MGMT 490 Exam 1 Ch 1

Which of the following statements about strategies is NOT correct? A strategy represents a managerial commitment to an integrated array of considered choices about how to compete. A strategy provides direction and guidance, in terms of not only what the company should do but also what it should not do. Making the wrong strategic moves will prove a distraction and a waste of company resources. A strategy is an action plan for outperforming its competitors and achieving superior profitability. A strategy is the actions taken to gain sales and market share irrespective of product prices and costs.

A strategy is the actions taken to gain sales and market share irrespective of product prices and costs.

Which of the following statements does NOT accurately describe a sustainable competitive advantage? The advantage is sustainable if it persists despite the best efforts of competitors to match or surpass this advantage. If a company's competitive edge holds promise for being sustainable (as opposed to just temporary), then so much the better for both the strategy and the company's future profitability. If a company once achieved a sustainable competitive advantage due to experience, know-how, and specialized capabilities, it is nearly impossible for competitors to imitate and eliminate this advantage. What makes a competitive advantage sustainable are elements of the strategy that give buyers lasting reasons that competitors are unable to nullify or overcome despite their best efforts. The bigger and more sustainable the competitive advantage, the better are a company's prospects for winning in the marketplace and earning superior long-term profits relative to its rivals.

If a company once achieved a sustainable competitive advantage due to experience, know-how, and specialized capabilities, it is nearly impossible for competitors to imitate and eliminate this advantage.

Which of the following is NOT true of a company's business model? It is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit. It is management's storyline for how the strategy will be a moneymaker. It consists of two crucial elements: (1) its customer value proposition and (2) its profit formula. It sets forth the logic for how its strategy will create value for customers, while at the same time generates revenues sufficient to cover costs and realize a profit. It reflects how efficiently a company can meet customer wants and needs even at the cost of incurring loss.

It reflects how efficiently a company can meet customer wants and needs even at the cost of incurring loss.

T/F: It is easier for rivals to imitate a company's product line than it is for them to duplicate its capabilities

True

Which of the following basic elements comprise a company's profit formula? V the value provided for customers; P the price charged to customers; and C the company's costs S the sustainable competitive advantage potential; V the value provided for customers; and C the company's costs C the competitive strength of the company; S the sustainable competitive advantage potential; and V the value provided for the customer M the company's market share; C the competitive strength of the company; and S sustainable competitive advantage potential P the price charged to customers; C the company's costs; and M the company's market share

V the value provided for customers; P the price charged to customers; and C the company's costs

When can a company achieve sustainable competitive advantage? Whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors. When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors. When it is able to produce better products for fewer costs than its rivals. When it consistently achieves both its long-term and short-term strategic and financial objectives. If it can translate its vision, mission, and values into a well-crafted strategy.

When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors.

Which is NOT a hallmark of a cleverly crafted and well-executed strategy? a strategy that facilitates the capture of emerging opportunities a strategy that produces enduringly good performance a strategy that is adaptable to changing business and market conditions a strategy that provides direction only in terms of what the company should do a strategy that can withstand the competitive challenges from rival firms

a strategy that provides direction only in terms of what the company should do

A strategy that changes in response to new market conditions and challenges is known as

an evolving strategy

Why does a company's strategy tend to be a "work in progress" and evolve over time? because of changing circumstances and ongoing management efforts to improve the strategy because the change in the company's vision and values cause a constant adaptation of the strategy, with the ongoing need to imitate new strategic moves by the industry leaders because the competitive advantage potential of developing a new strategy changes annually because of the ongoing need to imitate the strategic moves of the industry's strongest rival due to the changing nature of employee skills and capabilities

because of changing circumstances and ongoing management efforts to improve the strategy

What are two basic approaches in company strategy to improve chances of success in competing against rivals?

clearly differentiate a company from its rivals and establish a position in an uncrowded market

The fit test, which a company's strategy has to pass in order to be qualified as a winning strategy, includes competitive strength and market standing. a superior performance for more than a brief period of time. close and effective alignment with the company's situation even as external and internal conditions change. profitability, shareholder value creation, and financial strength. competitive strength and superior performance.

close and effective alignment with the company's situation even as external and internal conditions change.

