Ch 4, 5, 6

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.

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.

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

A company's vertical slope refers to the extent to which the company participates in strategic alliances with other firms various offensive strategies that the company can employ extent to which the company participates in the industry value chain from raw material extraction to end-user sales various products and services that the company offers

extent to which the company participates in the industry value chain from raw material extraction to end-user sales

Which of the following is NOT true regarding defensive strategies lower the risk of being attacked by other firms influence competitors to aim their efforts at other rivals usually help enhance a firms competitive advantage weaken the impact of attacks that occur by other firms

usually help enhance a firms competitive advantage

Which of the following is not a type of vertical integration strategy full integration tapered integration partial integration value integration

value integration

Offering direct online sales to consumers while also promoting wholesale and retail sales can result in 1. channel conflict 2. net loss of sales due to disgruntled dealers 3. signal of the company's strong commitment to retailers 4. cannibalization of retailers sales

1. channel conflict 2. net loss of sales due to disgruntled dealers 4. cannibalization of retailers sales

Which of these are common reasons why companies enter into strategic alliances 1. collaborate on development of new technology 2. make supply chain more efficient 3. improve market access and marketing capabilities 4. create a more cost-efficient operation by collapsing ownership of two or more companies into one company

1. collaborate on development of new technology 2. make supply chain more efficient 3. improve market access and marketing capabilities

A late-mover strategy may be advantageous when 1. consumer needs evolve away from existing product 2. late-mover can enter the market with lower costs than the first mover 3. potential buyers are skeptical about the new products offered by the first-mover 4. the overall economy is poor and demand for consumers goods to begin this fall

1. consumer needs evolve away from existing product 2. late-mover can enter the market with lower costs than the first mover 3. potential buyers are skeptical about the new products offered by the first-mover

Reasons why a merger or acquisition might fall include 1. disenchantment and voluntary turnover of key employees 2. difficulty in meshing the two corporate cultures 3. lack of consumer demand or an evolution in consumer needs 4 smaller cost savings than expected

1. disenchantment and voluntary turnover of key employees 2. difficulty in meshing the two corporate cultures 4 smaller cost savings than expected

Which of these are examples of defensive strategies that can be carried out by a company? 1. grant volume discounts to distributes to discourage them from using other suppliers 2. threaten wholesalers and other intermediaries with price increases to prevent them from trying competitors brands. 3. maintain low-priced options to defend against low-price attacks by competitors 4. Introduce new features or otherwise expand on existing products or brands

1. grant volume discounts to distributes to discourage them from using other suppliers 3. maintain low-priced options to defend against low-price attacks by competitors 4. Introduce new features or otherwise expand on existing products or brands

Which of the following are advantages of forward integration 1. improved relationships with end users 2. selling costs are shifted to wholesalers and distributors 3. convenient purchases are differentiating feature 4. better market visibility

1. improved relationships with end users 3. convenient purchases are differentiating feature 4. better market visibility

What are the goals of signaling competitors that strong retaliation is likely in the event of an attack 1. let competitors know that a challenge will not be profitable 2. prevent challenges from competitors 3. pressure competitors into raising prices and dissuade a price war 4. convince challengers to pursue other strategic options

1. let competitors know that a challenge will not be profitable 2. prevent challenges from competitors 4. convince challengers to pursue other strategic options

Strategic Alliance is more likely to be long-lasting when 1. the alliance is formed by companies who are not in direct competition 2. alliance is formed by companies in the same industry segment 3. there is a degree of trust between partners 4. continued collaboration benefits both parties

1. the alliance is formed by companies who are not in direct competition 3. there is a degree of trust between partners 4. continued collaboration benefits both parties

Which of the following are disadvantages of vertical integration 1. vertically integrated companies may be slow to embrace technological changes due to investments in older technology or facilities 2. diminishes a company's control over the crucial steps of the value chain, possibly impairing the company's competitive strategy 3. result in capacity matching problems when components must be manufactured in different quantities 4. increases a firms risk of loss if the industry experiences a downturn

1. vertically integrated companies may be slow to embrace technological changes due to investments in older technology or facilities 3. result in capacity matching problems when components must be manufactured in different quantities 4. increases a firms risk of loss if the industry experiences a downturn

Which of the following are examples of outsourcing? 1. a company expands its own manufacturing capacity to ramp up production of a new product design. 2. a company contracts with an overseas plant to assemble and package its product 3. a company contracts with an outside payroll vender to handle their payroll function 4. a company uses outside information technology firm to manage its iT infrastructure.

2. a company contracts with an overseas plant to assemble and package its product 3. a company contracts with an outside payroll vender to handle their payroll function 4. a company uses outside information technology firm to manage its iT infrastructure.

Which of the following are the potential benefits of backward integration 1. stronger value-chain relationships 2. improved product quality 3. better customer service 4. less dependence on outside vendors

2. improved product quality 3. better customer service 4. less dependence on outside vendors

In what ways can vertical integration make a business less responsive to market changes 1. significant capital investment in vertical integration reduce the impact of an industry downturn, making profitability less urgent 2. significant investments in older technology make the firm less likely to adopt new technologies 3. vertical integration makes a firm less reliant on high sales volumes, reducing its need to innovate and respond to customer requests. 4. A firm may be unable to respond to changes in consumer preferences using its existing facilities.

2. significant investments in older technology make the firm less likely to adopt new technologies 4. A firm may be unable to respond to changes in consumer preferences using its existing facilities.

A firm that uses backward integration may find it difficult to match the cost advantages of suppliers for which of the following reasons 1. the firms employees will be less efficient when they are required to take on new production responsibilities 2. the firm will need to achieve the same production efficiency without losing product quality 3. wholesalers will demand price decreases that will offset the firms cost savings 4. suppliers will have greater production volume to achieve economies of scale

2. the firm will need to achieve the same production efficiency without losing product quality 4. suppliers will have greater production volume to achieve economies of scale

Which of the following strategic approaches becomes most appealing when a market is not important to industry leaders? Multiple Choice A low-cost provider strategy An offensive strategy A focused strategy A broad differentiation strategy A best-cost provider strategy

A focused strategy

Identifying the strategic issues and challenges that company managers need to address does NOT involve developing a "worry list" of "how to" "whether to" and "What to do about" Assessing the diversifiation moves of corporations competing in similar industries assessing what challenges the company has to overcome in order to be financially and competitvely successful in the short-run drawing on what was learned from having analyzed the company's industry and competitive environment drawing on evaluations of the company's own resources, internal circumstances, and compeitiveness

Assessing the diversification moves of corporations competing in similar industries

Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? 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 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 Improving organizational flexibility and speeding time to market 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 Being able to reduce the company's risk exposure to changing technology and/or buyer preferences

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

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

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. 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.

What are the two ways a company can translate its low-cost advantage over rivals into attractive profit performance? Multiple Choice Eliminating or curbing nonessential activities and aggressive use of activity-based costing Having a smaller labor force than rivals and outsourcing many value chain activities to suppliers with world-class technological capabilities Doing a better job than its rivals in performing essential activities and utilizing more best practices than its rivals use Pursuing the aggressive use of activity-based costing, utilizing more best practices than its rivals use, and having a narrower product line than its rivals offer Eliminating or curbing nonessential activities and doing a better job than its rivals in performing essential activities

Eliminating or curbing nonessential activities and doing a better job than its rivals in performing essential activities

Which one of the following statements explaining why merger and acquisition strategies typically fail is true? Merger and acquisition strategies typically fail due to the development of effective integration plans conducive to employee satisfaction. Merger and acquisition strategies typically fail due to the creation of management-employee programs intended to foster better communication. 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. 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. Mergers and acquisition strategies typically fail due to misleading advertising messages detailing the merger announcement.

