One of the most significant contributions to strategy making in diversified companies
that the nine-cell industry attractiveness competitive strength matrix provides is:
A. identifying which businesses have strategies that should be continued, which
businesses have strategies that need fine-tuning, and which businesses have strategies
that need a major overhaul.
B. that businesses having the greatest competitive strength and that are positioned in the
most attractive industries should have the highest priority for corporate resource
allocation and that competitively weak businesses in relatively unattractive industries
should have the lowest priority and perhaps even be considered for divestiture.
C. pinpointing which strategies are most appropriate for businesses positioned in the
four corners of the matrix (although the matrix reveals little about the best strategies for
businesses positioned in the remainder of the matrix).
D. its ability to pinpoint what kind of competitive advantage or disadvantage each
business has.
E. pinpointing which businesses to keep and which ones to divest.
Answer:
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 organizational units 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 what
organization units can and cannot do in carrying out management’s directives to execute
the chosen strategy proficiently.
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 the wasteful use of cash.
E. lean, strictly enforced budgets are management’s best and most used means of getting
organizational units to exercise the fiscal discipline needed to execute the chosen
strategy in a cost-efficient manner.
Answer:
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.
Answer:
Which of the following is generally NOT among the common practices that companies
use to staff jobs with talented people, particularly if intellectual capital greatly aids
good strategy execution?
A. Careful screening and evaluation of job applicants, along with continuous training
and retraining programs for employees that continue throughout their careers
B. Rotating people through jobs that not only have great content but also span
functional and geographic boundaries
C. Eliminating the bottom 10 percent of the lowest-performing employees each year to
increase the overall quality performance metrics to above-average industry standards
D. Encouraging employees to challenge existing ways of doing things, to be creative
and innovative in proposing better ways of operating, and to push their ideas for new
products or businesses
E. Fostering a stimulating and engaging work environment such that employees will
consider the company a great place to work
Answer:
Managers must chart a company’s strategic course by:
A. focusing on the local environment in which they are operating.
B. ensuring excess production capacity and/or inventory.
C. competing fiercely for a share in the market.
D. building a bigger dealer network.
E. developing a thorough understanding of the company’s external and internal
environment.
Answer:
Which of the following is TRUE of the capability building process?
A. It requires two things: (1) developing the ability to do something, however
imperfectly or inefficiently, and (2) molding these efforts into an organizational ability
and as experience grows and personnel perform the activity consistently well and at an
acceptable cost, it is transformed into a tried-and-true competence and as they continue
to polish and refine their know-how into further improvements, they then create a real
competitive capability.
B. It entails (1) deciding which value chain activities to perform internally and which
ones to outsource; and (2) deciding how much authority to centralize at the top and how
much to delegate to down-the-line managers and employees.
C. It is essential (1) when the company does not have the ability to create the needed
capability internally (perhaps because it is too far afield from its existing capabilities),
and (2) when industry conditions, technology, or competitors are moving at such a rapid
clip that time is of the essence.
D. It involves (1) staffing the organization with people capable of executing the strategy
well, (2) developing the resources and building the organizational capabilities needed
for successful strategy execution, and (3) creating an organizational structure supportive
of the strategy execution process.
E. It must (1) supplement the design with appropriate coordinating mechanisms, and (2)
institute whatever networking and communications arrangements are necessary to
support effective execution of the firm’s strategy.
Answer:
Which of the following does NOT describe an unhealthy company culture?
A. Insular and inwardly-focused
B. Change-resistant
C. Unethical and greed-driven
D. Politicized
E. Hyper-adaptive
Answer:
A company’s values relate to such things as:
A. how it will balance its pursuit of financial objectives against the pursuit of its
strategic objectives.
B. how it will balance the pursuit of its business purpose/mission against the pursuit of
its strategic vision.
C. fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch
quality, superior customer service, social responsibility, and community citizenship.
D. whether it will emphasize stock price appreciation or higher dividend payments to
shareholders
E. whether it will put more emphasis on the achievement of short-term performance
targets or long-range performance targets.
Answer:
The notion of social responsibility as it applies to businesses is concerned with:
A. a company’s duty to put the public interest ahead of shareholder interests.
B. societal expectations that all company stakeholders will be treated equally and fairly.
C. a company’s duty to establish a loyal workforce.
D. the responsibility that top management has for ensuring that the company’s actions
and decisions are in the best interest of stakeholders at large.
E. a company’s duty to operate in an honorable manner and provide good working
conditions for employees.
Answer:
How do good corporate citizens function?
A. They pursue discretionary activities that contribute to the betterment of society,
especially in areas where government has chosen not to focus its efforts or has fallen
short.
B. They are active participants in the political processes.
C. They identify up-and-coming managers who have a future in local- or state-level
politics.
D. They create a democratic workplace where the voices of lower-level employees are
heard through representation on the board of directors.
E. They seek to replace government functions with more efficient, market-driven
solutions.
Answer:
The task of driving-forces analysis is to:
A. develop a comprehensive list of all the potential causes of changing industry
conditions.
B. predict which new driving forces will emerge next.
C. determine which of the five competitive forces is the biggest driver of industry
change.
D. identify the driving forces, assess whether their impact will make the industry more
or less attractive, and determine what strategy changes are needed to prepare for the
impacts of the driving forces.
E. learn what the industry key success factors are and how they might change in the
future.
Answer:
The strength of the beliefs underlying the moral case for an ethical strategy relates to all
EXCEPT which of the following?
A. It begins with managers who themselves have strong character (for example, who
are honest, have integrity, and truly care about how they conduct a company’s business).
B. It starts with managers who walk the talk in displaying the company’s stated values.
C. It involves managers with high ethical principles and standards who are advocates of
a corporate code of ethics and strong ethics compliance and are genuinely committed.
D. It starts with managers who understand there is a big difference between adopting
values statements superficially and truly accepting a company’s actual strategy and
business conduct.
E. It starts with mangers that involve themselves in creating strategies based on risks
and loss of reputation that implementing an unethical strategy can cost.
Answer:
Assessments of how a diversified company’s subsidiaries compare in competitive
strength should be based on such factors as:
A. vulnerability to seasonal and cyclical downturns, vulnerability to driving forces, and
vulnerability to fluctuating interest rates and exchange rates.
B. relative market share, the ability to match or beat rivals on key product attributes,
brand image and reputation, costs relative to competitors, and the ability to benefit from
strategic fits with sister businesses.
C. the appeal of its strategy, the relative number of competitive capabilities, the number
of products in each business’s product line, which businesses have the highest/lowest
market shares, and which businesses earn the highest/lowest profits before taxes.
D. the ability to hurdle barriers to entry, value chain attractiveness, and business risk.
E. cost reduction potential, customer satisfaction potential, and comparisons of annual
cash flows from operations.
Answer:
FaberRoad, a respected courier brand, is fast losing its market share to competitors who
do overnight deliveries of packages or offer lower prices. The company’s research
department has found that many customers care more about knowing exactly when a
package will arrive than getting it the next day. Which strategy would best address the
current state of FaberRoad and help it regain its market?
A. Employing night delivery drivers at a high cost and maintenance charges
B. Developing radio tags that could be attached to packages to allow for real-time
tracking by customers’ PCs and mobile phones
C. Diversifying the different types of packages that can be transported and enabling
booking through calls
D. Acquiring small transportation companies with cheaper trucks and tempos,
rebranding, and using them for deliveries
E. Engaging in expensive advertising with new tag lines and famous celebrities to
enhance its brand image in the market
Answer:
Which of the following is NOT an accurate attribute of an organization’s strategic
vision?
A. Providing a panoramic view of “where we are going”
B. Outlining how the company intends to implement and execute its business model
C. Pointing an organization in a particular direction and charting a strategic path for it
to follow
D. Helping mold an organization’s character and identity
E. Describing the company’s future product-market-customer focus
Answer:
Which of the following is an example of a modification in the company’s business
model to accommodate the unique local circumstances of developing countries?
A. Mahindra and Mahindra ranked number one in J. D. Power Asia Pacific’s
new-vehicle overall quality category.
B. Home Depot could rely on its value propositions only in some developing countries.
C. Unilever developed a low-cost detergent, named Wheel, for the Indian market.
D. Japan is known for its competitive strength in consumer electronics.
E. In China, Dell moved from its traditional Internet-based orders to orders over phone
and fax.
Answer:
Which of the following statements falsely characterizes the managerial task of
executing strategy?
A. Executing strategy is an action-oriented, make-things-happen task.
B. Executing strategy tests a manager’s ability to direct organizational change, achieve
continuous improvement in operations and business processes, create and nurture a
strategy-supportive culture, and consistently meet or beat performance targets.
C. Implementing new strategic initiatives principally involves employing managerial
techniques to overcome resistance to change.
D. Executing strategy requires a team effort which entails that every manager think
through the answer to “What does my area have to do to implement its part of the
strategic plan, and what should I do to get these things accomplished effectively and
efficiently?”
E. Implementing and executing strategy is primarily an operations-driven activity
revolving around the management of people and business processes.
Answer:
The key success factors in an industry:
A. are those competitive factors that most affect industry members’ abilities to prosper
in the marketplacethe particular strategy elements, product attributes, operational
approaches, resources, and competitive capabilities that spell the difference between
being a strong competitor and a weak one, and between profit and loss.
