Strategic Management Assouad Belmont Final Exam

Which of the following is one of the eight principal managerial components associated with the process of implementing and executing strategy? A) Allocating ample resources to strategy-critical activities B) Shifting from decentralized to centralized decision making so as to give senior executives more authority and control in driving cultural change C) Implementing a management development plan to groom future executives D) Staffing solely with personnel below the age of 35 who have college degrees and a grade point average of 3.0 or better E) Adopting best practices and business processes to drive continuous improvement in activities that encompass strategy execution

A) Allocating ample resources to strategy-critical activities

Which of the following is not one of the principal offensive strategy options? A) Adopting and improving on the good ideas of other companies B) Launching preemptive strikes C) Blocking the avenues open to challengers D) Attacking competitors' weaknesses E) Offering an equal or better product at a lower price

C) Blocking the avenues open to challengers

Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is A) total quality management. B) business process reengineering. C) a properly designed reward structure. D) making the company a great place to work in terms of pay scales, fringe benefits, and employee perks. E) effective screening of job applicants such that only the most motivated and energetic people are hired.

C) a properly designed reward structure.

Although there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are A) whether a company's overall costs are lower than a competitors' and whether the company can achieve strong product differentiation. B) whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market. C) whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy. D) whether a company can achieve lower costs than its rivals and whether the company is pursuing the industry's sales and market share leader's role. E) whether a company can build a brand name and an image that buyers trust.

C) whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy.

To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: A) the attractiveness test, the barrier-to-entry test, and the growth test. B) the strategic fit test, the resource fit test, and the profitability test. C) the barrier-to-entry test, the growth test, and the shareholder value test. D) the attractiveness test, the cost-of-entry test, and the better-off test. E) the resource fit test, the strategic fit test, the profitability test, and the shareholder value test.

D) the attractiveness test, the cost-of-entry test, and the better-off test.

Business process reengineering is a tool for A) remodeling and refreshing a strategy-critical core competence. B) pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work. C) reducing the size of a company's managerial bureaucracy. D) boosting the quality of a company's product and the caliber of its customer service. E) expediting the development of an important new competitive capability.

A) remodeling and refreshing a strategy-critical core competence. B) pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work.

Integrated social contracts theory maintains that A) all ethical standards are determined by societal norms and individuals have an implied social contract to live up to these standards. B) "first-order" universal ethical norms always take precedence over "second-order" local ethical norms. C) there should be no absolute limits put on what is ethically or morally right. D) few nations or cultures have common moral agreement on what is ethically right and wrong. E) each country/culture/society has commonly held views about what constitutes ethically appropriate actions/behaviors that all individuals in that country/culture/society are obligated to observe.

B) "first-order" universal ethical norms always take precedence over "second-order" local ethical norms.

Which one of the following falsely describes a centralized approach to decision making? A) Little discretionary authority is granted to frontline supervisors and rank-and-file employees. B) Hierarchical command-and-control structures speed an organization's responses to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision. C) Tight control by a few senior managers makes it easy to fix accountability when things do not go well. D) There is an assumption that front line personnel have neither the time nor the inclination to direct and properly control the work they are performing, and that they lack the knowledge and judgment to make wise decisions about how best to do their work. E) Top executives retain authority for most strategic and operating decisions.

B) Hierarchical command-and-control structures speed an organization's responses to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision.

Which of the following steps is not a part of the SWOT analysis? A) Identify company weaknesses and competitive deficiencies. B) Identify the company's alignment of vision, mission, values, and strategy. C) Identify company strengths and competitive assets. D) Identify external threats to the company's future profitability. E) Identify company market opportunities.

B) Identify the company's alignment of vision, mission, values, and strategy.

Multinational competitors tend to concentrate activities in a limited number of locations when A) prices and competitive conditions are strongly linked across country markets to form a world market. B) there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. C) the risk of fluctuating exchange rates is very high. D) host-country governments can be persuaded to erect high tariff barriers to protect the company's operations from foreign competitors and it is not imperative to be responsive to buyer needs and competitive conditions in each country. E) competitive conditions make it infeasible to employ a profit sanctuary strategy or an export strategy.

B) there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.

Which of the following is not an example of unrelated diversification? A) Homebuilder acquiring a forest products company B) A manufacturer of golf shoes acquiring a retailer of fishing rods and lures C) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans) D) A steel producer acquiring a hardware store E) An online merchandiser acquiring a retail supermarket that specializes in natural and organic foods

C) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans)

Which of the following is not a good example of a marketing-related key success factor? A) A well-known and well-respected brand name B) Breadth of product line and product selection C) Proven ability to improve production processes D) Clever advertising E) Courteous, personalized customer service

C) Proven ability to improve production processes

The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on A) the contribution it makes to improving labor productivity and reducing labor costs. B) the benefits of keeping the layers of management to a minimum. C) the thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact they need, they have to be centerpieces in the organizational scheme. D) the benefit of keeping the organization structure simple and easy for employees to understand. E) making it easier to capture the benefits of centralized decision making.

C) the thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact they need, they have to be centerpieces in the organizational scheme.

Companies tend to concentrate their activities in a limited number of locations A) where the costs of manufacturing or other activities are significantly higher. B) where there are significant scale diseconomies. C) when there is a steep learning curve associated with performing an activity. D) when certain locations have inferior resources or allow for poorer coordination of related activities. E) where sophisticated production facilities or highly trained local personnel are unavailable.

C) when there is a steep learning curve associated with performing an activity.

Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies? A) Gain wider access to attractive country markets B) Gain better access to scale economies in production and/or marketing C) Fill competitively important gaps in their technical expertise and/or knowledge of local markets D) Better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization E) Share distribution facilities and dealer networks, thus mutually strengthening the allies' access to buyers

D) Better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization

Which of the following is not a typical reason that many alliances do not live up to expectations? A) Inability of partners to work well together B) Emergence of more attractive technological paths C) Changing conditions make the purpose of the alliance obsolete D) Disagreement over how to divide the added market share and profits gained from joint collaboration E) Diverging objectives and priorities

D) Disagreement over how to divide the added market share and profits gained from joint collaboration

Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries? A) Variations in market growth rates from country to country and important country-to-country differences in consumer buying habits and buyer tastes and preferences B) Country-to-country variations in host-government policies and trade requirements C) Product designs suitable for one country are sometimes inappropriate in another D) Vulnerability to adverse shifts in currency exchange rates E) A need to convince shippers to keep transportation costs low

E) A need to convince shippers to keep transportation costs low

Companies can pursue differentiation from many angles except A) providing a unique competitive product taste. B) executing superior customer service. C) ensuring engineering design and performance benefits. D) providing products that ensue luxury and prestige. E) investing in managerial productivity and enjoying experience curve effects.

E) investing in managerial productivity and enjoying experience curve effects.

Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? A) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling directly to end-users at the company's website B) Allowing a company to reduce its costs if the activity is not crucial to the firm's ability to achieve sustainable competitive advantage and will not hollow out its capabilities, core competencies, or technical know-how C) Improving organizational flexibility and speeding time to market D) Allowing a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best E) Being able to reduce the company's risk exposure to changing technology and/or buyer preferences

A) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling directly to end-users at the company's website

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures? A) Coca-Cola as a substitute for Pepsi. B) Video-on-demand services from Amazon Prime as a substitute for going to a movie theatre. C) Smartphones as a substitute for digital cameras. D) A salad as a substitute for French fries. E) Healthy vegan fast-food quick-service restaurants as a substitute for burger chains.

A) Coca-Cola as a substitute for Pepsi.

Which of the following is a condition that does not necessarily give rise to unethical business strategies and behavior? A) Confusion over local ethical standards that conflict with those of the company B) Faulty oversight that implicitly allows the overzealous pursuit of personal gain, wealth, and self-interest C) An organizational culture that adheres to the philosophy of "the business of business is business, not ethics." D) A company mindset that puts profitability and business performance ahead of ethical behavior E) Constant heavy pressures on company managers to meet or beat short-term performance targets

A) Confusion over local ethical standards that conflict with those of the company

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of developing country markets? A) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals. B) Prepare to compete on the basis of low price. C) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). D) Try to change the local market to better match the way the company does business elsewhere. E) Stay away from those emerging markets where it is impractical or uneconomical to modify the company's business model to accommodate local circumstances.

A) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals.

Which of the following statements about matching organizational structure to strategy execution is not correct? A) Functional structures are common among companies pursuing some form of diversification strategy. B) Simple structures are best matched to small firms and entrepreneurial startups. C) The type of organizational structure that is most suitable for a given firm will depend on the firm's size and complexity, as well as its strategy. D) Matrix organizational structures are most suitable when there is a need for cross-unit communication, collaboration, and coordination. E) As firms grow, their structural form is likely to evolve.

A) Functional structures are common among companies pursuing some form of diversification strategy.

Which of the following is not a strategic disadvantage of vertical integration? A) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. B) Vertical integration increases a firm's capital investment in the industry. C) Integrating into more industry value chain segments increases business risk if industry growth and profitability sour. D) Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities. E) Integrating backward potentially results in less flexibility in accommodating shifting buyer preferences when a new product design does not include parts and components that the company makes in-house.

A) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs.

Which of the following help in changing an unhealthy or problematic company culture? A) Management needs to be quickly and aggressively striving to ingrain new behaviors and work practices that will enable first-rate strategy execution, which may take a longer period of time. B) Managers need to learn the weaknesses of their subordinates to begin the change process. C) The strategy has to be changed as rapidly as possible to regain harmony with cultural norms. D) Management needs to go on the offensive to reinterpret the culture and explain to company personnel why there really is a good overall cultural fit with the strategy. E) Company personnel need to cling to familiar practices, be wary of change, and blame top management for any shortfalls in performance.

A) Management needs to be quickly and aggressively striving to ingrain new behaviors and work practices that will enable first-rate strategy execution, which may take a longer period of time.