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? Starbucks in the coffee house industry FedEx in overnight package delivery Nordstrom in the retail industry Cirque de Soleil in the live entertainment industry eBay in the online auction industry

Nordstrom in the retail industry

Which of the following is not a potential advantage of backward vertical integration? Adds to a company's differentiation capabilities and perhaps achieves a differentiation-based competitive advantage Lessens a company's vulnerability to powerful suppliers inclined to raise prices at every opportunity Spares a company the uncertainty of being dependent on suppliers for crucial components or support services 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 Contributes to a better-quality product/service offering

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 one of the hazards of pursuing a differentiation strategy? Multiple Choice Charging too high a price premium for the differentiating features Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements Striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) Using features or attributes that rivals can easily copy Overspending on efforts to differentiate the company's product offering

Overspending on efforts to differentiate the company's product offering

Which of the following is not a distinguishing feature of a low-cost provider strategy? Multiple Choice The product line consists of a few basic models having minimal frills and acceptable quality. The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features. The marketing emphasis is on making virtues out of product features that lead to low cost. The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations. Sustaining the strategy revolves around keeping costs down year after year and delivering good value at economical prices.

The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations.

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

To gain better access to end users and better market visibility

T/F Strategies should consider how quickly they expect a product or technology to become popular when deciding whether to pursue a first-mover advantage

True

Which of the following involves expanding a company's involvement in industry value chain activities? Vertical integration horizontal integration a fast-mover strategy outsourcing

Vertical integration

Which of the following is not a strategic disadvantage of vertical integration? It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. Vertical integration increases a firm's capital investment in the industry. Integrating into more industry value chain segments increases business risk if industry growth and profitability sour. Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities. 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.

Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities.

In which one of the following market circumstances is a broad differentiation strategy generally not well suited? Multiple Choice When buyer needs and preferences are too diverse to be fully satisfied by a standardized product When few rivals are pursuing a similar differentiation approach When most competitors are using eye-catching ads to set apart their product offerings and build a brand image that is differentiated When there are many ways to differentiate the product or service and many buyers perceive these differences as having value When technological change is fast-paced and competition revolves around rapidly evolving product features

When most competitors are using eye-catching ads to set apart their product offerings and build a brand image that is differentiated

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

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

First-mover advantages are unlikely to be present in which one of the following instances? When first-time customers remain strongly loyal to pioneering firms in making repeat purchases 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 When moving first can constitute a preemptive strike, making imitation extra hard or unlikely When pioneering helps build a firm's image and reputation with buyers 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

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

A broad differentiation strategy works best in which of the following market circumstances? Multiple Choice When buyers have a low degree of bargaining power and purchase the product frequently When new and improved products are introduced frequently When buyers incur low costs in switching to rival brands When most competitors are resorting to clever advertising and promotions in an attempt to set apart their product offerings When there are many ways to differentiate the product or service that have value to buyers

When there are many ways to differentiate the product or service that have value to buyers

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? 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 Which value chain activities, if any, should be outsourced Whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy Whether to integrate forward or backward into more stages of the industry value chain Whether to enter into strategic alliances or collaborative partnerships

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

For a best-cost provider strategy to be successful, a company must have Multiple Choice excellent supply chain capabilities and product design expertise. economies of scope or greater scale economies than rivals. a superior value chain configuration and unmatched efficiency in managing essential value chain activities. superior product innovation skills and manufacturing capabilities. a short, low-cost value chain.

a superior value chain configuration and unmatched efficiency in managing essential value chain activities.

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.

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.

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.

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.

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

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

Which of the following is not one of the principal offensive strategy options? a. Blocking the avenues open to challengers b. Offering an equal or better product at a lower price c. Adopting and improving on the good ideas of other companiesd. d. Launching preemptive strikese. e. Attacking competitors' weaknesses

a. Blocking the avenues open to challengers

In terms of business strategy, a blue ocean is a defensive strategy used to thwart price competition a strategy to improve market share within the existing market space of the industry a situation where industry boundaries are well-defined and accepted by industry members an untapped market space for industry opportunity

an untapped market space for industry opportunity

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.

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

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 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.

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.

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.

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

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.

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.

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

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)

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

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

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

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

becoming dependent on other companies for essential expertise and capabilities.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is Multiple Choice extra attention paid to establishing a distinctive competence. concentrated attention on serving the needs of buyers in a narrow piece of the overall market. greater opportunity for brand loyalty. suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor. bold strategic attempt at global market leadership via heavy advertising.

concentrated attention on serving the needs of buyers in a narrow piece of the overall market

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?

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 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

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

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

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).

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.

Examples of uniqueness drivers do not include Multiple Choice product features, design, and performance. production R&D. customer service. continuous quality improvement. eliminating low value-added activities and work steps.

eliminating low value-added activities and work steps.

Successful differentiation allows a firm to Multiple Choice gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). increase unit sales (because additional buyers are won over by the differentiating features) and lower incremental input costs.

gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features).

Companies striving for global market leadership pursue strategic alliances or collaborative partnerships with foreign companies in order to revamp the global industry value chain, raise needed financial capital from foreign banks, and wage price wars against foreign competitors. exercise better control over efforts to revamp the global industry value chain and combat the bargaining power of foreign suppliers. 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. increase the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. 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.

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.

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

have a high "divorce rate."

The most long-lasting strategic alliances aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. are those whose purpose is helping a company master a new technology. are those formed to enable the partners to be consistent first movers or fast followers. 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. aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.

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 most appealing approaches to broad differentiation Multiple Choice are those that hinge upon first-rate R&D and frequent product innovation. involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate. are those that either lower buyer switching costs or enhance the differentiator's brand image. generally relate to product superiority or clever merchandising. are typically based on either superior product quality or superior customer service.

involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate.

A focused low-cost strategy Multiple Choice involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors. is the hardest of the four generic types of competitive strategies to employ successfully. involves the use of deep price discounting to capture customers. entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques. cannot be sustained over time unless the focuser is aggressive in entering other segments where it also can achieve a low-cost advantage.

involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors.

The five generic types of competitive strategies include offensive strategies, best-cost provider, defensive strategies, differentiation strategies, and low-cost strategies. low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider. offensive strategies, defensive strategies, low-price strategies, technological leadership strategies, and product innovation strategies. low-price strategies, premium price strategies, middle-of-the-road strategies, best-cost provider, and market share leadership strategies. attacking competitor strengths, broad differentiation, attacking competitor weaknesses, market leadership strategies, and product superiority strategies.

low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider.

Striving to be the low-cost provider is a particularly attractive competitive strategy when Multiple Choice managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain, for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs. most rivals are trying to differentiate their product offering from those of rivals. there are many ways to achieve higher product quality that have value to buyers. buyers are not swayed by advertising and are not very brand loyal. most rivals are pursuing best-cost or broad differentiation strategies.

managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain, for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs.

Which of the following is NOT a good target for an offensive attack small local and regional firms lacking experience or resources runner-up firms with weaknesses in areas that can be exploited by a firm with greater strengths in those areas market leaders with strong profitability and solid market share market leaders having a weak competitive strategy with regard to cost vs differentiation

market leaders with strong profitability and solid market share

A low-cost provider's basis for competitive advantage is Multiple Choice using an everyday low pricing strategy to gain the biggest market share. larger profit margins than rival firms'. high buyer switching costs because of the company's differentiated product offering. meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price. a reputation for charging the lowest prices in the industry.

meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price.

When two companies mutually agree to become a single corporate entity, they are participating in strategic alliance merger joint venture acquisition

merger

A company's biggest vulnerability in employing a best-cost provider strategy is Multiple Choice relying too heavily on price discounting. adding features not needed by the majority of buyers. not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. relying excessively on outsourcing in an attempt to boost gross profit margins.

not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs.

