs to gain
customer attention and loyalty.
Answer:
A sustainable competitive advantage is gained:
A. when a company has durable competitive assets that are central to its strategy and
superior to those of rival firms.
B. when a company has sufficient resources to expedite its strategy.
C. when a company realizes its inherent weaknesses are transformable to advantages.
D. when a company can stand out relative to rivals because of resource utilization.
E. when a company has resources in well-populated geographical locations
Answer:
Which of the following is NOT a good candidate for divestiture in a corporate
restructuring effort?
A. Business units that lack strategic fit with the businesses to be retained
B. Weak performers
C. Businesses in unattractive industries
D. Businesses that are cash hogs or that lack other types of resource fit
E. Businesses compatible with the company’s revised diversification strategy
Answer:
A “best practice” refers to:
A. a policy or procedure that is unusually effective.
B. a method of performing an activity or business process that consistently delivers
superior results compared to other approaches and that at least one company has
demonstrated works particularly well in terms of delivering operating excellence.
C. a strategy-critical activity that results in sustainable competitive advantage.
D. a value chain activity that is a company’s distinctive competence.
E. a particular value chain activity that management has given top priority to
performing in world-class fashion.
Answer:
What makes the marketplace a competitive battlefield is:
A. the race of industry members to build strong defenses against the industry’s driving
forces.
B. the constant rivalry of firms to strengthen their standing with buyers and win a
competitive edge over rivals.
C. the ongoing race among rival sellers to have the highest-quality product.
D. the ongoing efforts of industry members to introduce new and improved
products/services at a faster rate than their rivals.
E. the ongoing race among rivals to achieve the fastest rate of growth in revenues and
profits.
Answer:
An example of how companies can revamp their value chain to reduce costs is to:
A. have suppliers locate their plants close to companies’ own facilities.
B. continue to utilize traditional methods of distribution and sales.
C. not make any changes in product manufacturing but change end distribution
methods.
D. increase extra services to increase staffing requirements.
E. facilitate the learning curve by providing superior training to new employees.
Answer:
In analyzing driving forces, the strategist’s role is to:
A. identify the driving forces and evaluate their impact on (1) demand for the industry’s
product, (2) the intensity of competition, and (3) industry profitability.
B. predict future marketing innovations and how fast the industry is likely to globalize.
C. evaluate what stage of the life cycle the industry is in and when it is likely to move
to the next stage.
D. determine who is likely to exit the industry and what changes can be expected in the
industry’s strategic group map.
E. forecast fluctuations in product demand and how buyer needs will most likely
change.
Answer:
The advantages of using a licensing strategy to participate in foreign markets include:
A. being especially well-suited to achieve scale economies.
B. being able to charge lower prices than rivals.
C. being able to achieve first-mover advantages quickly and easily.
D. being able to leverage the company’s technical know-how, appealing brand, or
patents without committing their resources or capabilities to foreign markets.
E. being able to achieve higher product quality and better product performance than
with an export strategy.
Answer:
Six Sigma processes:
A. are based on three principles: (1) all work is a statistically controllable process; (2)
no well-controlled process allows variability; and (3) defect-free work requires tight
statistical controls.
B. can be used for both improving existing business processes and for developing new
processes or products.
C. can be used for improving products or business processes but not for developing new
products or new processes.
D. consists of a disciplined, statistics-based system aimed at producing not more than
10 defects per million iterations for a manufacturing or assembly process.
E. can be used for developing new products or new business processes but not for
improving existing products or business processes.
Answer:
Which of the following is particularly pertinent in evaluating whether an industry
presents a sufficiently attractive business opportunity?
A. The industry’s growth potential, whether competition appears destined to become
stronger or weaker, and whether the industry’s overall profit prospects are above
average, average, or below average
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
Answer:
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.
Answer: