Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
TestPrep 7: Multiple-Choice Questions
1. Which is the best question to ask when starting the strategic management process?
2. The ability of a firm to consistently outperform its rivals is called ___________
(a) vertical integration
3. General Electric is a complex conglomerate that owns many firms operating in very
different industries. The strategies pursued for each of these units within GE would best
be called __________level strategies.
(a) corporate
4. An organization that is downsizing by cutting staff to reduce costs can be described as
pursuing a _________strategy.
(a) liquidation
5. When you buy music downloads online, the firm selling them to you is engaging in which
type of e-business strategy?
(d)crowdsourcing
6. The alliances that link together firms in supply chain management relationships are examples
of how businesses try to use ____________strategies.
(a) B2C
7. Among the global strategies that international businesses might pursue, the
_________strategy most directly tries to tailor products to fit local needs and cultures in
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
different countries.
8. If Google’s top management were to announce that the firm was going to buy Federal
Express, this would indicate a growth strategy of .____________
(d)vertical integration
9. ___________are an organization’s special strengths that help it outperform competitors.
(d)Operating objectives
10. A ________in the BCG Matrix would have a high market share in a low-growth market.
(d)star
11. In Porter’s five forces model, which of the following conditions is most favorable from the
standpoint of industry attractiveness?
(a) many competitive rivals
12. The two questions asked by Porter to identify the correct competitive strategy for a business
or product line are “What is the market scope?” and “What is the __________ ?”
13. When Coke and Pepsi spend millions on ads trying to convince customers that their products
are unique, they are pursuing a ______________strategy.
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
14. A firm that wants to compete with rivals by selling a very-low priced product in a broad
market would need to successfully implement a ________________ strategy.
(a) retrenchment
15. In addition to focusing on strategy implementation and strategic control, the responsibility
for strategic leadership of an organization involves success with _________________.
(a)motivating a disposable workforce
Short-Response Questions:
16. What is the difference between corporate strategy and functional strategy?
17. Why is a cost leadership strategy so important when one wants to sell products at lower prices
than competitors?
18. What strategy should be pursued for a “question mark” in the BCG Matrix, and why?
19. What is strategic leadership?
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
Integration and Application Questions:
Integration and Application Question
20. Kim Harris owns and operates a small retail store, selling the outdoor clothing of an
American manufacturer to a predominantly college-student market. Lately, a large
department store outside of town has started selling similar but lower-priced clothing
manufactured in China, Thailand, and Bangladesh. Kim is starting to lose business to this
store. She has asked your instructor to have a student team analyze the situation and propose
some strategic alternatives to best deal with this threat. You are on the team.
Questions: Why would a SWOT analysis be helpful in addressing Kim’s strategic management
problem? How could Porter’s competitive strategies model be helpful as well?
A SWOT analysis is useful during strategic planning. It involves the analysis of
organizational strengths and weaknesses, and of environmental opportunities and threats.
Such a SWOT analysis in this case would help frame Kim’s thinking about the current and
Self-Assessment 7: Facts and Inferences
Instructions
1. Read the following report.
A well-liked college instructor had just completed making up the final examination and
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
Large variety of flavors of
donuts and baked items
Low barrier to entry for
competitors
Online marketing to
increase customer basis
Currency fluctuations and
stronger dollar rate affects
the brand’s revenue.
Known for its coffee
Perception of nonexistent
healthy choices
Social media to increase
customer base
Childhood diseases on the
rise (diabetes and obesity)
Number of locations and
international presence
Conflict with franchise
owners—poor
relationships and
numerous lawsuits
Expansion outside the
United States (emerging
markets)
Competition from local
pastry and coffee shops
Loyalty program
Poor expansion in fast
developing or newly
developed
economies: pace of growth
in comparison to
competitors is still slow.
Product expansion
Competition from
McDonald’s and
Starbucks (coffee and
donuts)
Years of
experience/longevity
Coffee consumption on the
rise in Asia, along with
income levels
Price of coffee beans
Major sports team
association (Red Sox)
Recessionary spending on
“comfort foods” and less
expensive snacks
compared to other store-
bought items
Awareness of Fair Trade
policies for coffee bean
purchases.
