BUSI 5388 Ch. 6

16) As general manager of a local restaurant chain, you have been asked to develop defensive moves to protect your company's market position and restrict any challenger's options for initiating a competitive attack. You would present all but ONE of the following strategic options to your executive team.

A) Challenge struggling runner-up restaurants that are on the verge of going under.

31) ________ is the range of product and service segments that the firm serves within its market.

A) Horizontal scope

73) The best strategic alliances

A) are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit.

45) A vertical integration strategy can expand the firm's range of activities

A) backward into sources of supply and/or forward toward end users.

9) An offensive to yield good results can be short if

A) buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign).

85) Samsung Group, which includes Samsung Electronics, successfully manages an ecosystem of over 1,300 partnerships that enable productive activities from global procurement to local marketing to collaborative R&D. Samsung Group's alliance management capability can be said to have

A) developed over time, out of effort and learning.

36) In the face of strong competition from Amazon, Walmart's 2016 acquisition of Jet. com was driven by a strategic objective, such as

A) expanding its geographic coverage or extending its business into new product categories.

6) Strategic offensives should, as a general rule, be based on

A) exploiting a company's strongest competitive assets—its most valuable resources and capabilities.

42) Vertical integration strategies

A) extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain.

51) The strategic impetus for forward vertical integration is to

A) gain better access to end users and better market visibility.

17) The purposes of a defensive strategy do not include

A) increasing the risk of having to defend an attack.

70) Daimler's 2017 agreement with automotive supplier Robert Bosch GmbH to develop self-driving taxis that customers can hail with a smartphone app is called a

A) joint venture.

28) For every emerging opportunity, there exists a(n)

A) market penetration curve, and this typically has an inflection point where the business model falls into place.

40) A primary reason why mergers and acquisitions sometimes fail is due to the

A) misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.

10) Bumble, a digital dating site where women make the first move, specifically uses which strategic weapon in its offensive arsenal?

A) pursuing disruptive product innovations to create new markets

55) Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

A) reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users.

82) The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are

A) resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment.

46) The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to

A) strengthen the company's competitive position and/or boost its profitability.

57) For a backward vertical integration strategy into the business of suppliers to be viable and profitable, a company must possess

A) the capability to achieve the same scale economies as outside suppliers and also match or beat suppliers' production efficiency with no drop in quality.

54) The best example of forward vertical integration is

B) Harley-Davidson and Ducati's own-branded stores that sell motorcycles and related memorabilia.

63) What might be considered to be a major drawback of employing an outsourcing strategy?

B) It can hollow out a firm's own capabilities and cause it to lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.

32) ________ is the extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system.

B) Vertical scope

33) The difference between a merger and an acquisition is that

B) a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).

81) The Achilles' heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is

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

67) Strategic alliances are

B) collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective.

71) Entering into strategic alliances and collaborative partnerships can be competitively valuable because

B) cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.

39) Mergers and acquisitions

B) frequently do not produce the hoped-for outcomes.

66) The big risk of employing an outsourcing strategy is

B) hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.

37) Merger and acquisition strategies

B) may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry.

47) For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company

B) must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality.

65) Outsourcing strategies can offer such advantages as

B) obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.

25) First-mover advantages are unlikely to be present when

B) 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.

48) The hallmarks of Tesla's vertical integration strategy do not include

B) research and development and rapid deployments of Tesla's control integration systems (creating control factors across its entire value chain).

59) The two big drivers of outsourcing are

B) that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).

61) The following are good examples of outsourcing some value chain activities that were formerly performed in-house except

C) Nordstrom retails certain products for Coach Inc.

1) Bonobos's Guideshop store concept allows men to have a personalized shopping experience, where they can try on clothing in any size or color, and then have it delivered the next day to their home or office. This fashion retail concept is a good example of

C) an offensive strategy to seek uncharted waters and compete in blue oceans.

50) Backward vertical integration can produce a

C) differentiation-based competitive advantage when activities enhance the performance of the final product.

52) The strategic impetus for Tesla's forward vertical integration into dealerships and charging stations is

C) gaining better access to Tesla's end users and better market visibility.

75) Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to

C) 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.

76) A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to

C) help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry.

77) Carlos, the CEO of a local HR recruiting and staffing company, is considering a strategic alliance with a local payroll company. What would not likely be a consideration for Carlos with respect to whether the proposed alliance could become successful and realize its intended benefits?

C) minimizing the amount of resources that the partners commit to the alliance

12) Launching a preemptive strike type of offensive strategy entails

C) moving first to secure advantageous competitive assets that rivals can't readily match or duplicate.

5) Companies like Amazon, Apple, Facebook, and Google employ all but ONE of the following offensive actions to complement and supplement the choice of one of the five generic competitive strategies. Which is not an example of an offensive move?

C) pursuing a market share leadership strategy

64) Relying on outsiders to perform certain value chain activities offers such strategic advantages as

C) reducing the company's risk exposure to changing technology and/or changing buyer preferences.

