Chp 4/5

According to Michael Porter, a company with good products that has no clear competitive advantage is said to be ________. a. perfectly positioned b. stuck in the middle c. in the wheelhouse d. outside of the box

b. stuck in the middle Porter's phrase "stuck in the middle" describes a company that has no clear edge over its competitors, so "stuck in the middle" is the correct response for this question. A company may be efficient, innovative, and produce high-quality products, but if it cannot establish some kind of significant advantage over its rivals it will remain "stuck."

A company with a differentiation strategy focuses on making its products or services ________. a. unique and special b. similar to its competitors c. familiar d. affordable

a. unique and special The key to a differentiation strategy is for the company to somehow make itself or its products distinct from all of its competitors. This distinction may reside in a product, service, or brand image that sets the company apart from others in the market. These factors make "unique and special" the correct response. Being familiar, similar to competitors, or affordable would have little value to a company that uses a differentiation strategy as none of these qualities makes their product different or distinguished.

An external analysis, the second step of the strategic management process, helps identify ________. Välj ett svar a. the products that a company makes b. the long-term goals for a company c. a company's opportunities and threats d. a company's concern for its employees

c. a company's opportunities and threats The focus of an external analysis is to locate the organization's place in the external business environment, analyzing the competition that the organization faces, the opportunities it might take advantage of, and the things that threaten the organization, making "opportunities and threats" the correct response. Long-term goals, product descriptions, and company policy toward its workers have nothing to with analyzing the external environment, so those choices are ruled out.

A differentiation strategy ________. a. usually focuses on price b. must focus on price c. can focus on a brand image d. can focus on value, but not service

c. can focus on a brand image A company with a differentiation strategy tries to make its products and services distinct and different, so prices would not typically be part of the approach. Service can function as something that differentiates the company, so the choice indicating focus on value but not service cannot be a correct response. Surprisingly, brand image can be the determining factor for a differentiation strategy. Though hard to establish, once it exists a unique and special brand name can distinguish a company from all of its competitors.

A politician whose ultimate goal is to get elected is planning campaign ads for TV. In planning the ads, the politician is functioning at a ________ level. a. strategic b. long-term c. tactical d. directional

c. tactical In this situation the politician's overall strategic goal is to get elected. His immediate goal is to plan effective TV ads. Since he is working on his immediate goal, the politician is functioning on a tactical, rather than a strategic level, making tactical the correct response.

A company that is on the verge of collapse or bankruptcy might employ this strategy. a. retrenchment b. incremental improvement c. turnaround d. hunker down

c. turnaround When a company finds itself in truly dire conditions, it goes beyond incremental improvement, "hunkering" down to try to wait out its troubles, or retrenchment. Instead, it employs a turnaround strategy, making that the correct response. A turnaround strategy is a full-fledged reorganization of the entire corporation, making it the most serious remedy for corporate woes.

In forward vertical integration, a company becomes its own ________, while in backward integration the company is its own ________. a. supplier; distributor b. supplier; customer c. distributor; monitor d. distributor; supplier

d. distributor; supplier Forward vertical integration involves a company taking control of distribution, while in backward vertical integration a company takes control of its suppliers. This makes the choice indicating "distributor;supplier" the correct response and eliminates all other responses

When Google purchased YouTube, a company that featured different, but related products, Google was engaging in which of the following? a. concentration b. forward vertical integration c. backward vertical integration d. diversification

d. diversification Google was clearly not focusing on existing products, taking control of distribution or supply so those choices can be ruled out as correct responses. What Google was doing was buying a company that it can use to complement or support its existing products. YouTube makes Google a more diversified product, so the purchase is an example of diversification, making that the correct response.

