BUAD 4020 Practice Exam
In which of the following instances are industry members not subject to stronger competitive pressures from substitute products?
Buyers are dubious about using substitutes. Competitive pressures are stronger when: (1) good substitutes are readily available and attractively priced; (2) buyers view the substitutes as comparable or better in terms of quality, performance, and other relevant attributes; and (3) the costs that buyers incur in switching to the substitutes are low.
Key functional strategies of SunPower, a solar power manufacturing and installation company (described in Illustration Capsule 4.2, "Benchmarking in the Solar Industry") include
R&D, technology, and product design. Key functional strategies include R&D, technology, and product design, but do not include benchmarking, diversification, divestment, and forecasting.
Managers of all types of business organizations must develop a clear answer for which of the following questions?
What is the set of actions that we need to make to outperform competitors and achieve superior profitability? A company's strategy is the set of actions that its managers need to take to outperform the company's competitors and achieve superior profitability.
A company's mission statement typically addresses which question?
Who are we and what do we do? A mission statement describes the enterprise's present business and purpose—"who we are, what we do, and why we are here." It is purely descriptive.
A strategic group
is a cluster of industry members with similar competitive approaches and market positions in the market. A strategic group consists of those industry members with similar competitive approaches and positions in the market. Companies in the same strategic group can resemble one another in a variety of ways.
In a weighted competitive strength analysis, each strength measure is assigned a weight based on
its perceived importance in determining a company's competitive success in the marketplace. Step 1 in doing a competitive strength assessment is to make a list of the industry's key success factors and other telling measures of competitive strength or weakness (6 to 10 measures usually suffice). Step 2 is to assign weights to each of the measures of competitive strength based on their perceived importance.
A company's business strategy is not likely to include
management's actions to revise the company's financial and strategic performance targets. A company's business strategy incorporates responding to changing market conditions, strengthening competitiveness via strategic alliances and collaborative partnerships, strengthening capabilities and competitively valuable resources, and managing the functional areas of the business in order to achieve, not revise, financial and strategic performance targets.
Buyer bargaining power is weaker when
buyers' costs of switching to competing brands or to substitute products are relatively high. Competitive pressures from buyers decrease when they have weak bargaining power and high switching costs in choosing among competing offerings. Buyer bargaining power is stronger when buyers can threaten to integrate backwards into the business of sellers, when buyers are large and few in number relative to the number of industry sellers, and when buyers purchase products frequently and are well informed.
An unlikely, inaccurate feature of an organization's strategic vision is
outlining how the company intends to implement and execute its business model. The real purpose of a vision statement is to serve as a management tool for giving the organization a sense of direction. A strategic vision delineates management's aspirations for the business, providing a panoramic view of "where we are going" and a convincing rationale for why this makes good business sense for the company. A strategic vision thus points an organization in a particular direction, charts a strategic path for it to follow, builds commitment to the future course of action, and molds organizational identity. A clearly articulated strategic vision communicates management's aspirations to stakeholders (customers, employees, stockholders, suppliers, etc.) and helps steer the energies of company personnel in a common direction.
Quantitative measures of a company's competitive strength
provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival. High-weighted competitive strength ratings signal a strong competitive position and possession of competitive advantage; low ratings signal the opposite.
A first-rate SWOT analysis
provides a good basis for crafting a strategy. A first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company's strengths, aims squarely at capturing the company's best opportunities, and defends against the threats to its well-being.
The company with the highest rating on a given measure has an implied competitive edge on that specific measure, with the size of its edge
reflecting the difference between its weighted rating and rivals' weighted ratings. The company with the highest rating on a given measure has an implied competitive edge on that measure, with the size of its edge reflected in the difference between its weighted rating and rivals' weighted ratings.
An engaging and convincing strategic vision
should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. It is particularly important for executives to provide a compelling rationale for a dramatically new strategic vision and company direction. When company personnel do not understand or accept the need for redirecting organizational efforts, they are prone to resist change. Hence, explaining the basis for the new direction, addressing employee concerns head-on, calming fears, lifting spirits, and providing updates and progress reports as events unfold all become part of the task in mobilizing support for the vision and winning commitment to needed actions.