Which of the following instances does not exemplify when a late-mover advantage arises? A) Property rights protections in the form of patents, copyrights, and trademarks prevent the ready imitation of initial moves. B) Rapid market evolution gives fast followers the opening to leapfrog a first mover's products with more attractive next-version products. C) Market uncertainties make it difficult to ascertain what will eventually succeed. D) Products of an innovator are simple, do not need a high customer understanding, and easily penetrate the market. E) Pioneering helps build a firm's reputation with buyers and creates brand loyalty.

A) Property rights protections in the form of patents, copyrights, and trademarks prevent the ready imitation of initial moves.

In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? A) When potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover B) When pioneering helps build up a firm's image and reputation with buyers C) When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases D) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely E) When moving first can result in a cost advantage over rivals

A) When potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover

The strategic appeal of related diversification is that it A) allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities. B) is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses). C) involves diversifying into industries having the same kinds of key success factors. D) is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses. E) facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.

A) allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.

Which of the following is the biggest strategic issue when competing in the markets of foreign countries? A) determining whether to standardize or customize the company's offerings. B) learning about the regulation processes and political and capital requirements of each country market. C) selecting among global, transnational, or international entry strategies. D) deciding which price strategy to follow. E) avoiding the risks posed by fluctuating exchange rates.

A) determining whether to standardize or customize the company's offerings.

Assessing the competitive advantage potential of cross-business strategic fit among the company's various business units involves A) examining a company's costs relative to the costs of its chief rivals in the industry. B) evaluating how much benefit a diversified company can gain from cross-business value chain matchups and resource sharing. C) considering what competitive value can be generated from a strategic fit. D) determining if there are opportunities to exploit outsourcing opportunities by a diversified company's lineup of businesses. E) evaluating a diversified company's profitability relative to its competitors.

A) examining a company's costs relative to the costs of its chief rivals in the industry.

A "think local, act local" multidomestic type of strategy A) focuses on the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. B) always makes a company vulnerable to rivals employing "think global, act global" strategies. C) protects a multinational firm against fluctuating exchange rates. D) is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy. E) employs essentially the same basic competitive strategy theme in all country markets.

A) focuses on the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all countries where the firm does business.

Experience indicates that strategic alliances A) have a high "divorce rate." B) are generally successful. C) work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. D) work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies. E) are rarely useful in helping a company win the race for global industry leadership and establish positions in industries of the future.

A) have a high "divorce rate."

If one adopts the thinking of the school of ethical relativism, then A) there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another. B) there is a "one-size-fits-all" set of authentic ethical standards. C) the preferred set of ethical standards is the one that society at large has put in place in the form of laws and regulations. D) the prevailing ethical standards are the product of a system of "integrated social contracts." E) no ethical standards are ever truly "authentic"—they exist only to the extent that there is a temporary shared conviction among company managers and company personnel that a particular behavior is either ethically permissible or ethically impermissible.

A) there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another.

One of the biggest strategic challenges to competing in the international arena is A) whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers. B) determining how many foreign firms to license to produce and distribute the company's products. C) whether to pursue a global strategy or an international strategy. D) whether to offer a product at a priced based on the median income of the population. E) whether to charge the same price in all country markets.

A) whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.

Which of the following does not accurately describe entering a new business via acquisition, internal development, or a joint venture? A) The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price. B) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up. C) Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurtle entry barriers. D) Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market. E) The big drawbacks to entering a new industry via internal development include the costs of overcoming entry barriers, building an organization from the ground up, and the extra time it takes to build a strong and profitable competitive position.

B) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up.

Which of the following is not generally on a company's menu of actions to consider in crafting a strategy of social responsibility? A) Efforts to employ an ethical strategy and observe ethical principles in operating the business B) Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins C) Making charitable contributions, supporting community service endeavors, engaging in broader philanthropic initiatives, and reaching out to make a difference in the lives of the disadvantaged D) Actions to build a workforce that is diverse with respect to gender, race, national origin, and other aspects that different people bring to the workplace E) Actions to protect the environment and, in particular, to minimize or eliminate any adverse impact on the environment stemming from the company's own business activities

B) Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins

Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is correct? A) Observing and following the lead of local competitors is the sole guarantee of success in developing markets. B) Building a market for the company's products can often turn into a long-term process that involves reeducation of consumers. C) Entering an emerging market should always involve a best-cost strategy. D) Standardized products are typically more successful in emerging country markets. E) Profitability always comes quickly to entrants into developing markets because of global branding.

B) Building a market for the company's products can often turn into a long-term process that involves reeducation of consumers.

Which of the following strategic business units generate operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends? A) Cash hogs B) Cash cows C) Star businesses D) Stars E) Cash dogs

B) Cash cows

Which of the following statements is accurate concerning a company's environmental sustainability strategy? A) Environmental sustainability consists of a corporate commitment to address the unmet noneconomic needs of society. B) Environmental sustainability consists of deliberate actions to protect the environment, provide for the longevity of natural resources, and maintain ecological support systems for future generations. C) Environmental sustainability consists of striking a balance between (1) the economic responsibility to reward shareholders with profits, (2) the legal responsibility by the company to laws in countries where it operates, (3) the ethical responsibility to abide by society's moral norms, and (4) the discretionary philanthropic responsibility to contribute to the noneconomic needs of society. D) Environmental sustainability consists of developing the resource strengths necessary to develop a sustainable competitive advantage. E) Environmental sustainability consists of business practices that meet the needs of the future by rationing what is provided to present-day customers.

B) Environmental sustainability consists of deliberate actions to protect the environment, provide for the longevity of natural resources, and maintain ecological support systems for future generations.

Which of the following is not a characteristic of a compensation and reward system designed to help drive successful strategy execution? A) Making the performance payoff a major, not minor, piece of the total compensation package B) Keeping performance incentives and bonuses to less than 15 percent of total compensation C) Not skirting the system to find ways to reward effort rather than results D) Having incentives that extend to all managers and all workers, and generously rewarding people who turn in outstanding performances E) Making sure the time between achieving the target performance outcome and the payment of the reward is as short as possible

B) Keeping performance incentives and bonuses to less than 15 percent of total compensation

Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following? A) Broadening the firm's business scope by diversifying into additional businesses B) Shifting from a multiple-country to a global strategy C) Restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup D) Sticking closely with the existing business lineup and pursuing the opportunities these businesses present E) Divesting some businesses and retrenching to a narrower base of business operations

B) Shifting from a multiple-country to a global strategy

Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? A) A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents. B) The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society's social responsibility expectations. C) Social responsibility strategies work to the advantage of shareholders. D) Socially responsible actions yield internal benefits (particularly for employee recruiting, workforce retention, and training costs) and can improve operational efficiency. E) Socially responsible actions can lead to increased buyer patronage.

B) The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society's social responsibility expectations.

According to the triple bottom line, which of the following statements is not accurate? A) The three dimensions of performance are often referred to in terms of the "three pillars" of people, planet, and profit. B) The term "planet" refers to the company's overriding legal obligation to incorporate protection of the environment into its mission. C) The term "people" refers to various social initiatives such as charitable contributions, serving endeavors, and engaging in broader philanthropic initiatives. D) The term "profit" not only encompasses the profit earned for its shareholders but also the economic impact that the company has on society more generally. E) The triple bottom line refers to three types of performance metrics: economic, social, and environmental.

B) The term "planet" refers to the company's overriding legal obligation to incorporate protection of the environment into its mission.

First-mover advantages are unlikely to be present in which one of the following instances? A) When first-time customers remain strongly loyal to pioneering firms in making repeat purchases B) When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products C) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely D) When pioneering helps build a firm's image and reputation with buyers E) When early commitments to new technologies, new-style components, new or emerging distribution channels, and so on can produce an absolute cost advantage over rivals

B) When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products

The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to A) determine which business unit has the greatest number of resources, competencies, and competitive capabilities and which one has the least. B) assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender. C) rank each business unit's strategic fit from highest to lowest. D) rank each business unit's resource fit from highest to lowest. E) rank each business unit's strategy from best to worst.

B) assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender.

Teresa is reconfiguring the structure, staffing, and reporting relationships within the IT department in her company. Which of the following organization-building actions is Teresa undertaking? A) assembling a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution. B) building an organization—consisting of the capabilities, people, and structure needed to execute the strategy successfully. C) instilling a corporate culture for good strategy execution. D) strengthening key resources for a strategy change. E) choosing managers who have the same core values and ethical standards.

B) building an organization—consisting of the capabilities, people, and structure needed to execute the strategy successfully.

The primary reasons that companies opt to expand into foreign markets are to A) boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions. B) gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base. C) grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances. D) avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy. E) raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.

B) gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include A) being particularly well-suited to the international expansion efforts of companies with global strategies. B) having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. C) helping build brand awareness in international markets. D) being well suited to companies that employ cross-market subsidization. E) gaining support from local governments in the form of subsidies and meeting local content requirements.

B) having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.

In order to use location to build competitive advantage when competing on domestic and international level, a company must A) transfer company expertise to cross-border markets and initiate actions to contend on an international level. B) pursue blue-ocean opportunities both in the company's home country market and in global markets. C) use acquisition and rapid-growth strategies to better defend against expansion-minded international rivals. D) try to change the local market to better match the way the company does business elsewhere. E) consider whether to concentrate each activity it performs in a few select countries or disperse the performance of the activity to many nations, and determine in which countries it should locate particular activities.

B) pursue blue-ocean opportunities both in the company's home country market and in global markets.

Among the purposes of defensive strategies are to A) aggressively retaliate against rivals pursuing offensive strategies and prevent price wars. B) restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals. C) guard against adverse changes in the company's macro-environment and insulate the company from the impact of industry-driving forces. D) strengthen a company's competitive advantage and reduce its exposure to business risk. E) eliminate a company's resource weaknesses and competitive deficiencies, thereby making it invulnerable to competitive attack from would-be challengers.

B) restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals.

The defining characteristic of unrelated diversification (as opposed to related diversification) is A) the presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit). B) that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities). C) the presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit). D) that the company's businesses are in different industries. E) the presence of cross-business financial fit.

B) that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities).