B. are determined by the industry’s driving forces, which are essential to surviving and
thriving in the industry.
C. hinge on how many different strategic groups the industry has operating within the
industry and their level of profitability and sustainable advantages.
D. depend on how many rivals are trying to move from one strategic group to another
without losing momentum.
E. are a function of such considerations as how many firms are in the industry, how
many have market shares above 5 percent, and whether the business models being used
are similar or diverse.
Answer:
Companies with change-resistant cultures are:
A. typically opposed to performance-based incentive compensation and employee
empowerment.
B. prone to be preoccupied with avoiding risks and are unlikely to pursue actions to
capture emerging opportunities.
C. often overly gung ho about looking outside the company for best practices, new
managerial approaches, and innovative ideas.
D. often preoccupied with making sure the company has an aggressive strategic vision
that embraces risky business strategies.
E. typically run by amoral managers who have little regard for high ethical standards.
Answer:
Which of the following is NOT a reasonable option for deploying a diversified
company’s financial resources?
A. Making acquisitions to establish positions in new businesses or to complement
existing businesses
B. Investing financial resources in cash cow businesses until they show enough strength
to generate positive cash flows
C. Funding long-range R&D ventures aimed at opening market opportunities in new or
existing businesses
D. Paying down existing debt, increasing dividends, or repurchasing shares of the
company’s stock
E. Investing in ways to strengthen or grow existing businesses
Answer:
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.
Answer:
The basic premise of unrelated diversification is that:
A. the least risky way to diversify is to seek out businesses that are leaders in their
respective industry.
B. the best companies to acquire are those that offer the greatest economies of scope
rather than the greatest economies of scale.
C. the best way to build shareholder value is to acquire businesses with strong
cross-business financial fit.
D. any company that can be acquired on good financial terms and that has satisfactory
growth and earnings potential represents a good acquisition and a good business
opportunity.
E. the task of building shareholder value is better served by seeking to stabilize earnings
across the entire business cycle than by seeking to capture cross-business strategic fits.
Answer:
Which of the following is NOT a substantive culture-changing action that a company’s
managers can undertake to alter a problem culture?
A. Promoting individuals who are known to possess the desired cultural traits, who
have stepped forward to advocate the shift to a different culture, and who can serve as
role models for the desired cultural behavior
B. Appointing outsiders with the desired cultural attributes to high-profile positions
C. Screening all candidates for new positions carefully, and hiring only those who
appear to fit in with the new culture
D. Urging company personnel to search outside the company for work practices and
operating approaches that may be an improvement over what the company is presently
doing, and paying sizable bonuses to those employees who identify practices that the
company ends up adopting
E. Designing compensation incentives that boost the pay of teams and individuals who
display the desired cultural behaviors and hitting change-resisters in the pocketbook
Answer:
Diversified companies striving to capture the benefits of synergy between separate
businesses have to be aware of all of the following challenges EXCEPT:
A. giving business-unit heads full rein to operate independently.
B. having pieces of strategically relevant activities and capabilities scattered across
many departments, with each pursuing its own priorities, projects, and agendas.
C. centralizing performance of functions requiring close coordination at the functional
level.
D. serving the interests of individual businesses and not the company as a whole.
E. forming cross-business strategic fit by enforcing close collaboration.
Answer:
Which of the following statements concerning the effects of fluctuating exchange rates
on companies competing in foreign markets is NOT accurate?
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. Exporters win when the currency of the country from which the goods are being
exported 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 can be undermined
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 benefited when
their government’s currency grows weaker in relation to the currencies of the countries
where the imported goods are being made.
Answer:
A company wants to plan a state-of-the-art information and operating system to enable
better strategy execution. Which of the following is the most likely reason for the
company’s move?
A. It wants to embrace modern technology.
B. It wants to gain a competitive edge over rivals.
C. It wants to spot cost overruns and inefficiencies.
D. It wants to increase workforce productivity and retention.
E. It wants to boost management morale.
Answer:
A pitfall to avoid in pursuing a differentiation strategy is:
A. trying to differentiate on the basis of attributes or features that are easily and quickly
copied.
B. choosing a product offering that supports buyers’ indifference to rival brands’
offerings.
C. charging a premium price for the differentiating features.
D. meeting and exceeding the meaningful gaps in quality, performance, service, and
other attractive differentiating attributes offered by rivals.
E. spending on activities to differentiate the company’s product to enhance profitability.
Answer:
Collaborative relationships between particular sellers and buyers in an industry can
represent a source of strong competitive pressure when:
A. virtually all buyers have strong brand attachments and are highly brand loyal.
B. demand for the product is growing rapidly.
C. sales are made to buyer groups with either strong bargaining power or high
sensitivity.