What performance indicators reveal the most about the merits of a company's strategy?

competitive strength and market standing profitability and financial strength

Which of the following are impediments to a company's long-term industry success?

inadequate attempts to improve, imitative strategies, illogical strategies

Starbucks is an example of a company that has been able to charge more for its products than its rivals yet still expand its customer base. Which of the following are elements of the company strategy that have enabled Starbucks to gain competitive advantage?

delivering a premium product enhancing the atmosphere of its stores making its store locations ubiquitous

Actions taken in response to new strategic maneuvers by rival firms or other unanticipated market circumstances make up a company's ______ strategy.

emergent

Unanticipated developments and fresh market conditions require a[n] deliberate strategy. market-driven strategy. customer-oriented strategy. emergent strategy. proactive strategy.

emergent strategy.

Which of the following is NOT a condition that would lead managers to drastically modify the company's strategy? changing market conditions advancing technology shifting buyer needs mounting evidence that the strategy is not working well employee demands for better working conditions

employee demands for better working conditions

Types of actions and approaches that often characterize a company's strategy do NOT include actions to strengthen market standing and competitiveness by acquiring or merging with other companies. enter new product or geographic markets or to exit existing ones. upgrade, build, or acquire competitively important resources and capabilities. capture emerging market opportunities and defend against external threats to the company's business prospects. improve ethical standards, ensure employees' commitment, and continuously develop new talents.

improve ethical standards, ensure employees' commitment, and continuously develop new talents.

Competing in the marketplace on the basis of a competitive advantage involves either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm. provides the basis for a longer, sustainable growth. gives buyers an immediate preference for a company's products or services over those of competitors and enables the company to dominate its competitors. deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner that keeps the company's prices as low as possible. means that a company has to offer the lowest price for differentiated goods that at least match the feature and performance of higher-priced rival brands.

involves either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm.

The combination of a good strategy and good strategy execution provides long-term growth for the company. enables the company to become the industry leader. is the most telling sign of good management. is the sign for achieving a sustainable competitive advantage. signals the company's superiority in the industry.

is the most telling sign of good management.

Which of the following is NOT a frequently used and dependable strategic approach to setting a company apart from rivals, building strong customer loyalty, and winning a competitive advantage? striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals outcompeting rivals on the basis of differentiating features, such as higher quality, wider product selection, added performance, value-added services, more attractive styling, and technological superiority developing an advantage based on offering more value for the money focusing on a narrow market niche within an industry mimicking the strategies of the industry leaders to gain a strong market position

mimicking the strategies of the industry leaders to gain a strong market position

A company's strategy is shaped by the market environment and the competitive pressure created by the rivalry within the industry. by its core values, mission, and strategic vision. by its resources, capabilities, competitiveness, and market position. by its capital reserves and future growth potential. partly by management analysis and choice, and partly by the necessity of adapting.

partly by management analysis and choice, and partly by the necessity of adapting.

What is a company's strategy?

set of actions

A company's strategy is mostly proactive and consists of strategy elements that are both planned and realized as planned. tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective. consists of initial and developing approaches aiming to ensure long-term growth. is mainly affected by a reactive approach since uncertainty is high. generally consists of new strategy elements and strategic moves that emerge as changing conditions warrant.

tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective

A strategy consists of the beliefs, traits, and behavioral norms that company personnel are expected to display and execute in daily business operations. the competitive moves and business approaches that managers are employing to achieve superior profitability. the offensive moves a company is employing to make its product offering more distinctive and appealing to buyers, and that offers a higher margin for the company. the company's aspirations for the future, its vision, purpose, and present business approaches that differentiate the company from its competitors and create a competitive advantage. the actions and moves taken by the managers to please and attract the customers without much consideration to rival strategies.

the competitive moves and business approaches that managers are employing to achieve superior profitability.

Which of the following are among the tests a winning strategy must pass? the fit test and the profitability test the performance test and the cost-advantage test the competitive advantage test and the profitability test the fit test and the performance test the ethical standard test and the fit test

the fit test and the performance test