Attacking the competitive weaknesses of rivals, adopting and improving on the good ideas of other companies, and deliberately attacking market segments where rivals make a huge profit are examples of offensive strategies early-mover strategies defensive strategies blue ocean strategies

offensive strategies

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

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

Among the purposes of defensive strategies are to aggressively retaliate against rivals pursuing offensive strategies and prevent price wars. 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. guard against adverse changes in the company's macro-environment and insulate the company from the impact of industry-driving forces. strengthen a company's competitive advantage and reduce its exposure to business risk. eliminate a company's resource weaknesses and competitive deficiencies, thereby making it invulnerable to competitive attack from would-be challengers.

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.

Which is not a typical objective of a merger or acquisition scale back on the company's product line or eliminate some product categories gain quick access to new technology and competitive capabilities improve cost efficiency of the combined businesses expand geographic reach

scale back on the company's product line or eliminate some product categories

A firm pursuing a best-cost provider strategy Multiple Choice seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation. tries to have the best cost (as compared to its rivals) for each activity in the industry's value chain. achieves competitive advantage because its operating activities are "best-in-class" or "best-in-world." follows a hybrid strategy based upon superior resources and a narrow market niche. seeks a "middle of the road" strategic approach that attempts to satisfy the product or service needs of consumers with average household incomes.

seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation.

A _______ is a collaborative relationship between two separately owned companies in which resources, risk, and operational control are shared. merger acquisition outsourcing strategic alliance

strategic alliance

A manager should pursue vertical integration if it will signal to investors that the company is pursuing an aggressive growth strategy strengthen profitability and competitive standing eliminate a major competitor increase the size of the company's workforce

strengthen profitability and competitive standing

A hit-and-run or guerrilla warfare type of offensive strategy involves random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals. 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. tactics that work best if the guerrilla is the industry's low-cost leader. pitting a small company's own competitive strengths head-on against the strengths of much larger rivals. surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.

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

Which of the following describes a company's biggest long-term risk with an outsourcing strategy? The risk of less efficient production of nonessential products the risk of losing control over activities crucial to the company's competitive success The risk of being saddled with outdated technologies the risk of missing out on industry growth and profitability

the risk of losing control over activities crucial to the company's competitive success

A company's competitive strategy deals with Multiple Choice specific actions management plans to take to develop a better value chain than rivals have. how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. the specifics of management's game plan for competing successfully. its plans for underpricing rivals and achieving product superiority. specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry.

the specifics of management's game plan for competing successfully.

The strategic target of a best-cost provider is Multiple Choice the extremely price-conscious customer in a low-end market range. the extremely price-conscious customer in a high-end market range. any customer in a narrow market niche where buyers' needs and preferences are distinctively different. the value-conscious customer in a middle-market range. the value-conscious customer in a high-end market range.

the value-conscious customer in a middle-market range.

A company's horizontal scope refers to the various defensive strategies the company can employ the extent of its ownership in multiple joint ventures the various product and services that it offers the extent to which the company participates in the various activities of the industry's value chain

the various product and services that it offers

The two pivotal factors that distinguish one competitive strategy from another boil down to Multiple Choice whether the company has a customer value proposition, profit formula, and collection of valuable resources, and whether the company's market target is broad or narrow. whether the company focuses on low cost, and whether the company chooses offensive or defensive moves to counter its rivals. whether the company chooses offensive or defensive moves to counter its rivals, and whether the company's market target is broad or narrow. whether the company has to deal with strong competitive forces, and whether the company chooses offensive or defensive moves to counter its rivals. whether the company's market target is broad or narrow, and whether the company is pursuing a competitive advantage linked to lower costs or differentiation.

whether the company's market target is broad or narrow, and whether the company is pursuing a competitive advantage linked to lower costs or differentiation.