D. sellers are racing to add the latest and greatest performance features so as to attract
the patronage of important or prestigious buyers.
E. buyers are very quality conscious.
Answer:
In prescribing policies and procedures that facilitate independent action on the part of
empowered employees for good strategy execution companies need to do ALL of the
following EXCEPT:
A. give organization members clear direction and place reasonable boundaries on their
actions.
B. empower employees to act within the company’s set boundaries in pursuit of
company goals.
C. allow company personnel to act with some defined degree of freedom, especially
when individual creativity and initiative are more essential to good strategy execution
than standardization and strict conformity.
D. institute policies that give employees substantial leeway to carry out activities the
way they think best.
E. produce policy manuals on strategy execution that prescribe exactly how daily
operations are to be conducted.
Answer:
Capturing the benefits of strategic alliances is not easy, but success generally is a
function of all of the following factors, EXCEPT:
A. being sensitive to cultural differences
B. managing the learning process and allowing for emerging circumstances
C. picking a good partner with good chemistry
D. recognizing that the alliance must benefit both sides
E. ensuring the division of work is directly apportioned to appropriate skill sets
Answer:
When firms are involved in a mix of in-house and outsourced activity in any given
stage of the vertical chain, it is called:
A. tapered integration.
B. partial integration.
C. full integration.
D. forward integration.
E. backward integration.
Answer:
The difference between the concept of a company mission statement and the concept of
a strategic vision is that:
A. a mission concerns what to do to achieve short-term objectives, while a strategic
vision concerns what to do to achieve long-term performance targets.
B. a mission statement focuses on the methods needed to make a profit, whereas a
strategic vision concerns what business model to employ in striving to make a profit.
C. a mission statement deals with what to accomplish on behalf of shareholders, while a
strategic vision concerns what to accomplish on behalf of customers.
D. a mission statement typically concerns a company’s purpose and its present business
scope, whereas the principal concern of a strategic vision is a company’s aspirations for
its future.
E. a mission statement deals with “where we are headed,” whereas a strategic vision
provides the critical answer to “how will we get there?”
Answer:
Companies operating in an international marketplace have to respond to all of the
following, EXCEPT:
A. whether to customize their offerings in each different country market to match the
tastes and preferences of local buyers.
B. whether to pursue a strategy of offering a mostly standardized product worldwide.
C. how much to customize their offerings in each different country market to match the
tastes and preferences of local buyers.
D. the tensions between market pressures to localize a company’s product offerings
country by country and the competitive pressures to lower costs through greater product
customization.
E. whether to buy a struggling competitor at a bargain price or pay a premium to gain
entry to the local market.
Answer:
The real purpose of the company’s strategic vision:
A. is management’s story line for how it plans to implement and execute a profitable
business model.
B. sets forth what business the company is presently in and why it uses particular
operating practices in trying to please customers.
C. serves as management’s tool for giving the organization a sense of direction.
D. defines “who we are and what we do.”
E. spells out a company’s strategic intent, its strategic and financial objectives, and the
business approaches and operating practices that will underpin its efforts to achieve
sustainable competitive advantage.
Answer:
Identify the six questions to consider in evaluating a company’s ability to compete
successfully against market rivals.
Answer:
Explain why an acquisition is better than a greenfield venture.
Answer:
What are the three tests of a winning strategy?
Answer:
Explain how the strategic target of a low-cost provider differs from the strategic target
of a best-cost provider.
Answer:
Identify and discuss the basic tenets, the chief advantages, and the chief disadvantages
of decentralized organizational structures.
Answer:
Competitive markets are economic battlefields. True or false? Explain.
Answer:
Explain why the strategies of firms that expand internationally are usually grounded in
home-country advantages or core competencies.
Answer:
Identify and briefly explain any three factors that lead to weak bargaining power on the
part of suppliers.
Answer:
List the 10 principal managerial components of the
strategy-implementing/strategy-executing process.
Answer:
Explain why low switching costs and weakly differentiated products tend to give buyers
a high degree of bargaining power.
Answer:
What type of competitive advantage does a best-cost provider strategy aim at
achieving? Explain what a company has to do to achieve this advantage.
Answer:
What are the differences between the school of ethical universalism and the school of
ethical relativism?
Answer:
Identify and briefly explain any three factors that lead to strong bargaining power on the
part of suppliers.
Answer:
What are the strategic disadvantages of a forward vertical integration strategy?
Answer:
What is the difference between ethics and business ethics?
Answer:
Identify and briefly discuss the four types of organizational structures that can be
aligned with strategy execution.
Answer: