GEB 4890 Exam #1

Due to impending labor strife over planned layoffs in its Silicon Valley headquarters, a social networking company has decided to outsource its programming operations to an emerging market, India, to obtain cheaper labor. Since then, this social networking company has encountered criticism that has diminished its current market position and staff productivity. You have been retained by this company to develop an appropriate reactive (emergent) strategy that would begin by

cancelling the job cuts till the market situation and entry operations stabilize.

Outsourcing strategies

carry the substantial risk of making a company overly dependent on its suppliers.

In evaluating how well a company's strategy is working, the best place to start is with a

clear view of what that strategy entails.

Strategic alliances are

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

Successful broad differentiation allows a firm to

command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.

A company needs financial objectives to

communicate management's targets for financial performance and achieve strategic objectives.

Competitive intelligence can be gleaned from

company press releases, company websites, management presentations, annual reports, and 10-K filings.

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.

A good example of vertical integration is a

crude oil refiner purchasing a firm engaged in drilling and exploring for oil.

The primary role of a functional strategy is to

determine how to support particular activities in ways that support the overall business strategy and competitive approach.

Managers must chart a company's strategic course by

developing a thorough understanding of the company's external and internal environment.

When a company performs a particular competitively important activity truly well in comparison to its rivals, it is said to have a

distinctive competence.

Well-conceived visions are ________ and ____________ to a particular organization and they avoid generic, feel-good statements that could apply to hundreds of organizations.

distinctive; specific

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.

A winning strategy is one that

fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance.

Legal and regulatory factors in the external environment typically do notinclude

genetic engineering, nanotechnology, and solar energy technology.

The competitive pressures from substitute products tend to be stronger when

good substitutes are readily available.

A sustainable competitive advantage is gained when a company

has durable competitive assets that are central to its strategy and superior to those of rival firms.

Examples of a potential resource weakness or competitive deficiency for a company do not include

having a single, unified functional strategy instead of several distinct functional strategies

A good example of a company's resources does not include

having higher earnings per share and a higher stock price than key rivals

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

The best example of a well-stated, specific financial objective is to

increase earnings per share by 15 percent annually.

A core competence

is an activity that a firm performs proficiently that is also central to its strategy and competitive success.

A competitive environment where there is strong rivalry among sellers, low entry barriers, strong competition from substitute products, and considerable bargaining leverage on the part of both suppliers and customers

is competitively unattractive from the standpoint of earning good profits.

A company's strategy stands a better chance of succeeding when

it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals.

An example of an external threat to a company's future profitability does not include

lack of a distinctive competence

A strategic vision constitutes management's view and conclusions about the company's

long-term direction and what product-market-customer mix seems optimal.

When trade-offs have to be made between achieving long-term and achieving short-term objectives

long-term objectives should take precedence unless the short-term performance targets have unique importance.

The competitive objective of a best-cost provider strategy is to

meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes).

The difference between the concept of a company mission statement and the concept of a strategic vision is that a

mission statement typically concerns a company's purpose and its present business scope, whereas the principal concern of a strategic vision is a company's aspirations for its future.

The essence of a broad differentiation strategy is to

offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.

Well-stated objectives are

quantifiable or measurable, and contain deadlines for achievement.

First-mover advantages are unlikely to be present 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 capability of the firm is not considered to be

related to the level of resources available.

In evaluating proposed or existing strategies managers should

scrutinize the company's existing strategies on a regular basis to ensure they offer a good strategic fit, create a competitive advantage, and result in above-average performance.

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

strategic alliance

A company attempting to be successful with a broad differentiation strategy has to

study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for.

A winning strategy must pass which three tests?

the fit test, the competitive advantage test, and the performance test

The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in an industry is

the five forces model of competition.

A strategically relevant political factor in the macro-environment that will influence the performance of all firms across the board is most likelyto be

the strength of the federal banking system.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is

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

An evolving strategy for a ride-share business like Uber or Lyft is not likely to be triggered by

their need to respond to short-term swings in the stock market that impact timing of an initial public offering (IPO).

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

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

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

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

________ 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.

Vertical scope

It is normal for a company's strategy to end up being

a blend of proactive actions to improve the company's competitiveness and financial performance, and adaptive reactions to unanticipated developments and fresh market conditions.

The difference between a merger and an acquisition is that

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).

What are value drivers?

a set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect

External forces in the natural environment include

air and/or water pollution, the depletion of irreplaceable natural resources, or inefficient energy/resource usage.

Best-cost provider strategies are those that

are a hybrid of low-cost provider and differentiation strategies that aim at providing desired attributes while beating rivals on price.

A company that succeeds in differentiating its product offering from those of its rivals is UNLIKELY to

attract mainly price-conscious buyers.

A company's competitive strategy should

be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies.

Why are crafting and executing business strategies the foremost tasks of any organization?

because a good strategy coupled with a good strategy execution are the most telling signs of good management and allow a company to be a standout performer in the marketplace

Which one of the following is not part of conducting a SWOT analysis?

benchmarking the company's resource strengths and competitive capabilities against industry key success factors

Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves

building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determine whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.

Buyers are in position to exert strong bargaining power in dealing with sellers when

buyers are price sensitive because the product represents a significant portion of their purchasing budget.

Opportunities to differentiate a company's product offering

can exist in activities all along an industry's value chain.

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

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

Why should long-run objectives take precedence over short-run objectives?

Long-run objectives are necessary for achieving long-term performance and stand as a barrier to undue focus on short-term results.

Identify the company with a low-cost provider strategy.

A baby products retailer sells unassembled baby furniture produced in China.