According to integrated social contracts theory, A) the views and principles of the school of ethical universalism are definitely wrong; the correct view is that ethics is a matter of personal responsibility, not a matter of management concern. B) the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms. C) the standards of what is ethically permissible and what is not should be based on a code of ethical and moral conduct that each society/country/culture adopts and then enacts into law. D) the standards of what is ethically permissible should be determined by the terms of an "ethics contract" that each company employee signs as a condition of employment. E) the only valid ethical standards are those that are universal—and then only if the standards are not absolute and provide some wiggle room according to the circumstances of the each situation.

B) the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms.

The defining characteristic of related diversification (as opposed to unrelated diversification) is A) that the diversified businesses are utilizing similar competitive strategies. B) the presence of cross-business value chain relationships and strategic fits. C) that each business the company has diversified into has very similar core competencies and competitive capabilities. D) that the company has about the same number of cash cow businesses as it has cash hog businesses. E) the existence of cross-industry resource fits and similar key success factors from industry to industry.

B) the presence of cross-business value chain relationships and strategic fits.

A change in strategy nearly always entails budget reallocations because A) new strategic initiatives can be costly or capital intensive. B) units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets. C) the accompanying policy revisions and compensation incentives tend to require different levels of funding than before. D) of corresponding changes in the company's organizational structure and budgetary requirements. E) adopting best practices and pushing for continuous improvement tend to reduce costs and reduce overall resource requirements.

B) units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.

Which of the following statements about a company's realized strategy is true? A) A company's realized strategy is usually kept secret. B) A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. C) A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. D) A company's realized strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. E) A company's realized strategy is developed mostly on a day-to-day basis because of the constant efforts of managers to keep rival companies at a disadvantage.

C) A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements.

Which one of the following statements concerning the impact of fluctuating exchange rates on companies competing in foreign markets is not true? A) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B) Exchange rate shifts can produce sometimes favorable and sometimes unfavorable effects on a company's competitiveness. C) 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. D) Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries to which goods are being exported. E) If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25 per euro, then it is correct to say that the U.S. dollar has grown weaker.

C) 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.

Of the following examples of value chain activities, which is unlikely to be a primary building block in the company's organizational structure? A) In a discount stock brokerage, the critical value chain activities are fast access to information, accurate order execution, and good customer service. B) In apparel retailing, the critical value chain activities include apparel design, supply chain activities, marketing and advertising, and in-store customer service. C) In automobile manufacturing, the critical value chain activities include raw materials procurement, offshore sourcing, and customer service. D) In specialty chemicals, the critical value chain activities are R&D, product innovation, and getting new products on the market quickly. E) For a ski apparel manufacturer, the critical value chain activities are styling and design and marketing and advertising.

C) In automobile manufacturing, the critical value chain activities include raw materials procurement, offshore sourcing, and customer service.

Which one of the following statements explaining why merger and acquisition strategies typically fail is true? A) Merger and acquisition strategies typically fail due to the development of effective integration plans conducive to employee satisfaction. B) Merger and acquisition strategies typically fail due to the creation of management-employee programs intended to foster better communication. C) Merger and acquisition strategies typically fail due to a misinterpretation of the cultural differences, like employee disenchantment and low morale, because of differences in management styles and operating procedures, and due to unforeseen challenges in integrating operations. D) Mergers and acquisition strategies typically fail due to an execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue. E) Mergers and acquisition strategies typically fail due to misleading advertising messages detailing the merger announcement.

C) Merger and acquisition strategies typically fail due to a misinterpretation of the cultural differences, like employee disenchantment and low morale, because of differences in management styles and operating procedures, and due to unforeseen challenges in integrating operations.

Which of the following is not an example of a company pursuing a blue-ocean strategy? A) Starbucks in the coffee house industry B) FedEx in overnight package delivery C) Nordstrom in the retail industry D) Cirque de Soleil in the live entertainment industry E) eBay in the online auction industry

C) Nordstrom in the retail industry

Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A) Picking the new industries to enter and deciding on the means of entry B) Initiating actions to boost the combined performance of the businesses the firm has entered C) Standardizing the resource fit across the group of businesses the company has diversified into D) Establishing investment priorities and steering corporate resources into the most attractive business units E) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage

C) Standardizing the resource fit across the group of businesses the company has diversified into

Which of the following is typically the strategic impetus for forward vertical integration? A) To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers B) To make it easier to expand the company's product line C) To gain better access to end users and better market visibility D) To achieve greater control over advertising and in-store retail merchandising E) To gain better access to greater economies of scale

C) To gain better access to end users and better market visibility

Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A) Whether and when to go on the offensive and initiate aggressive strategic moves to improve the company's market position, or to go on the defensive B) Which value chain activities, if any, should be outsourced C) Whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy D) Whether to integrate forward or backward into more stages of the industry value chain E) Whether to enter into strategic alliances or collaborative partnerships

C) Whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy

The hallmarks of a high-performance corporate culture include A) a shared willingness to adapt core values and ethical standards to fit the changing requirements of an evolving strategy, use of a balanced scorecard approach to tracking company performance, and a gung-ho approach to discovering best practices. B) considerable political infighting that typically consumes a great deal of organizational energy, often with the result that what is best for the company takes a backseat to political maneuvering. C) a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat objectives. D) charismatic managerial leadership, a lean management bureaucracy, and a must-be-invented-here mind set. E) strong inclinations to adopt a wait-and-see posture, carefully analyze several alternative responses, learn from the missteps of early movers, and then move forward cautiously and conservatively with initiatives that are deemed safe.

C) a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat objectives.

The advantages of manufacturing goods in a particular country and exporting them to foreign markets A) are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country. B) are greatest when local consumers prefer products manufactured inside the country's borders. C) are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. D) can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. E) are largely unaffected by tariffs or quotas.

C) are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

Using domestic plants as a production base for exporting goods to selected foreign country markets A) is usually a superior approach to competing in international markets. B) can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country. C) can be an excellent initial strategy to pursue international sales. D) is usually a weak strategy when competitors are pursuing licensing strategies. E) can be a powerful strategy because the company is not vulnerable to tariffs or quotas.

C) can be an excellent initial strategy to pursue international sales.

The thesis that because different societies and cultures have divergent values and standards of what is "ethically right" and "ethically wrong," it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores A) is the basis for the theory of ethical variation. B) defines what is meant by "integrated social contracts theory." C) characterizes the school of ethical relativism. D) accounts for why there is no such thing as ethical standards for business enterprises. E) is the reason codes of ethical and social morality have been established country by country.

C) characterizes the school of ethical relativism.

Company strategies and value-creating processes cannot be effectively executed without internal operating systems that include A) PCs, servers, web applications, and e-business solutions. B) TQM, reengineering, and Six Sigma programs. C) customer data, employee data, supplier/partner data, operations data, and financial performance data. D) benchmarking and best practices. E) up-to-date competitor strength assessments.

C) customer data, employee data, supplier/partner data, operations data, and financial performance data.

Six Sigma quality control A) is a tool that is superior to TQM in achieving top-notch quality in manufacturing a product. B) consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations. C) is based on three principles: (1) all work is a process, (2) all processes have variability, and (3) all processes create data that explain variability. D) is the best practice for managing manufacturing and assembly activities. E) is a disciplined, statistics-based approach to manufacturing or assembling a product and results in five defects per million iterations when implemented properly.

C) is based on three principles: (1) all work is a process, (2) all processes have variability, and (3) all processes create data that explain variability.

Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel A) are able to comply with the varying ethical standards of the world's different cultures. B) have no fair way to judge the ethical correctness of the conduct of company personnel. C) quickly find themselves on a slippery slope with no ethical standards or principles of their own. D) have a uniform code of ethical standards that is applied globally. E) end up allowing each company employee to determine what set of ethical standards to observe.

C) quickly find themselves on a slippery slope with no ethical standards or principles of their own.

Ranking a diversified company's businesses in terms of priority for resource allocation and new capital investment A) should be done chiefly on the basis of appealing industry attractiveness and resource fit and secondarily on the basis of competitive strength and strategic fit with other businesses. B) entails arraying the various businesses from the biggest cash hog down to the biggest cash cow; big cash hogs get the highest priority for resource allocation and big cash cows get the lowest priority. C) should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and have solid and appealing strategic fits and resource fits. D) should be based chiefly on relative market share, recent profitability, and potential for achieving cash cow status. E) should be based primarily on cross-business resource fit considerations, each business unit's relative market share, and each business's projected ability to cover its debt payments and generate positive cash flows.

C) should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and have solid and appealing strategic fits and resource fits.

Economies of scope A) are derived from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. B) have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. C) stem from cost-saving strategic fits along the value chains of related businesses. D) refer to the cost savings that flow from being able to combine the value chains of different businesses into a single value chain. E) are like economies of scale and arise from being able to lower costs via a larger volume operation.

C) stem from cost-saving strategic fits along the value chains of related businesses.

Business ethics can be defined as A) applying general ethical principles and standards to the various stakeholders of businesses. B) rules that each company makes about "what is right" and "what is wrong" for top management and the board of directors. C) the application of ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel. D) special standards and codes of conduct that are only present in business situations. E) adopting or rejecting various societal ethical standards to arrive at a set of standards for operating a business.

C) the application of ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel.

An example of a potential weakness or competitive deficiency is A) a rival developing unique resources and capabilities that require a high level of capital investment. B) the growing bargaining power of customers or suppliers. C) the lack of attention to customer needs. D) restrictive foreign trade policies or tight credit conditions. E) changes in technology—particularly disruptive technology.

C) the lack of attention to customer needs.