A company's strategy is not concerned with management's choices about how to
stake out the same position as successful rival companies. Mimicking the strategies of successful industry rivals—with either copycat product offerings or maneuvers to stake out the same market position—is certainly not the best at yielding successful results.
The concept of strategic groups is relevant to industry and competitive analysis because
strategic group maps help identify how each competing firm is positioned and the relationship to its closest competitors. Evaluating strategy options entails examining what strategic groups exist, identifying the companies within each group, and determining if a competitive "white space" exists where industry competitors are able to create and capture altogether new demand.
What does a company specifically exhibit when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective?
strategic intent A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.
Excellent execution of an excellent strategy is
the best test of managerial excellence and the best recipe for making a company a standout performer. The formulation of a truly successful requires managers to consider not only these primary factors in crafting a strategy but also an organization's ability to execute whatever strategy it chooses.
Strategic group mapping is a visual technique for displaying
the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors. Evaluating strategy options entails examining what strategic groups exist, identifying the companies within each group, and determining if a competitive "white space" exists where industry competitors are able to create and capture altogether new demand.
A company's resources and capabilities represent
the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace. A company's resources and capabilities represent its competitive assets and are determinants of its competitiveness and ability to succeed in the marketplace.
The real payoff of driving forces is to help managers understand
what strategy changes are needed to prepare for the impacts of the driving forces.
A cleverly crafted and well--executed strategy
can withstand the competitive challenges from rival firms. 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.
The heart and soul of a company's strategy-making effort is determining how to
come up with moves and actions that produce a durable competitive edge over rivals. A company achieves a competitive advantage whenever it has some type of edge over rivals in attaching buyers and coping with competitive forces. Strategy, as its essence, is about competing differently - doing with rivals don't do or what rival firms can't do.
A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a
competitive advantage over other companies. When a company has competitive assets that are central to its strategy and superior to those of rival firms, it can create a competitive advantage.
What a company's top executives are saying about where the company is headed long term with respect to its future product-market-customer-technology mix
constitutes the strategic vision for the company Top management's views about the company's direction and future product-customer-market-technology focus constitute a strategic vision for the company. A clearly articulated strategic vision communicates management's aspirations to stakeholders about "where we are going" and helps steer the energies of company personnel in a common direction.
A seldom used strategic approach to setting approach to setting a company apart from rivals and achieving a sustainable competitive advantage is
coping the attributes of a popular product or service. The above are four of five most frequently used and dependable strategic approaches to setting a company apart from rivals and winning a sustainable competitive advantage. Clever rivals can nearly always copy the attributes of a popular product or service, but it is substantially more difficult for rivals to match the know-how and specialized capabilities a company has developed and perfected over a long period.
Remedying a cost disadvantage associated with activities performed by forward channel partners (wholesale distributors and retail dealers) would not involve
insisting 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. Insisting on across-the-board cost cuts in all value chain activities is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers).
The task of stitching together a strategy
entails addressing a series of hows: how to grow the business, how to please customers, how to outcompete rivals, how to respond to changing market conditions, and how to achieve strategic and financial objectives. The task of stitching a strategy together entails addressing a series of hows: how to attract and please customers, how to compete against rivals, how to position the company in the marketplace, how to respond to changing market conditions, how to capitalize on attractive opportunities to grow the business, and how to achieve strategic and financial objectives.
A regional electric scooter manufacturer sells its scooter at a lower price than other manufacturers of two-wheeler scooters. What will make the product most attractive for customers?
high value From a customer perspective, the greater the value delivered and the lower the price, the more attractive is the company's value proposition. From a customer perspective, the greater the value delivered and the lower the price, the more attractive is the company's value proposition.
The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of
whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. Supplier power is stronger when: demand for suppliers' products is high and the products are in short supply; suppliers provide differentiated inputs that enhance the performance of the industry's product; it is difficult or costly for industry members to switch their purchases from one supplier to another; the supplier industry is dominated by a few large companies and it is more concentrated than the industry it sells to; industry members are incapable of integrating backward to self-manufacture items they have been buying from suppliers; suppliers provide an item that accounts for no more than a small fraction of the costs of the industry's product; good substitutes are not available for the suppliers' products; and/or industry members are not major customers of suppliers.
