Strategic Management
CH 1: Unanticipated developments and fresh market conditions require a[n] _______ strategy. -deliberate -emergent -market-driven -proactive -customer-oriented
Emergent An emergent strategy consists of reactive strategy elements that emerge as changing conditions warrant.
CH 1: A company's profit formula consists of the following basic elements: -M, the company's market share, multiplied by C, the competitive strength of the company, divided by S, the company's sustainable competitive advantage potential. -P, the price charged to customers, minus C, the company's costs. -P, the price charged to customers, minus C, the company's costs, multiplied by M, the company's market share. -C the competitive strength of the company, multiplied by S, the company's sustainable competitive advantage potential, minus V, the value provided for the customer. -S, the sustainable competitive advantage potential plus V, the value provided for customers, minus C, the company's costs.
P, the price charged to customers, minus C, the company's costs. The profit formula, on a per-unit basis, can be expressed as P (price) minus C (costs).
CH 1: Gerard's Paella, a tapas bar and paella restaurant, offers healthy, sustainably sourced, as well as veggie and vegan, cuisine at higher prices than its competitors in the market and has a drive-through and indoor seating casual dining operation. What strategy is Gerard's Paella using to gain competitive advantage? -a focused low-cost strategy -a best-cost provider strategy -a low-cost provider strategy -a focused differentiation strategy -a broad differentiation strategy
a focused differentiation strategy A focused differentiation strategy concentrates on a narrow buyer segment, or market niche, and outcompetes rivals by offering buyers customized attributes that meet their specialized needs and tastes better than rivals' products. By appealing to upscale customers, Gerard's Paella has a narrow buyer segment, and it outcompetes rivals by offering healthy, sustainably sourced, vegetarian and vegan cuisine.
Ch 1: Which is not a hallmark of a cleverly crafted and well-executed strategy? -a strategy that can withstand the competitive challenges from rival firms -a strategy that facilitates the capture of emerging opportunities -a strategy that produces enduringly good performance -a strategy that provides direction only in terms of what the company should do -a strategy that is adaptable to changing business and market conditions
a strategy that provides direction only in terms of what the company should do The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company's future over the long term.
CH 1: A strategy to achieve and maintain sustainable competitive advantage is never associated with -carefully considered moves to compete on dimensions like quality, cost, services, locations, and customers. -opportunities to enter strategic alliances and collaborative partnerships to strengthen a company's market position and competitiveness. -actions taken by companies to gain sales and market share irrespective of product prices and costs. -direction and guidance, in terms of not only what the company should do, but also what it should not do. -competing differently from rivals—doing what competitors do not do or doing what they cannot do.
actions taken by companies to gain sales and market share irrespective of product prices and costs. Strategy is about competing differently from rivals—doing what competitors don't do or doing what they can't do. Companies compete on dimensions like quality, cost, services, locations, and customers. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen their market position and competitiveness.
CH 1: Why does a company's strategy tend to be a "work in progress" and evolve over time? -because of the ongoing need to imitate the strategic moves of the industry's strongest rival -because the competitive advantage potential of developing a new strategy changes annually -because the change in the company's vision and values cause a constant adaptation of the strategy, with the ongoing need to imitate new strategic moves by the industry leaders -due to the changing nature of employee skills and capabilities -because of changing circumstances and ongoing management efforts to improve the strategy
because of changing circumstances and ongoing management efforts to improve the strategy Changing circumstances and ongoing management efforts to improve the strategy cause a company's strategy to evolve over time—a condition that makes the task of crafting strategy a work in progress, not a one-time event.
CH 1: Why would managers not consider drastically modifying their company's strategy? -advancing technology -mounting evidence that the strategy is not working well -shifting buyer needs -changing market conditions -employee demands for better working conditions
employee demands for better working conditions The lead managers of every company must be willing and ready to modify the strategy in response to changing market conditions, advancing technology, unexpected moves by competitors, shifting buyer needs, emerging market opportunities, and new ideas for improving the strategy.
CH 1: The two tests a winning strategy must pass are the ________ test and the ________ test. -competitive advantage; profitability -fit; performance -fit; profitability -performance; cost-advantage -ethical standard; fit
fit; performance A winning strategy must pass three tests: the fit test, the competitive advantage test, and the performance test.
Types of actions and approaches that often characterize a company's strategy do not include actions to -upgrade, build, or acquire competitively important resources and capabilities. -enter new product or geographic markets or to exit existing ones. -capture emerging market opportunities and defend against external threats to the company's business prospects. -strengthen market standing and competitiveness by acquiring or merging with other companies. -improve ethical standards, ensure employees' commitments, and continuously develop new talents.
improve ethical standards, ensure employees' commitments, and continuously develop new talents. Actions and approaches that characterize a company's strategy do not include actions to improve ethical standards, ensure employees' commitments, and continuously develop new talents.
CH 1: The combination of a good strategy and good strategy execution -is the sign for achieving a sustainable competitive advantage. -provides long-term growth for the company. -is the most telling sign of good management. -enables the company to become the industry leader. -signals the company's superiority in the industry.
is the most telling sign of good management. A company's performance is directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
CH 1: As the owner of a local housecleaning business that is trying to achieve a sustainable competitive advantage, you most likely would not -give buyers lasting reasons that competitors are unable to nullify or overcome despite their best efforts. -have some distinctive strategic element that draws in customers and produces a competitive edge. -utilize copycat product offerings or similar maneuvers as rivals to stake out the same market position. -have better prospects to win in the marketplace and to earn superior long-term profits relative to rivals. -persist in competing differently, despite the best efforts of competitors to match or surpass this advantage.
utilize copycat product offerings or similar maneuvers as rivals to stake out the same market position. Mimicking the strategies of successful industry rivals—with either copycat product offerings or maneuvers to stake out the same market position—rarely works. Rather, every company's strategy needs to have some distinctive element that draws in customers and produces a competitive edge. Strategy, at its essence, is about competing differently—doing what rival firms don't do or what rival firms can't do.
CH 1: When can a company achieve sustainable competitive advantage? -if it can translate its vision, mission, and values into a well-crafted strategy -whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors -when it is able to produce better products for fewer costs than its rivals -when it consistently achieves both its long-term and short-term strategic and financial objectives -when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors
when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors A company achieves sustainable competitive advantage when it gives its buyers lasting reasons to prefer its products or services over those of competitors—reasons that competitors are unable to nullify or overcome despite their best efforts.