Checking a diversified company's business lineup for resource fit does not involve which one of the following "tests"? A) Determining whether a company has or can develop the specific resources and competitive capabilities needed to be successful in each of its businesses B) Determining whether recently acquired businesses are acting to strengthen the company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thin C) Determining whether each business adequately contributes to achieving companywide performance targets D) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses E) Determining whether the company has adequate financial strength to fund the needs of its various businesses and maintain a healthy credit rating

D) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses

Which of the following makes acquisition an attractive approach to diversifying into another industry? A) If it is not time-consuming and allows the firm to realize great profits and a sustainable competitive advantage B) Only if it is less expensive, less risky, and more effective than launching a new startup operation C) If it satisfies all three diversity tests (industry attractiveness test, cost-of-entry-test, better-off test) to grow shareholder value over the long term D) If it is quicker than trying to launch a brand-new operation, offers an effective way to hurtle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry E) If due diligence and integration can be done easily and at low cost

D) If it is quicker than trying to launch a brand-new operation, offers an effective way to hurtle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry

Which of the following is not a potential advantage of backward vertical integration? A) Adds to a company's differentiation capabilities and perhaps achieves a differentiation-based competitive advantage B) Lessens a company's vulnerability to powerful suppliers inclined to raise prices at every opportunity C) Spares a company the uncertainty of being dependent on suppliers for crucial components or support services D) Offers enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality E) Contributes to a better-quality product/service offering

D) Offers enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality

Which of the following is not an important nonmonetary approach to enhancing motivation and helping drive successful strategy execution? A) Adopting promotion-from-within policies and acting on suggestions from employees B) Providing attractive perks and fringe benefits C) Creating a work atmosphere in which there is genuine sincerity, caring, and mutual respect among employees and management D) Providing rank-and-file employees with representation on the company's board of directors E) Using frequent words of praise to recognize employees for commendable performance

D) Providing rank-and-file employees with representation on the company's board of directors

Which one of the following is not something that shapes and helps define a company's culture? A) Core values, beliefs, business principles, and traditions that permeate the workplace B) Work practices and behaviors that define "how we do things around here": the company's standards of what is ethically acceptable and what is not, along with the legends and stories that people repeat to illustrate and reinforce the company's core values, traditions, and business practices C) A company's approach to managing people and its style of operating D) The strategy and business model that the company has adopted E) The "chemistry" that permeates its work environment

D) The strategy and business model that the company has adopted

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A) when high transportation costs make it expensive to operate from central locations. B) whenever buyer-related activities are best performed in locations close to buyers. C) if economies of scale are essential to achieving acceptable production costs. D) Two answers are correct when high transportation costs make it expensive to operate from central locations and whenever buyer-related activities are best performed in locations close to buyers. E) if trade barriers and transportation costs fall, making it more profitable to operate from a central location in the company's home market.

D) Two answers are correct when high transportation costs make it expensive to operate from central locations and whenever buyer-related activities are best performed in locations close to buyers.

Ethical principles in business A) concern the behavioral guidelines a company's top management and board of directors set for company personnel regarding "what is right" and "what is wrong" in conducting the company's business. B) deal chiefly with the actions and behaviors required to operate companies in a socially responsible manner. C) are arrived at by picking and choosing among the consensus ethical standards of society to come up with a set of ethical standards that apply directly to operating a business. D) are not materially different from ethical principles in general and have to be judged in the context of society's standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct. E) involve behavioral guidelines for balancing the interests of nonowner stakeholders (customers, employees, suppliers, and the communities in which the company has operations) against the interests of company shareholders.

D) are not materially different from ethical principles in general and have to be judged in the context of society's standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct.

Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical A) ultimately depend on a person's own values and beliefs. B) ultimately depend on the circumstances; nothing is really black or white when it comes to ethical standards. C) are governed mainly by religious views held in different geographic regions of the world. D) are present in all societies, organizations, and individuals. E) vary enormously from country to country across the world.

D) are present in all societies, organizations, and individuals.

A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when A) customer preferences vary significantly from country to country. B) it is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions. C) plants need to be scattered across many countries to avoid high shipping costs. D) country-to-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy. E) host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

D) country-to-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy.

Managers must chart a company's strategic course by A) ensuring excess production capacity and/or inventory. B) building a bigger dealer network. C) ensuring that marketing and promotion programs are state-of-the-art. D) developing a thorough understanding of the company's external and internal environments. E) competing fiercely for a share in the market.

D) developing a thorough understanding of the company's external and internal environments.

The most long-lasting strategic alliances A) aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. B) are those whose purpose is helping a company master a new technology. C) are those formed to enable the partners to be consistent first movers or fast followers. D) involve collaboration with suppliers or distribution allies, or conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging. E) aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.

D) involve collaboration with suppliers or distribution allies, or conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.

The Nine-Cell Industry Attractiveness-Competitive Strength Matrix A) is a valuable tool for ranking a company's different businesses from best to worst based on strategic fit. B) shows which of a diversified company's businesses have a good or poor resource fit. C) indicates which businesses have the highest or lowest economies of scale and which have the highest or lowest economies of scope. D) involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness. E) pinpoints which of a diversified company's businesses are resource-rich cash cows and which are resource-poor cash hogs.

D) involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.

The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that A) a "think global, act local" approach involves charging much different prices in the various country markets where the company competes. B) a "think global, act local" approach involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused) in all country markets. C) a "think global, act local" approach involves considerably less adherence to utilizing the same capabilities, distribution channels, and marketing approaches worldwide. D) local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions. E) a "think global, act global" approach involves selling under a single brand worldwide, whereas a "think global, act local" approach involves the use of multiple brands (often a local brand for each local market).

D) local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.

Which one of the following is not a good type of rival for an offensive-minded company to target? A) market leaders that are vulnerable B) runner-up firms with weaknesses in areas where the challenger is strong C) small local and regional companies with limited capabilities D) other offensive-minded companies with a sizable war chest of cash and marketable securities E) struggling enterprises that are on the verge of going under

D) other offensive-minded companies with a sizable war chest of cash and marketable securities

Calculating quantitative attractiveness ratings for the industries a company has diversified into involves A) determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm's ability to compete successfully in each of its industries. B) determining each industry's average profit margins, calculating how far the firm's profit margins are above or below the industry averages, and then using these values to draw conclusions about industry attractiveness. C) rating the attractiveness of each industry's strategic and resource fit, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. D) selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group. E) identifying each industry's average price, rating the difficulty of charging an above-average price in each industry, and deciding whether the company's prospects for being able to charge above-average prices make the industry attractive or unattractive.

D) selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.

Which of the following is an intangible or invisible cost that companies incur when ethical wrongdoing is disclosed? A) Legal and investigative costs incurred by the company B) Costs of taking corrective actions C) Sharp and sudden drops in the company's stock price D) Civil penalties arising from class-action lawsuits and other litigation aimed at punishing the company for its offense and the harm done to others E) Costs of complying with often harsher government regulations

E) Costs of complying with often harsher government regulations

Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? A) Acting in a socially responsible manner is in the overall best interest of shareholders. B) Acting in a socially responsible manner can generate internal benefits (as concerns employee recruiting, workforce retention, training, and improved worker productivity). C) To the extent that a company's socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage. D) Acting in a socially responsible manner reduces the risk of reputation-damaging incidents. E) Every business has a moral duty to be a good corporate citizen.

E) Every business has a moral duty to be a good corporate citizen.

Which of the following are not consequences of a company pursuing a strategy that has unethical or shady components? A) Devastating public relations hits B) Sharp drops in stock price C) Sizable government fines and penalties D) Criminal indictments and convictions of company executives E) Intangible costs such as legal and investigative costs incurred by the company

E) Intangible costs such as legal and investigative costs incurred by the company

Which of the following is not an advantage of utilizing a licensing strategy to participate in foreign markets? A) The ability to shift the costs and risks to the licensee B) The ability to generate income from royalties C) The ability to enter international markets even though the company lacks international organizational capabilities and the resources to do so D) The ability to avoid risks of committing resources to country markets that are unfamiliar or otherwise risky E) The ability to safeguard the company's technical know-how or patents

E) The ability to safeguard the company's technical know-how or patents

Architects of mergers and acquisition strategies typically set sights on which of the following objectives? A) Revamping a company's value chain B) Facilitating the employment of both offensive and defensive strategies C) Creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories D) Gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities E) Two answers are correct: creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories, and gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.

E) Two answers are correct: creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories, and gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.

The procedure for evaluating a diversified company's strategy involves all of the following steps except A) checking whether the firm's resources fit the requirements of its present business lineup. B) assessing the competitive strength of each business the company has diversified into and determining which ones are strong or weak contenders in their respective industries. C) ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses. D) checking the competitive advantage potential of cross-business strategic fit among the company's various business units. E) a determination of the degree of risk involved with each business unit.

E) a determination of the degree of risk involved with each business unit.

A company's strategy needs to be ethical because A) of the potential for embarrassment to top management if the company's unethical behavior is publicly exposed. B) unethical strategies are inconsistent with or weaken the corporate culture. C) ethics watchdogs are sure to blow the whistle on the company's unethical behavior. D) of the risks of prosecution by governmental authorities if an unethical strategy is disclosed. E) a strategy that is unethical not only damages the company's reputation, but it also can have costly consequences.

E) a strategy that is unethical not only damages the company's reputation, but it also can have costly consequences.

Companies committed to environmental sustainability A) make major contributions to local civic and charitable organizations. B) consider the commitment to the environment as a "first-order" priority, commitment to employees as a "second-order" priority, and commitment to shareholders as a "third-order" commitment. C) believe it is essential to strike a balance between shareholder interests and the interests of stakeholders such as suppliers, customers, employees, and the communities in which they operate. D) develop and market only products that are environmentally friendly. E) adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future.

E) adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future.

The most appealing approaches to differentiation are those that A) are the most costly to incorporate. B) match the differentiating features offered by rivals in the industry. C) can be made even more attractive to buyers via clever advertising. D) appeal to the most affluent consumers. E) are hard or expensive for rivals to duplicate and have considerable buyer appeal.

E) are hard or expensive for rivals to duplicate and have considerable buyer appeal.

The multidomestic strategy of "think local, act local" A) is most appropriate when the need for local responsiveness is low. B) avoids host country ownership requirements and import quotas. C) facilitates the transfer of a company's capabilities, knowledge, and other resources across country borders. D) is the only global market entry strategy conducive to building a single worldwide competitive advantage. E) becomes more appealing when country-to-country differences in buyer tastes, cultural traditions, and market conditions vary significantly.

E) becomes more appealing when country-to-country differences in buyer tastes, cultural traditions, and market conditions vary significantly.

The biggest drawback of relying heavily on alliances and cooperative strategies is A) that partners will not divide profits from the alliance in an equitable manner. B) that strategic allies and partners frequently become rivals in the marketplace. C) having to compromise the company's own priorities and strategies in reaching agreements with partners. D) incurring excessive administrative expenses associated with engaging in collaborative efforts. E) becoming dependent on other companies for essential expertise and capabilities.

E) becoming dependent on other companies for essential expertise and capabilities.

Companies striving for global market leadership pursue strategic alliances or collaborative partnerships with foreign companies in order to A) revamp the global industry value chain, raise needed financial capital from foreign banks, and wage price wars against foreign competitors. B) exercise better control over efforts to revamp the global industry value chain and combat the bargaining power of foreign suppliers. C) exercise better control over efforts to revamp the global industry value chain, insulate a company from the impact of the five competitive forces, and use the brand names of their partners to make sales to foreign buyers. D) increase the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. E) get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

E) get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find, particularly if intellectual capital greatly aids good strategy execution? A) providing promising employees with challenging, interesting, and skill-stretching assignments B) striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks C) fostering a stimulating and engaging work environment such that employees will consider the company a great place to work D) coaching average performers to improve their skills and capabilities, while weeding out underperformers E) hiring only people below the age of 35 who have college degrees and a grade point average of B or better

E) hiring only people below the age of 35 who have college degrees and a grade point average of B or better

When trying to change a problem culture, management should undertake such steps as A) selecting a team of rank-and-file employees to lead the culture change effort. B) hosting company outings to help build camaraderie among employees and support for the culture change. C) drawing up an action plan to change the present culture and then persuading company personnel why this plan of action is good and will be successful. D) conducting an employee survey to determine the organization's cultural norms and what company personnel like and dislike about the current culture. E) identifying which aspects of the present culture are supportive of good strategy execution and which ones are not.

E) identifying which aspects of the present culture are supportive of good strategy execution and which ones are not.

Recruiting and retaining capable employees are A) usually much more important to good strategy execution than is assembling a capable top management team. B) easily the most critical aspect in building competitively valuable core competencies and capabilities. C) more easily done by large multinational corporations because of their deep financial resources and stimulating job assignments. D) largely a function of the skills and capabilities of the company's human resources staff. E) important because the quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.

E) important because the quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.

Corporate restructuring strategies A) focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability. B) involve rightsizing the company's labor force to reduce the costs of salaries and benefits. C) are directed at achieving a 1 + 1 = 3 effect from the company's diversification strategy. D) focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. E) involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup.

E) involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup.

Total quality management (TQM) A) involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace. B) is a philosophy of managing that involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace. C) involves managing company operations in a manner calculated to quickly and efficiently make quantum gains in the quality and effectiveness with which production activities are performed. D) is incompatible with the ambidextrous organization. E) is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.

E) is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.

According to the school of ethical universalism A) what behaviors are "ethically right" and "ethically wrong" vary across religions, but the boundaries of what is ethical or not are universal within religions. B) concepts of right and wrong universally apply to all business situations within a given country but can vary across countries or cultures. C) ethical guidelines exist only when there is universal agreement as to what behaviors are "ethically right" and "ethically wrong"; anything not universally viewed as unethical is thus within the bounds of what is ethically permissible. D) all societies and countries have some definition of what is ethically permissible (in this sense, ethics are universal); however, the definitions of what is ethically permissible vary according to the prevailing religious doctrines in each country. E) many of the same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.

E) many of the same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.

A hit-and-run or guerrilla warfare type of offensive strategy involves A) random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals. B) undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position. C) tactics that work best if the guerrilla is the industry's low-cost leader. D) pitting a small company's own competitive strengths head-on against the strengths of much larger rivals. E) surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.

E) surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.

The theory of corporate social responsibility concerns A) a company's duty to maximize shareholder value. B) the blending of shareholder interests and employee interests. C) a company's duty to establish socially acceptable core values and to have a strictly enforced code of ethical conduct. D) the responsibility that top management has for ensuring that the company's actions and decisions are in the best interest of society at large. E) the company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.

E) the company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.

As long as a single-business company can achieve profitable growth opportunities in its present industry, A) it needs to avoid putting all of its "eggs" in one industry basket. B) it will face diminishing market opportunities and stagnating sales in its principal business. C) its opportunities are limited to leverage existing competencies and capabilities by expanding into businesses where these same resources are key success factors and valuable competitive assets. D) it has diminished prospects to lower costs by entering closely related businesses and/or an opportunity to transfer a powerful and well-respected brand name to the products of other businesses and thereby increase the sales and profits of these newly entered businesses. E) there is no urgency to pursue a diversification strategy.

E) there is no urgency to pursue a diversification strategy.

Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? A) Directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy B) Overseeing the company's financial accounting and financial reporting practices C) Evaluating the caliber of senior executives' strategy-making/strategy-executing skills D) Being inquiring critics and exercising strong oversight over the company's direction, strategy, and business approaches E) Instituting a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests, most especially those of shareholders

A) Directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy

Which of the following is not an option to improve the efficiency and effectiveness of internally performed value chain activities? A) Insist on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors-dealers. B) Adopt best practices for quality, marketing, and customer service. C) Reallocate resources to activities that address buyers' most important purchase criteria, which will have the biggest impact on the value delivered to the customer. D) Adopt new technologies that spur innovation, improve design, and enhance creativity. E) Implement best practices throughout the company, particularly for high-cost activities.

A) Insist on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors-dealers.

Accounting scandals that led to investigations of such well-known companies as AOL Time Warner, Global Crossing, Enron, Qwest Communications, and WorldCom resulted in the conviction of a number of corporate executives and the passage of the Sarbanes-Oxley Act of 2002. In these cases, the board of directors did not fulfill which of the following important obligations? A) Overseeing the company's financial accounting and financial reporting practices B) Instituting a compensation plan for top executives that rewards them for actions that serve stakeholder interests C) Critically appraising the company's direction, strategy, and business approaches D) Creating meeting agendas to deal with regulatory compliance issues E) Hiring and firing senior-level executives and working with the company's chief strategic planning officer to improve the company's strategy when performance came up short of expectations

A) Overseeing the company's financial accounting and financial reporting practices

Which one of the following is not related to actions and approaches that comprise a company's strategy? A) Proving to shareholders that the company's business model is viable B) Achieving a low-cost provider strategy C) Seeking a broad differentiation strategy D) Concentrating on a focused low-cost strategy E) Pursuing a best-cost provider strategy

A) Proving to shareholders that the company's business model is viable

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? A) Sticking with an outdated business model B) Focusing on a narrow market niche within an industry C) Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals D) Developing an advantage based on offering more value for the money E) Creating a differentiation-based advantage over rivals

A) Sticking with an outdated business model

Which of the following conditions determines whether buyer bargaining power in an industry is weak? A) There is a surge in buyer demand that creates a "seller's market." B) Buyer demand is weak or declining. C) Buyer switching costs to competing brands is low. D) Buyers who make large-volume purchases are important to sellers. E) Buyers can postpone purchases until later if they are not satisfied with sellers' prices.

A) There is a surge in buyer demand that creates a "seller's market."

Every corporation should have a strong, independent board of directors that does all of the following except A) be intensely involved with and responsible for leading the strategy-making, strategy-executing process. B) guide and judge the CEO and other top executives. C) certify to shareholders that the CEO is doing what the board expects. D) be intensely involved in debating the pros and cons of key decisions and actions. E) be well informed about the company's performance.

A) be intensely involved with and responsible for leading the strategy-making, strategy-executing process.

Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to A) decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. B) determine whether the company has a balanced scorecard for judging its performance. C) determine what changes should be made to its strategy map. D) determine whether the company's business model is well matched to changing market and competitive circumstances. E) stay on track in achieving the company's mission and strategic vision.

A) decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods.

A strategy that distinguishes a company from its rivals and provides a sustainable competitive advantage A) is a company's most reliable ticket to above-average profitability. B) is based heavily upon the emergent elements of its strategy. C) is a reliable indicator that the company has a profitable business model. D) is logical because the strategies of rival companies are often predicated on strikingly different business models. E) is the best indicator that the company's strategy and business model are well matched and properly synchronized.

A) is a company's most reliable ticket to above-average profitability.

SWOT analysis A) is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being. B) is a tool for benchmarking whether a firm's strategy is closely matched to industry key success factors. C) reveals whether a company is competitively stronger than its closest rivals. D) examines the company's cost position activity by activity. E) is a competitive intelligence tool that discloses rivals' key weaknesses.

A) is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being.

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 never take precedence until the short-term objective is achieved. C) short-term objectives should take precedence unless the long-term performance targets are not achievable. D) short-term objectives should take precedence because they focus attention on delivering performance improvement. E) long-term objectives should never take precedence until the short-term objective is achieved.

A) long-term objectives should take precedence unless the short-term performance targets have unique importance.

A company's competitive strategy deals with A) management's game plan for securing a competitive advantage relative to rivals. B) what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on. C) its efforts to change its position on the industry's strategic group map. D) its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E) tweaking the value chain drivers to make them more cost competitive with rivals.

A) management's game plan for securing a competitive advantage relative to rivals.

Company objectives A) need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. B) are needed only in those areas directly related to a company's short-term and long-term profitability. C) help answer the question of "Where do we want to go". D) determine the geographic and business scope of the company's operations. E) should be set in a manner that does not conflict with the performance targets of lower-level organizational units.

A) need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units.

A viable business model A) sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit. B) lays out a compelling case for how the strategy will yield competitive advantage. C) explains how high profit margins will be achieved despite charging relatively low prices to customers. D) is always closely linked to the company's business strategy. E) is part and parcel of a company's strategic vision.

A) sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit.