Which of the following make up the three main types of corporate strategies? a. growth, vertical integration, horizontal integration b. growth, retrenchment, renewal c. renewal, retrenchment, diversification d. growth, stability, renewal

d. growth, stability, renewal The three basic corporate strategies are termed growth, stability, and renewal, making that the correct response. The choice indicating growth, vertical integration, and horizontal integration includes only growth strategies so it can be eliminated. Both of the remaining choices leave out at least one major corporate strategy and include at least two forms of renewal, making these choices redundant and incorrect.

Customer service cannot be considered a strategic weapon for an organization. true false

false Anything that a company has or does that gives it an edge on its competition qualifies as a strategic weapon. Since customer service can serve as such an edge, it can be considered a strategic weapon.

The four reasons that organizations plan is to provide direction, set standards, minimize waste, and reduce uncertainty and the impact of change true false

true Direction tells organization members where the organization is going with respect to goals and objectives. Standards identify the goals of the organization. Minimizing waste and redundancy makes the organization efficient. Reducing the impact of change makes the organization more able to avoid the damage that change can bring on and to take advantage of the opportunities that changes often presents.

"Build a better mousetrap" is a way of describing a competitive advantage. true false

true Having a competitive advantage means that an organization has some kind of edge on its competition with respect to price, quality, the product itself, or some other characteristic

Most managers feel that formal, top-down plans created by corporate planning departments are ________. a. very useful b. usually unsatisfactory c. indispensible d. excellent

b. usually unsatisfactory Rather than find plans created by specialized corporate planning departments useful, indispensible, or excellent, a survey shows that over 75 percent of managers were dissatisfied with formal planning department plans, making "usually unsatisfactory" the correct response.

Which of the following is a frequently cited criticism of formal planning? a. Plans lock organizations into rigid goals and timetables. b. Plans take too long to create. c. Plans create resentment within different levels of the organization. d. Formal planning works well only for smaller companies.

a. Plans lock organizations into rigid goals and timetables. Planning works better for larger rather than smaller companies. Few serious complaints are ever voiced that planning is too time-consuming or that it creates discord, making these responses incorrect. What planning does do is lock organizations into commitments that are sometimes overly confining or destructive, making that the correct response.

A diversified corporation is likely to have ________. a. multiple competitive strategies b. a single competitive strategy c. no more than two competitive strategies d. thousands of competitive strategies

a. multiple competitive strategies A single competitive strategy might exist for a small company that has only one line of business. A large, diversified organization will consist of multiple businesses, so it will have multiple competitive strategies, making that the correct response and ruling out the choices indicating a single or no more than two competitive strategies. It is unlikely that an organization would have thousands of different lines of business, so it would be equally unlikely to have thousands of competitive strategies, ruling out that choice.

Taco Rocket (Scenario) Imagine that you are the president of Taco Rocket, a new and successful chain of 8 Mexican fast-food restaurants. The success you have experienced in the last 5 years has you thinking of what to do with the business next. Should you expand the business at the current rate? Open new and different restaurants? What? Up to now your success has been based on selling high-quality tacos and burritos at a price that others can't match. Your business is pursuing which of Porter's strategies? a. differentiation strategy b. cost leadership strategy c. competitive advantage strategy d. focus strategy

b. cost leadership strategy A focus strategy would have Taco Rocket trying to appeal to a narrow segment of the market, something that it clearly is not doing. A differentiation strategy would have Taco Rocket trying to make tacos that were superior in some way to all competitors, again something that it is not attempting to do. What Taco Rocket is doing is selling good quality food at low prices, so it is using a cost leadership strategy. A competitive advantage strategy is not one of Porter's recognized categories, so it is an incorrect response for this question.

SWOT analysis combines ________. a. a company's mission with its goals b. external and internal analyses c. a company's philosophy with its ethics d. profit with productivity

b. external and internal analyses An external analysis identifies threats to an organization and opportunities that it has. An internal analysis identifies strengths and weaknesses of the organization. Together, these two analyses make up the SWOT items—strengths, weaknesses, opportunities, and threats, making external and internal analyses the correct response. SWOT analysis has nothing to do with mission or company philosophy, making these choices incorrect. SWOT does not address profit or productivity, which rules out that choice.

