Strategic Mgmt Chapter 6
In which of the following ways can a firm pursue vertical integration? (Check all that apply.)
Acquiring a company that performs activities further along the value chain, closer to the end user Building positions in selected stages of the value chain and avoiding participation in others
Which of the following companies have used disruptive product innovations to create new markets? (Check all that apply.)
Bumble Venmo
What are some of the negative effects that mergers and acquisitions can have on personnel?
Difficulty coping with new management may lead to lower morale. Employees may resist efforts to mesh the cultures of the two companies. Managers may make mistakes when deciding which systems to integrate.
Which statement about establishing the technical standard in an industry is true?
Establishing a technical standard is an experience-based advantage that can grow over time.
What statement about winning standard wars among early movers is true?
Establishing relationships with other participants in the sector can help a firm win a standard war.
True or False: A company's strategic offensive is usually based on brand-name recognition.
FALSE
True or false: For a company making a strategic move, being a fast follower or a late mover is always better in the long run than being a first mover.
FALSE
What are reasons that mergers and acquisitions sometimes fail?
Gains in competitive advantage materialize more slowly than was anticipated. Cost savings are less than anticipated.
Which statements are true concerning horizontal scope?
It can be expanded through company mergers and acquisitions. It is the range of product and service segments that a firm serves within its product and service market.
Which statements are true concerning vertical scope?
It is the extent to which a firm engages in the activities that make up the industry's entire value chain system. It is defined by the range of activities that may extend from initial production to after-sale customer service.
Which of the following are conditions in which first-mover advantages are most likely to arise? (Check all that apply.)
Switching costs discourage a first mover's customers from seeking a different vendor. Being first in a new market builds strong brand loyalty and enhances a firm's reputation.
Which statement concerning mergers and acquisitions is accurate?
The difference between a merger and an acquisition relates primarily to management control and financial arrangements.
What is a sign that a leading firm may be vulnerable to an offensive strategic attack?
The firm's use of aging technology and outdated equipment.
In which situations do adept followers have an advantage over first movers? (Check all that apply.)
When market uncertainties make it difficult to predict which products will succeed When the first-mover's products do not perform well When imitators can achieve the same benefits as pioneers with lower costs
In order to make a backward vertical integration strategy profitable, a company must
achieve the same economies of scale as suppliers. match suppliers' production efficiency and quality.
The term "blue ocean" refers to a market space in which
an industry does not yet exist and the market space is untainted by competition.
The new owners of a long-established clothing retailer have experience in garment manufacturing and as a result they decide to expand into that business. This type of business growth is called
backward vertical integration.
If new infrastructure is required before buyer demand can surge, a company should
be careful about allocating too many resources into being first in the market.
In industries with changing boundaries, a company may pursue an acquisition strategy in order to
become more flexible in its capacity to respond to buyers' changing needs. expand into new geographic regions. be prepared to respond to the various directions the industry might take
Guerrilla warfare tactics in business competition include which of the following?
catching rivals off guard with intense burst of promotional activity launching special campaigns to weaken a rival that is undergoing a period of internal discord
What are examples of company decisions concerned with scope of the firm?
choosing to remove leather goods from a line of product offerings choosing to focus solely on sales rather than designing and marketing
A company that acquires another company in the same industry may be able to cut costs by
closing inefficient plants. combining and downsizing administrative activities.
In some cases, backward vertical integration can increase efficiency by
coordinating production flows and preventing bottlenecks.
Some companies have adopted forward vertical integration strategies to
decrease dependence on sales agents, wholesalers, and retailers. supplement to their core product line with iconography and memorabilia. facilitate the sale of overstocked and slow-moving items.
A company can achieve which of the following by signaling would-be business challengers that retaliation is likely in the event of any strategic attack?
dissuading challengers from attacking altogether diverting challengers to less threatening competition
What are examples of preemptive strikes?
entering into exclusive, long-term contracts with the best suppliers obtaining the best retail location in a mall
Combined companies may be able to reduce supply chain costs because
expanded operating capacity may increase the company's bargaining power with suppliers.
Which two firms would be the best targets for an offensive strategic attack by a company?
firms in danger of going out of business regional firms with limited capabilities
In a winner-take-all type of market,
first-mover advantages can insulate a company from competition.
Expanding along the value chain into products and services that are closer to the end user is called
forward vertical integration.
What are common objectives of merger and acquisition strategies?
gaining quick access to new technologies expanding geographic coverage extending business into new product categories
In order to be successful, a preemptive strike by a company needs to
give the company a prime position in the market that rivals cannot easily bypass.
Price cutting can be an effective strategy for companies that
have already achieved a cost advantage.
A merger or acquisition that extends business into new product categories
helps a company fill gaps in its product line. can be more cost-effective for a company than developing the product on its own.
A company that expands its geographic coverage typically
increases its bargaining power with suppliers and buyers. enhances its name recognition and brand awareness.
A blue-ocean strategy is a strategy that seeks to gain a competitive advantage by
inventing a new segment of the market that makes existing competitors no longer relevant.
The introduction of disruptive product innovations
is a risky business strategy that has the potential to earn a company a majority of the market share.
What can lead to victory in a standard war among early movers?
making use of fast-cycle product development capabilities gaining the support of key customers and suppliers employing penetration pricing
What are typical obstacles that a company might create to deter the strategic offensive of a would-be challenger?
offering lower prices by maintaining a line-up of economy-based products lengthening warranties and offering free support services introducing new features and adding new models
A vertically integrated firm
participates in multiple stages of an industry's value chain system.
What are examples of ways that companies signal would-be challengers that retaliation is likely?
publicly announcing a commitment to maintaining market share maintaining cash reserves and marketable securities to fund countermeasures
Adept followers have an opportunity to meet the achievement of industry pioneers at far lower costs when
second movers can produce equal or better products than pioneers while avoiding the pioneer's costly mistakes.
A business guerrilla offensive is best suited for
small companies that lack the capacity to launch a full strategic offensive against better established rivals.
The benefits of defensive strategies include which of the following?
strengthening a firm's position in the market protecting a firm's resources
The best strategic offensives for companies involve which of the following?
striving to convert a competitive advantage into a sustainable advantage overwhelming rivals with swift and decisive action
A merger can be defined as
the combining of two or more companies into a single corporate entity.
Lowering prices can be a successful competitive strategy for a company if
the company convinces buyers that its products are as good as its competitors' products. its competitors maintain product prices at higher levels.
A company's strategic offensive should be based on
the company's strengths as well as its rival's strengths and weaknesses.
What would be an example of a firm pursuing vertical integration?
the owner of a poultry farm expanding into food distribution
If the race to market leadership in a particular industry is a marathon,
there may be enough time for fast followers and late movers to catch up.
What is the soundest approach for timing a company's offensive or defensive strategic moves?
to be aware of first-mover advantages and disadvantages
When a company considers whether to pursue an emerging market opportunity aggressively or cautiously, the company needs
to bear in mind that any first-mover advantages can be fleeting. to determine whether the race to market leadership will be a marathon or a sprint.
The defensive approach that companies use most frequently to defend their market position is
to block avenues that competitors might use to launch a strategic offensive.
What are reasons for a company to favor Internet retailing?
to lower costs for end users to increase brand recognition to lower distribution costs
What are some reasons that companies adopt defensive strategies?
to lower the risk of being attacked by competitors to minimize the impact of any competitive attack that occurs
When should a company undertake a strategic offensive?
when the company has no option other than to try to lessen a strong rival's competitive advantage when the company identifies a chance to improve its market share at a competitor's expense