Which one of the following is not an integral part of the managerial process of crafting and executing strategy? A) Developing a strategic vision B) Choosing a strategic intent C) Setting objectives and crafting a strategy to achieve them D) Evaluating performance and initiating corrective adjustments in the company's long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities E) Implementing and executing the chosen strategy efficiently and effectively

B) Choosing a strategic intent

Which one of the following is not a characteristic of an effectively worded strategic vision statement (see Table 2.2)? A) Directional (is forward-looking; describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future) B) Concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders) C) Graphic (paints a clear picture) D) Easy to communicate (ideally, explainable in 10 minutes) E) Focused and flexible (specific enough to provide managers with guidance in making decisions and allocating resources but stops short of a once-and-for-all-time statement because the strategic path may need to be changed as market-customer-technology circumstances change)

B) Concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders)

Which of the following statements about market opportunity is correct? A) Market opportunity is a big factor in shaping a company's strategy. B) Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable. C) In evaluating the attractiveness of a company's market opportunities, managers have to guard against viewing every industry opportunity as a suitable opportunity. D) A distinctive competence is a big factor in evaluating the attractiveness of a company's market opportunities because managers have to guard against viewing every industry opportunity as a suitable opportunity. E) A distinctive competence is market opportunity that a company has developed with superior proficiency—a capability, in other words.

B) Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable.

Which one of the following is not something that can be learned from doing a competitive strength assessment? A) Identifying the competitive factors where a company is strongest and weakest vis-à-vis key rivals and the kinds of offensive/defensive actions the company can use to exploit its competitive strengths and reduce its competitive vulnerabilities B) The extent to which a company's customer value proposition is superior to its rivals' C) Which of the rated companies is competitively strongest and what magnitude competitive advantage it enjoys D) Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (as indicated by the differences among the companies' competitive strength scores) E) Which rival company is competitively weakest and the areas where it is most vulnerable to competitive attack

B) The extent to which a company's customer value proposition is superior to its rivals'

A company's biggest vulnerability in employing a best-cost provider strategy is A) relying too heavily on outsourcing. B) getting squeezed between firms employing low-cost provider strategies and those using high-end differentiation strategies. C) getting trapped in a price war with low-cost leaders. D) being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E) not having a sustainable distinctive competence in cost reduction.

B) getting squeezed between firms employing low-cost provider strategies and those using high-end differentiation strategies.

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

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

What are two of the three best indicators as to how well a company's strategy is working? A) Whether the company is achieving its stated financial and strategic objectives and whether customer and employee satisfaction is high B) Whether the company is achieving its stated financial and strategic objectives and whether it is gaining customers and increasing its market share C) Whether it is subject to weaker competitive forces and pressures than close rivals (a good sign) or whether it is disadvantaged by stronger competitive forces and pressures (a bad sign) D) Whether the company has more competitive assets than it does competitive liabilities and whether its strategy is built around at least two of the industry's key success factors E) Whether customer and employee satisfaction is high and whether it has more core competencies than close rivals

B) Whether the company is achieving its stated financial and strategic objectives and whether it is gaining customers and increasing its market share

Identifying the strategic issues and challenges that company managers need to address does not involve A) developing a "worry list" of "how to ...," "whether to ...," and "what to do about ..." B) assessing the diversification moves of corporations competing in similar industries. C) assessing what challenges the company has to overcome in order to be financially and competitively successful in the short-run. D) drawing on what was learned from having analyzed the company's industry and competitive environment. E) drawing on evaluations of the company's own resources, internal circumstances, and competitiveness.

B) assessing the diversification moves of corporations competing in similar industries.

The objective of competitive strategy is to A) provide detail to the company's business model. B) build a competitive advantage in the marketplace by giving buyers superior value relative to the offerings of rival sellers. C) get the company into the best strategic group and then dominate it. D) establish a competitively powerful value chain. E) grow revenues at a faster annual rate than rivals are able to grow their revenues.

B) build a competitive advantage in the marketplace by giving buyers superior value relative to the offerings of rival sellers.

As Figure 2.2 shows, the strategy-making hierarchy in a single business company consists of A) business strategy, divisional strategies, and departmental strategies. B) business strategy, functional area strategies, and operating strategies. C) business strategy and operating strategy. D) managerial strategy, business strategy, and divisional strategies. E) corporate strategy, divisional strategies, and departmental strategies.

B) business strategy, functional area strategies, and operating strategies.

A focused differentiation strategy can lead to attractive competitive advantage when A) industry leaders have chosen not to compete in the niche. B) buyers are not strongly loyal to a brand and a large number of other rivals are attempting to specialize in the same target segment. C) the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities. D) the target market niche is big enough to be profitable and offers good growth potential. E) it is costly or difficult for multisegment competitors to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers.

B) buyers are not strongly loyal to a brand and a large number of other rivals are attempting to specialize in the same target segment.

An industry's key success factors A) are best determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. B) concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry. C) are mainly a function of an industry's macro-environment and dominant economic features. D) involve identifying the similarities in the strategies of rival companies; those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors. E) usually relate to technology and manufacturing-related capabilities and rarely to distribution or marketing capabilities.

B) concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry.

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because A) how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company. B) crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. C) a competitive advantage is what enables a company to achieve its strategic objectives. D) without a competitive advantage a company cannot become the industry leader. E) without a competitive advantage a company is likely to fall into bankruptcy.

B) crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance.

Every organization has many resources, capabilities, and routines; however, those few things the company does really well and are performed with a very high proficiency are termed A) core competencies. B) distinct capabilities. C) sustainable activities. D) socially complex activities. E) distributive factors.

B) distinct capabilities.

A broad differentiation strategy generally produces the best results in situations where A) buyer brand loyalty is low. B) few rivals are following a similar differentiation approach. C) new and improved products are introduced only infrequently. D) most rivals are seeking to differentiate their products on most of the same features and attributes. E) price competition is vigorous.

B) few rivals are following a similar differentiation approach.

A company's cost competitiveness is largely a function of A) whether it does a good enough job of benchmarking its value chain activities against the value chains of competitors so that it knows exactly how low to drive its costs to be cost-competitive. B) how efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies. C) whether it possesses a better job of building its resource strengths more cost effectively than rivals. D) whether it possesses more core competencies and competitive capabilities than its rivals. E) how closely its internally performed activities are linked to the activities performed by suppliers and to the activities performed by forward channel allies.

B) how efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies.

The heart and soul of any strategy A) is its ability to increase shareholder value. B) is the actions and moves to gain a competitive edge over rivals in the marketplace. C) deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner. D) is the day-to-day demands of delivering a service or producing goods to be sold. E) is its linkage with its business model.

B) is the actions and moves to gain a competitive edge over rivals in the marketplace.

A company's strategic plan consists of A) actions and market maneuvers the company plans to use to achieve a sustainable competitive advantage. B) management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path. C) a company's strategic vision, strategic objectives, strategic intent, and strategy. D) an organization's strategy and management's specific, detailed plans for implementing it. E) the specific actions management intends to take in detouring strategic inflection points and executing its overall strategy.

B) management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path.

When evaluating proposed or existing strategies, managers should A) evaluate the firm's business model at least every three years. B) scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. C) ensure that core capabilities are incorporated synergistically for establishing a competitive advantage. D) align existing strategies with new strategies to emphasize incremental gains. E) initiate new strategies even though they do not seem to match the company's internal and external situation.

B) scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance.

Resource and capability analysis is a powerful tool for A) justifying the expenditures on state-of-the-art manufacturing plants and equipment, efficient distribution facilities, attractive real estate locations, or ownership of valuable natural resource deposits. B) sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace. C) insulating a company against the combined impact of the industry's driving forces and industry key success factors. D) assessing the value of a company's primary competitor's core competencies and R&D investments. E) showing how much profit is earned on each dollar spent on R&D as well as the number of competitive assets in comparison to the market leader.

B) sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace.

A company's value chain consists of A) the activities a company performs in converting its resource weaknesses into resource strengths. B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service. C) those activities a company performs that represent "best practices." D) the activities that a company performs in developing a distinctive competence. E) the activities that represent a company's competencies, core competencies, distinctive competencies, and competitive capabilities.

B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service.

Strategies that yield sustainable competitive advantage are important because A) a competitive advantage is what enables a company to achieve its strategic objectives. B) these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. C) competitive advantage forms the underpinnings of a company's strategic vision. D) increases in shareholder value are contingent on a sustainable competitive advantage. E) None of these choices are correct.

B) these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage.

Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers? A) To enhance the quality of parts and components being supplied and/or to reduce defect rates B) To speed the availability of next-generation components C) To reduce the bargaining power they face from buyers of their products D) To squeeze out important cost savings for both themselves and their suppliers E) To reduce inventory and logistics costs

C) To reduce the bargaining power they face from buyers of their products

Which of the following is not among the most common types of driving forces? A) Product innovation, marketing innovation, and increasing globalization of the industry B) Changes in the long-term industry growth rate, changes in who buys the product and how they use it, and growing buyer preferences for differentiated products C) Changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability D) Emerging new Internet applications and capabilities, technological change, and the diffusion of technical know-how across more companies and more countries E) Changes in cost and efficiency, the entry or exit of major firms, and changing societal concerns, attitudes, and lifestyles

C) Changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability

Based on an analysis of the five competitive forces, in which of the following industries is profitability likely to be lowest? A) Delivery services using drones B) Wireless lighting systems C) Pizza restaurants D) Patented pharmaceuticals E) Wearable fitness and health monitors

C) Pizza restaurants

Which of the following statements about a company's strategy is true? A) Crafting an excellent strategy is more important than executing it well. B) A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. C) Strategy at its essence is about competing differently—doing what rival firms do not do or cannot do. D) Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers. E) Whether a company's strategy is ethical or not does not matter much because most customers and most suppliers are relatively unconcerned with whether a company they do business with engages in sleazy practices or turns a blind eye to below-board behavior on the part of its employees.