One criticism of formal planning is that it focuses on how to beat the competition rather than how to ________. a. have cordial relationships with the competition b. focus on new opportunities c. balance the organization's budget d. cooperate with the competition

b. focus on new opportunities Critics of planning do not complain that planning focuses too much on organizational budgets or too-close relationships of an organization with its rivals. Critics do complain that organizations that put too much emphasis on planning end up being small-minded and myopic as they spend all of their energy trying to beat the competition rather than in being innovative and creating whole new products or industries. This makes "focus on new opportunities" the correct response.

tactical plans are operational plans that identify ________. a. overall organizational goals b. how overall goals are to be achieved c. the mission of an organization d. specific goals for accomplishing a specific objective

b. how overall goals are to be achieved

A cell phone company might ask managers to do some environmental scanning of blogs that deal with electronics as a way to ________. a. obtain new customers b. identify emerging trends c. obtain new advertisers d. identify potential rivals

b. identify emerging trends The purpose of environmental scanning is not to obtain customers, advertisers, or competitors, but rather to get a feel for the business environment that an organization functions in and detect emerging trends in its industry. This makes "identifying emerging trends" the correct response.

the first step in the six-step strategic management process is to ________. a. analyze the organization's strengths and weaknesses b. identify the organization's mission c. identify strategies to reach the organization's goals d. analyze the opportunities the organization has

b. identify the organization's mission Identifying the organization's mission is the first step in the strategic management process, making that the correct response. Analysis of strengths and weaknesses, and opportunities are all part of the second and third SWOT analysis steps of the process, while identification of strategies would be included in the fourth step, formulate strategies.

Competitive advantages for a high-prestige, premium coffee franchise like Starbucks are likely to include all of the following EXCEPT ________. a. high quality b. lowest prices c. well-trained employees d. pleasant venues

b. lowest prices Starbuck's as a premium alternative in the marketplace may offer high quality coffee, pleasant store fronts, and well-trained employees. However, as a high-prestige choice, the least likely thing for Starbucks to offer would be lowest prices, making that the correct response. Low prices might actually harm the high-prestige image that Starbucks tries to project. Note that for some other, non-premium company, low prices may indeed comprise a competitive advantage.

To create a competitive advantage that is sustainable, a company can begin by focusing on quality, then ________ a. make sure quality doesn't decline at too rapid a pace b. make incremental improvements to keep quality levels high c. change its entire product line frequently d. slowly diminish quality and raise the prices of its products

b. make incremental improvements to keep quality levels high Diminishing quality would be likely to erode a competitive advantage, not make it more sustainable. Changing a successful formula would also tend to be counter-productive, making "changing its entire product line frequently" incorrect. The only effective strategy would be to refuse to let well enough alone—keep the same product, but keep improving the product to stay ahead of rivals, making the choice regarding incremental improvements the correct response.

A mission statement includes identification of an organization's ________. a. strengths and weaknesses b. products and basic philosophy c. assets and resources d. resources and strengths

b. products and basic philosophy Finding the organization's strengths, weaknesses, assets, and resources are all part of an internal analysis, so the choices indicating strengths and weaknesses, assets and resources, and resources and strengths can all be ruled out because they include one or more of those items. That leaves products and basic philosophy as the correct response, as it correctly identifies that a mission statement should include a description of an organization's products as well as a summary of its basic philosophy.

A mission statement does NOT include which of the following? a. the customers of a company b. strategy for success c. why the company is in business and what it hopes to accomplish d. the company's basic beliefs

b. strategy for success A mission statement should identify an organization's customers, its core philosophy and beliefs, and its basic purpose, so these choices can be eliminated as possible correct responses. The one item listed that should not be part of a mission statement is strategy for success—the organization's mission has nothing to do with its strategy. The strategy is something that will be determined by the strategic management process.