Advertising and marketing
programs and strategies
Growth through
franchising
Increased raw material
costs and coffee costs
Reputation for high
quality, superior grade of
coffee
Continued store growth
Largest seller of coffee by
the cup
Supply chain management
– Centralized production
designed to support
growth for the Dunkin’
Donuts brand.
3. FURTHER RESEARCH
Research the latest moves by Starbucks and other Dunkin’s competitors. What is each doing
that seems similar to and different from the approach of the other? Can you say that Dunkin’
is on the right track? Is it carving out new market share? Or, is it going to be more of a
copycat player in the industry?
Latest news for:
Starbucks:
• The company said it had reached its previously announced goal of hiring 10,000 U.S.
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
the United Nations and other organizations to find and train refugee candidates.
• Former CEO, Howard Schultz also said Starbucks has hired 40,000 young Americans
• New food offerings include New Seared Steak, Egg and Tomatillo Wrap, New
Chicken & Quinoa Protein Bowl with Black Beans and Greens, New Vegan Lentils
& Vegetables Protein Bowl with Brown Rice, Iced Coconutmilk Mocha Macchiato,
• Starbucks earlier this year had announced the ability to order by voice through
Amazon’s Alexa platform (as well as through Starbucks’ own My Starbucks barista
feature on its mobile app).
• With the planned integration of Alexa into Ford vehicles, owners of the cars
equipped with SYNC3 will be able to place voice orders for Starbucks beverages
using Alexa.
• Starbucks has introduced several new sandwiches and salads on its menu to increase
• Expansion of mobile payment platform
• Launch of new nonprofit corporation with a $1 million seed grant to introduce job skills,
leadership and apprenticeship programs to young people across the company’s
Dunkin’:
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
In summary, Dunkin’ Donuts is shortening its name to Dunkin’ to deemphasize its donuts (the
company sells more coffee than donuts). It is focused on an improved customer experience and
will implement a six-part plan to fuel U.S. strategic growth. Dunkin’ hopes to build its coffee
culture and to position itself as a coffee leader.
• The company is considering shortening its iconic brand name to simply “Dunkin’,” to
deemphasize its donuts. Because it sells more coffee than donuts, its brand differentiation
• Following extensive consumer research, the company has undertaken the implementation
of a six-part plan to fuel Dunkin’s strategic growth in the U.S. and better position the
company as a beverage-led, on-the-go brand. The plan includes: building our coffee
culture; faster and improved product innovation; targeted value and smart pricing; being
a leader in digital; improving the restaurant experience; and driving consumer packaged
goods and new channels.
• Over the past year, the company announced the launch of a line of Dunkin’ Donuts
branded ready-to-drink iced coffee beverages in the U.S. – and distributed by the Coca
• The introduction of two chicken sandwiches (barbeque chicken and bacon-ranch chicken)
on its menu is a step in the brand’s commitment to all-day menu items is a significant
step in the brand’s commitment to all-day menu items.
• Dunkin’ is interested in expanding into non-traditional venues including colleges and
universities, casinos, military bases, supermarkets, airports and travel centers.
Schermerhorn & Bachrach Exploring Management 6th edition Instructor’s Manual
What is similar?
• Focus on digital platform (order ahead, skip the line)
• Rewards program
What is different?
Dunkin’ has positioned itself as a quick alternative to Starbucks. Starbucks is a more hip and
trendy place to get a cup of coffee, while Dunkin’ fancies itself as a welcome place for any
Is Dunkin’ on the right track?
Is it carving out new market share?
Will it be a copycat player?
Suggested Team Exercise for Chapter 7
Break the class into pairs or small (no more than four students) teams.
Assign each team an industry (pick industries that students can relate to such as chocolate candy;
automobiles; clothing; shoes; fast food; beer; cell phones; computers, etc.)
Have each pair or team identify (and explain if needed):