Chapter 6 - LearnSmart
A company's strategic offensive should be based on:
The company's strengths as well as its rival's strengths and weaknesses
Companies that outsource strategically important operations run the risk of:
Weakening their ability to sustain their competitive advantage in areas vital to the company's success
Contract-based outsourcing can introduce problems because:
- A company may have difficult time monitoring the work of the outside company - Issues arising from delays and budget overruns may be difficult to resolve - The outside company may lack incentive to meet the needs of the outsourcing company
When are first-movers likely to experience significant advantages?
- Being first in a new market builds strong brand loyalty and enhances a firm's reputation - Switching costs discourage a first mover's customers from seeking a different vendor
What are reasons that mergers and acquisitions sometimes fail?
- Cost savings are less than anticipated - Gains in competitive advantage materialize more slowly than anticipated
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
What are typical obstacles that a company might create to deter the strategic offensive of a would-be-challenger?
- Introducing new features and adding new models - Offering lower prices by maintaining a line-up of economy-based products - Lengthening warranties and offering free support services
Which statements about strategic alliances among large corporations is true?
- Large corporations can be well-served by managing their strategic alliances like a portfolio - It is not uncommon for large corporations to have up to 50 strategic alliances
In order to make a backward vertical integration strategy profitable, what must a company do?
- Match suppliers production efficiency and quality - Achieve the same economies of scale as suppliers
When there are improvements in technology at the supply stage of the value chain, a vertically integrated company:
- May be required to incur high costs for abandoning old technologies in an effort to keep price with suppliers - May need to continue producing suboptimal products rather than upgrading its technology
Strategic alliances are more likely to succeed if partners:
- Protect themselves with safeguards - Make mutual commitments - Establish trust
Which two firms would be the best targets for an offensive strategic attack by a company?
- Regional firms with limited capabilities - Firms in danger of going out of business
Lowering prices can be a successful competitive strategy for a company if:
- The company convinces buyers that its products are as good as its competitor's products - Its competitor maintains product prices at higher levels
Approximately what percentage of strategic business alliances fail each year?
60-70%
Expanding along the value chain into products and services that are closer to the end user is called:
Forward vertical integration
Which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true?
Matching a supplier's production efficiency often requires significant investment in research and development