68) A formal agreement, or ________, is between two or more separate companies in which they agree to work cooperatively toward some common objective.

C) strategic alliance

56) A strategy of vertical integration can have substantial drawbacks, including

C) the environmental costs of coordinating operations across vertical chain activities.

27) The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when

C) the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first mover.

19) What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?

C) to dissuade challengers from attacking or diverting them into using less-threatening options

74) What might not be considered as a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products?

C) to enable greater opportunities for employee advancement

53) A strategic disadvantage of vertical integration is

C) to impair a company's flexibility in accommodating shifting buyer preferences.

18) To fend off a competitive attack, defensive-minded companies

C) use innovation and intellectual property protection to obtain product line exclusivity to force competitors to use other distributors.

3) Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT

C) using a strategic offensive to allow the company to leverage its weaknesses to strengthen operating vulnerabilities.

79) If you were advising Hoffmann-LaRoche, which set up Roche Partnering to manage more than 190 alliances in the healthcare industry, what might not be a reason why some of those alliances could prove to be unstable or break apart?

D) The partners may disagree among themselves over how to divide the profits gained from joint collaboration.

14) A good example of blue-ocean type of offensive strategy is

D) a company like Australian winemaker Casella Wines that created a Yellow Tail brand designed to appeal to a wider market, one that also includes consumers of other alcoholic beverages.

43) The best reason for investing company resources in vertical integration (either forward or backward) is to

D) add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability.

62) Why might a company not choose to outsource certain value chain activities presently performed in-house?

D) because it enables a company to gain better access to end users and better market visibility

80) Experience indicates that strategic alliances

D) can suffer culture clash and integration problems due to different management styles and business practices.

29) Market conditions and factors that tend not to favor first movers include

D) growth in demand that depends on the development of complementary products or services that are not currently available and new-industry infrastructure that is needed before buyer demand can surge.

44) A good example of vertical integration is a

D) hospital opening up a nursing home for the aged.

13) A blue-ocean strategy

D) involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.

24) Late-mover advantages (or first-mover disadvantages) are not likely to arise when

D) opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand.

30) What does the scope of the firm refer to?

D) the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses

35) A strategic objective that is highly UNLIKELY to drive a mergers and acquisition strategy is

D) to facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy.

22) Being a first mover is not particularly advantageous under which circumstance?

D) when markets are slow to accept the innovative product offering of a first mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover

38) Choose the intended outcome that did not happen with Expedia's merger and acquisition of HomeAway, Inc.

E) Expedia suppressed its rival company Orbitz's breakthroughs in management or technology.

41) Why do mergers and acquisitions sometimes fail to produce anticipated results?

E) Key employees at the acquired company can quickly become disenchanted and leave.

69) Under which circumstance can an alliance be considered just a convenient business arrangement rather than "strategic"?

E) The alliance helps the company obtain additional financing on better credit terms.

15) An example of a company that does not use blue-ocean market strategy is

E) Walmart's logistics and distribution in the retail industry

8) Offensive strategic moves involve all of the following except

E) blocking the avenues open to challengers.

78) Strategic alliances are more likely to be long lasting when they involve

E) collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

72) Microsoft's alliance with immuno-sequencing company Adaptive Biotechnologies can be called "strategic" because it serves all of the following strategic purposes except

E) contracts out certain value chain activities by both parties to outside vendors.

83) A company that has greater success in managing its strategic alliance can credit all of the following, except

E) creating organizational learning barriers across boundaries.

49) The potential advantages of Tesla's backward vertical integration strategy include

E) enhancement of Tesla's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

7) The principal offensive strategy options include all of the following except

E) initiating a market threat and counterattack simultaneously to effect a distraction.

60) Outsourcing strategies

E) involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.

58) An outsourcing strategy

E) involves farming out certain value chain activities presently performed in-house to outside vendors.

2) A hit-and-run or guerrilla warfare type offensive strategy

E) involves unexpected attacks (usually by a small-to-medium size competitor) to grab sales and market share from complacent or distracted rivals.

21) Tinder's first-mover strategic thrust into the online dating industry resulted in a high payoff in all of the following except

E) market uncertainties made it difficult for Tinder's founding team to ascertain whether or not the dating app would eventually succeed.

11) The worst targets for an offensive-minded company to target are

E) other offensive-minded companies that possess a sizable war chest of cash and marketable securities.

4) Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, except whether to

E) pay special attention to buyer segments that a rival is already serving.

20) A signal that would not warn challengers that strong retaliation is likely is

E) publicly announcing strong quarterly earnings potential to financial analysts.

84) A company that fails to manage its strategic alliance probably has

E) refrained from making commitments to its partners and ensured they do the same.

34) The difference between a merger and an acquisition relates to

E) the details of ownership, management control, and the financial arrangements.

23) First-mover disadvantages (or late-mover advantages) rarely arise when

E) the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

26) Because the timing of a strategic move can be just as important as the choice of move to make, a company's best option with respect to timing of an action is

E) to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.