C) Strategy at its essence is about competing differently - doing what rival firms do not do or cannot do

Which of the following analytical tools are particularly useful for determining whether a company's prices and costs are competitive? A) SWOT analysis, strategy assessment, activity-based costing analysis, and key success factor analysis B) SWOT analysis, competitive strength assessment, best practices analysis, and value chain analysis C) Value chain analysis and benchmarking D) Competitive position assessment, competitive strength assessment, strategic group mapping, SWOT analysis, and value chain analysis E) SWOT analysis, best practices analysis, activity-based costing analysis, and competitive strength assessment

C) Value chain analysis and benchmarking

Corporate governance failures at Volkswagen included all of the following except A) a lack of understanding regarding the risks of installing "defeat devices" during emissions testing of at least 11 million VW vehicles equipped with diesel engines. B) fraudulent executive compensation systems at Volkswagen. C) a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions. D) inadequate monitoring of VW's Chairman, Ferdinand Piëch, its CEO, Martin Winterkorn, and other senior executives. E) incomplete understanding and ineffective oversight of the technologies employed to accurately determine automobile emissions.

C) a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions.

In answering the question "How well does the strategy fit the company's situation," management must be willing and ready to address such issues as A) developing a sound business model and customer base. B) emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. C) changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. D) determining where the company is now and where does the company want to go. E) how to develop copy-cat strategies.

C) changing market conditions, development of internal capabilities and competencies, and allocation of financial resources.

The strength or weakness of the potential entry of rivals as a competitive force is A) strongly correlated with the level of supplier power and with the number of suppliers that may seek to integrate forwards into the industry. B) contingent upon the strength of buyer loyalty to existing brands. C) contingent upon whether the industry's growth and profit prospects are strongly attractive to potential entry candidates. D) contingent upon whether the strategies of industry members are well matched to the industry's key success factors. E) strongly correlated with the degree to which the industry's driving forces make it harder or easier for new entrants to be successful.

C) contingent upon whether the industry's growth and profit prospects are strongly attractive to potential entry candidates.

Benchmarking A) is inherently unethical if it involves companies that are direct competitors because it involves gathering competitively sensitive information about the operations and costs of rivals. B) is not a valid tool for measuring the cost-effectiveness of an activity unless it is restricted to companies in the same industry. C) entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities. D) loses much of its managerial usefulness if it is done with the aid of third-party organizations. E) entails calculating the costs of performing each of the primary and related support activities in a company's value chain.

C) entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities.

A balanced scorecard for measuring company performance A) entails balancing the pursuit of good bottom-line profit against the pursuit of nonprofit objectives (although achieving profitability targets is nearly always given greater emphasis). B) involves putting equal emphasis on the achievement of financial objectives, strategic objectives, and social responsibility objectives. C) entails setting both financial and strategic objectives and putting a balanced emphasis on their achievement. D) helps prevent the pursuit of strategic objectives from dominating the pursuit of financial objectives. E) is necessary to prevent the drive for achieving financial objectives from weakening the attention paid to social responsibility, community citizenship, and other worthy goals.

C) entails setting both financial and strategic objectives and putting a balanced emphasis on their achievement.

Factors that weaken rivalry among competing sellers include A) low buyer switching costs. B) slow growth in buyer demand. C) rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals. D) standardized or else weakly differentiated products among rival sellers. E) the presence of one or more rivals that are dissatisfied with their current position and market share.

C) rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals.

A company's business model A) determines whether its strategy will be ethical or not. B) is management's story line for how the strategy will result in achieving sustainable competitive advantage. C) specifies a customer value proposition and develops a profit formula. D) identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader. E) sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.

C) specifies a customer value proposition and develops a profit formula.

Establishing and achieving strategic objectives merits very high priority on management's agenda because A) strategic outcomes provide better benefits to shareholders in both the short run and the long run. B) a company cannot have a shrewd strategic vision without having aggressive and competitively astute strategic objectives. C) strategic outcomes are leading indicators of a company's future financial performance and business prospects. D) well-chosen strategic objectives help managers craft a good strategy. E) a company cannot achieve its strategic intent and strategic vision or gain a competitive advantage over rivals without having and achieving strategic objectives.

C) strategic outcomes are leading indicators of a company's future financial performance and business prospects.

The greatest danger or risk of an unsound best-cost provider strategy is A) that buyers will be highly skeptical about paying a relatively low price for upscale attributes/features. B) not establishing strong alliances and partnerships with key suppliers. C) that low-cost leaders will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes. D) that it will be unable to achieve top-notch quality at a rock-bottom cost. E) becoming too highly integrated and not relying enough on outsourcing.

C) that low-cost leaders will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes.

Operating strategies consist of A) what a company's various operating departments plan to do to help execute the company's overall strategy. B) the strategic intent of each operating unit. C) the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations). D) the specific actions a company's various operating departments plan to take to unify efforts to achieve a sustainable competitive. E) what a company will do once its strategic plan is adopted and approved by the company's board of directors.

C) the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations).

A low-cost provider strategy can defeat a differentiation strategy A) when a company can offset thinner profit margins per unit by selling sufficient additional units to increase total profits. B) when there are few ways to differentiate a product or a service and many buyers perceive these differences as valuable. C) when customers are basically satisfied and do not think extra attributes are worth a higher price feature. D) when there are many ways to differentiate the product or service and many buyers perceive these differences as having value. E) when technological change is fast-paced and competition revolves around rapidly evolving product features.

C) when customers are basically satisfied and do not think extra attributes are worth a higher price feature.

Corporate strategy A) determines balanced scorecard financial and strategic objectives. B) should be based on a flexible strategic vision and mission. C) is subject to being changed much less frequently than either a company's objectives or its mission statement. D) is primarily concerned with strengthening a company's market position and building competitive advantage. E) ensures consistency in strategic approach among businesses of a diversified, multibusiness corporation.

E) ensures consistency in strategic approach among businesses of a diversified, multibusiness corporation.

Which of the following is not among the principal managerial tasks associated with managing the strategy execution process? A) Ensuring that policies and procedures facilitate rather than impede effective execution B) Installing information and operating systems that enable company personnel to perform essential activities C) Exerting the internal leadership needed to drive implementation forward D) Engaging the services of staffing firms to maintain the company's personnel data E) Tying rewards and incentives directly to the achievement of performance objectives

D) Engaging the services of staffing firms to maintain the company's personnel data

Which of the following conditions generally raise the barriers to entering an industry? A) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry B) Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty C) Product offerings that are pretty much standardized from rival to rival D) High capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold E) The industry is not characterized by scale economies and/or sizable learning or experience curve effects, and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer

D) High capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold

In making an overall assessment of a company's competitive strength, the answer to which questions are of particular interest? A) Is the company's resource strength sufficient to allow it to earn bigger profits than rivals and are market opportunities unique, rare, long-lasting, and not able to be copied by rivals? B) Is the company's resource strength sufficient to allow it to earn bigger profits than rivals and are market opportunities unique, rare, long-lasting, and not able to be copied by rivals? C) How does the company rank relative to competitors on each important market success factor and is the company's resource strength sufficient to allow it to earn bigger profits than rivals? D) How does the company rank relative to the competitors on each important market success factor and does the company have a net competitive advantage or disadvantage versus major competitors? E) Does the company have a gross competitive advantage or disadvantage versus major competitors and does the company do a first-rate job of managing its value chain activities relative to its competitors?

D) How does the company rank relative to the competitors on each important market success factor and does the company have a net competitive advantage or disadvantage versus major competitors?

Which of the following is not an important factor for company managers to consider in drawing conclusions about whether the industry presents an attractive opportunity? A) Whether powerful competitive forces are squeezing industry profitability to subpar levels and whether competition appears destined to grow stronger or weaker B )The industry's growth potential C) Whether industry profitability will be affected favorably or unfavorably by the prevailing driving forces D) How many of the industry's key success factors do companies in the industry typically incorporate into their strategies E) The company's competitive position in the industry relative to rivals

D) How many of the industry's key success factors do companies in the industry typically incorporate into their strategies

Which of the following questions ought to be used to distinguish a winning strategy from a so-so or flawed strategy? A) Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction? B) Do a sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability? C) Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? D) Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance? E) Does the strategy contain a sufficient number of emergent and/or reactive elements?

D) Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance?

According to both the text discussion and the summary in Table 2.3, which of the following is not a common shortcoming of company vision statements? A) Incomplete or vague—short on specifics B) Overly reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of buyers) C) Overly broad—so umbrella-like and all-inclusive that the company could head in almost any direction, pursue most any opportunity, or enter most any business D) Lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable E) Not distinctive—provides no unique company identity; could apply to companies in any of several industries (or at least several rivals operating in the same industry or market arena)

D) Lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable

Which of the following is not typically a trigger to an evolving strategy? A) The need to respond to the newly initiated actions and competitive moves of rival firms B) The need to abandon some strategy features that are no longer working well C) The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy as conditions warrant D) The need to respond to short-term swings in the stock market E) The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations

D) The need to respond to short-term swings in the stock market

Which of the following is not one of the questions that must be answered in thinking strategically about a company's external environment? A) What kinds of competitive forces are industry members facing, and how strong is each force? B) What market positions do industry rivals occupy—who is strongly or weakly positioned, and who is not? C) What are the strategically relevant factors in the company's macro-environment? D) What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach? E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

D) What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach?

Which one of the following is not a good indicator of how well a company's present strategy is working? A) Whether it is achieving its stated financial and strategic objectives B) Whether it is an above-average industry performer C) Whether the firm's sales and earnings are increasing or decreasing D) Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities E) The rate at which new customers are acquired and whether the company's overall financial strength is improving or on the decline

D) Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities

Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures? A) Whether certain needed inputs are in short supply B) Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs C) Whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers E) Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product

D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers

The task of crafting a strategy is A) the function and responsibility of a few high-level executives. B) more of a collaborative group effort that involves all managers and sometimes key employees striving to arrive at a consensus on what the overall best strategy should be. C) the function and responsibility of a company's strategic planning staff. D) a job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in Figure 2.2). E) first and foremost the function and responsibility of a company's board of directors.

D) a job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in Figure 2.2).

The difference between a company's mission statement and the concept of a strategic vision is that A) the mission statement lays out the desire to make a profit, whereas the strategic vision addresses what strategy the company will employ in trying to make a profit. B) a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there." C) a mission statement deals with what a company is trying to do, and a vision concerns what a company ought to do. D) a mission statement typically concerns an enterprise's present business scope and purpose —"who we are, what we do, and why we are here"—whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be. E) a mission statement is about what to accomplish for shareholders, whereas a strategic vision concerns what to accomplish for customers.

D) a mission statement typically concerns an enterprise's present business scope and purpose —"who we are, what we do, and why we are here"—whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be.

The rivalry among competing sellers in an industry intensifies A) when buyer demand for the product is growing rapidly. B) when customers are brand loyal and their costs of switching to competing brands or substitute products are relatively high. C) when buyer demand is strong and sellers have little or no excess capacity and only minimal inventories. D) as the number of rivals increases and as they become more equal in size and competitive capability. E) when the products of rival sellers are highly differentiated products and the industry consists of so many rivals that any one company's actions have little direct impact on its rivals' business.

D) as the number of rivals increases and as they become more equal in size and competitive capability.

The primary role of a functional strategy is to A) describe the mission and strategic intent of each key functional piece of the business. B) create compatible degrees of strategic intent among a company's different business functions. C) unify the company's various operating-level strategies. D) determine how to support particular activities in ways that support the overall business strategy and competitive approach. E) assess what competitive capabilities to build in support of the overall company strategy and what to do to unify the firm's skills, competencies, and resource strengths across all the various key pieces of a company's business.

D) determine how to support particular activities in ways that support the overall business strategy and competitive approach.

A strategic group map is a helpful analytical tool for A) assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. B) determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. C) determining which company is the most profitable in the industry and why it is doing so well. D) determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions. E) pinpointing which of the five competitive forces is the strongest and which is the weakest.

D) determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions.

A winning strategy is one that A) makes the company a market leader, is ethically and socially responsible, and maximizes profits. B) is highly profitable and boosts the company's market share. C) passes the profitability test, the ethics and social responsibility test, the customer satisfaction test, and the shareholder wealth test. D) fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance. E) passes the ethical standards test, the competitive advantage test, and the profitability test.

D) fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance.

Nothing affects a company's ultimate success or failure more fundamentally than A) abandoning markets as conditions change. B) how well the strategy fits the company's business model. C) developing multiple differentiating features in comparison to rivals. D) how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence. E) the creation of shareholder value.

D) how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence.

A low-cost leader's basis for competitive advantage is A) lower prices than rival firms. B) using a low-cost/low-price approach to gain the biggest market share. C) high buyer-switching costs. D) lower overall costs than competitors. E) higher unit sales than rivals.

D) lower overall costs than competitors.

A competitive strategy of striving to be the low-cost provider is particularly attractive when A) buyers are not price sensitive. B) the industry is made up of a large number of or equal-sized rivals. C) there are many ways to achieve product differentiation that have value to buyers. D) price competition is especially vigorous, buyers have low switching costs, and the majority of industry sales are made to a few large-volume buyers. E) switching costs are high, price competition is strong, and buyers tend to use the industry's products in many different ways.

D) price competition is especially vigorous, buyers have low switching costs, and the majority of industry sales are made to a few large-volume buyers.

The value to a company of pursuing a low-cost provider strategy is contingent upon A) the leader's ability to combine the cost advantage with a reputation for good quality. B) the leader's ability to excel in manufacturing innovation so as to continuously reduce its manufacturing costs. C) the leader's ability to attain the biggest market share in the industry. D) whether or not it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. E) the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs.

D) whether or not it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.

The task of driving forces analysis is to A) identify all the underlying factors that can cause industry profitability to rise or fall in the years ahead. B) predict what new forces of competitive and market change will emerge next. C) determine which of the five competitive forces is the biggest driver of industry change. D) identify which companies are being driven to move from one strategic group to another strategic group. E) collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces.

E) collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces.

Which of the following is not an element of a company's realized business strategy? A) Actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities B) Actions to strengthen competitiveness via strategic alliances and collaborative partnerships C) Actions to capture emerging market opportunities and defend against external threats to the company's business prospects D) Actions to enter new geographic or product markets E) Adhering to abandoned strategy elements

E) Adhering to abandoned strategy elements

Which of the following is not one of the five generic types of competitive strategy? A) Best-cost provider strategy B) Broad low-cost provider strategy C) Focused differentiation provider strategy D) Focused low-cost provider strategy E) Focused best-cost provider strategy

E) Focused best-cost provider strategy

Which of the following is generally not considered to be a market opportunity for a company? A) Expanding into new geographic markets B) Expanding the company's product line to meet a broader range of customer needs C) Expanding into areas that are most suited to the company's collection of capabilities and resource strengths D) Sharply rising buyer demand for the industry's product E) Increased trade barriers in attractive foreign markets

E) Increased trade barriers in attractive foreign markets

Which of the following is not an action that a company can take to do a better job than its rivals of performing value chain activities more cost-effectively? A) Striving to capture all available economies of scale B) Trying to operate facilities at full capacity C) Taking full advantage of experience and learning curve effects D) Improving supply chain efficiency E) Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

E) Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

Which of the following statements is false? A) A dynamic capability is the ability to modify, deepen, or reconfigure the company's existing resources and capabilities in response to changes in the environment or market. B) A company's internal strengths should always serve as the basis for its strategy. C) Managers must look toward correcting competitive weaknesses that make the company vulnerable, dampen profitability, or disqualify it from pursuing an attractive opportunity. D) Managers need to keep close track of how cost effectively the company can deliver value to customers relative to its competitors. E) Resources are harder to categorize than capabilities and more challenging to search for as a result.

E) Resources are harder to categorize than capabilities and more challenging to search for as a result.

Buyer bargaining power is moderate-to-weak in which of the following scenarios? A) Apple designs and manufactures its own microprocessors for mobile devices rather than buying them from Intel or Qualcomm. B) Yoghurt and products made from yogurt are highly differentiated by origin and by price. C) Buyers tend to delay purchases of luxury goods, such as OLED and 4K television sets, until they are on sale. D) Consumers can easily compare different fitness clubs and gyms over the Internet before signing up for memberships. E) The supply of soccer balls increases during the World Cup season.

E) The supply of soccer balls increases during the World Cup season.

Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive? A) When it is costly or difficult for multisegment competitors to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers B) When the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities C) When industry leaders have chosen not to compete in the niche D) When the target market niche is big enough to be profitable and offers good growth potential E) When buyers are not strongly brand loyal and a large number of other rivals are attempting to specialize in the same target segment

E) When buyers are not strongly brand loyal and a large number of other rivals are attempting to specialize in the same target segment

It is normal for a company's realized strategy to end up A) left unchanged from management's original planned set of actions and business approaches since making on-the-spot changes is too risky. B) entailing a combination of defensive moves to protect the company's market share and offensive initiatives to set the company's product offering apart from that of its rivals. C) mimicking the strategies of other industry members since all companies are confronting much the same market conditions and competitive pressures. D) becoming a mirror image of its business model, so as to avoid impairing company profitability. E) blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions.

E) blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions.

Examples of important cost drivers in a company's value chain do not include A) input costs. B) capacity utilization. C) learning and experience. D) production technology and design. E) customer service.

E) customer service.

Trying to determine what strategic moves rivals are likely to make next A) usually has little bearing on a company's own best strategic moves. B) requires evaluating the industry's key success factors as well as determining how many driving forces are present. C) is best done by monitoring each rival's market share, earnings per share, and stock price. Adverse changes in these measures signal the coming of a fresh move, but as long as a company's performance on these measures is satisfactory, the chance of fresh moves is slim. D) cannot be done effectively without first drawing a strategic group map. E) entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

E) entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals A) should adopt a new competitive strategy that might better match the circumstances of the marketplace. B) should abandon strategy elements that have caused its weakness in the marketplace. C) should undertake efforts to develop a distinctive competence. D) is virtually blocked from using offensive strategies and must rely on defensive strategies. E) nearly always is relegated to a trailing position in the industry.

E) nearly always is relegated to a trailing position in the industry.

Options for attacking the high costs of items purchased from suppliers do not include A) switching to lower-priced substitute inputs. B) collaborating closely with suppliers to identify mutual cost-saving opportunities. C) integrating backward into the business of high-cost suppliers and making the item in-house so as to better control the cost. D) pressuring suppliers for more favorable prices. E) raising prices to customers (in order to cover the high costs).

E) raising prices to customers (in order to cover the high costs).

A differentiation strategy works best when A) buyers' needs are homogeneous. B) many rival firms are also pursuing a differentiation approach. C) firms have ample excess cash to invest in R&D activities. D) there are few other ways to make a product unique to buyers. E) technological change is fast-paced and competition revolves around rapidly evolving product features.

E) technological change is fast-paced and competition revolves around rapidly evolving product features.

Excellent execution of a successful strategy is A) the best test of whether a company is a "true" industry leader. B) the best evidence that the company has a sustainable competitive advantage. C) the best evidence that managers have an emerging business model. D) a solid indication that managers are maximizing profits and looking out for the best interests of shareholders. E) the best test of managerial excellence and the best recipe for making a company a standout performer.

E) the best test of managerial excellence and the best recipe for making a company a standout performer.

A pitfall to avoid in pursuing a differentiation strategy is A) charging a premium price for the differentiating features. B) spending on activities to differentiate the company's product to enhance profitability. C) meeting and exceeding the meaningful gaps in quality, performance, service, and other attractive differentiating attributes offered by rivals. D) choosing a product offering that supports buyers' indifference to rival brands' offerings. E) trying to differentiate on the basis of attributes or features that are easily copied.

E) trying to differentiate on the basis of attributes or features that are easily copied.

The procedure for creating a strategic group map involves identifying A) how many rivals are pursuing each type of strategy and determining competitive "gray spaces" where rivals can collaborate or form strategic partnerships or alliances. B) which companies have the biggest market share and which rival is the industry leader. C) which companies have the highest levels of capital expenditures and which rival has the best or worst financial health. D) which companies have the highest degrees of brand loyalty and which rival has the best or worst advertising and promotion to support that position. E) which different market or competitive positions rival firms occupy in an industry and each rival's closest competitors in that industry.

E) which different market or competitive positions rival firms occupy in an industry and each rival's closest competitors in that industry.