Mgmt 490 ULL online- Chapter 1

Why is it important to craft a business model? -Because it sets forth management's game plan for maximizing profits for shareholders -Because it details exactly how management's strategy will result in the achievement of the company's strategic intent -Because it is a part of an operating model that focuses on delivering excellence and creating value for external shareholders and internal labor force -Because it sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner -Because it sets forth management's long-term action plan to match the business standards set by formidable rivals

Because it sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner

• Company A is an established online fantasy sports gaming company that has been accused of game-rigging, bribes and kickbacks. • Company B, a ride share company, has delayed its planned initial public offering due to reports of having an inhospitable workplace characterized by sexual harassment and discrimination. • Company C, a pharmaceutical manufacturer, charges higher prices for life-saving drugs in some countries than it charges in others. • Company D, a manufacturer and marketer of high-end consumer electronics, has a strict Code of Conduct that requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. • Company E, a pizza delivery business, is a being boycotted by customers and losing sponsored tie-ins with professional sports due to racist comments by its founder and CEO. Which of the above companies is distinguished by an ethical strategy as opposed to an unethical or flawed strategy?

Company D

The video explains the military origins of the term strategy, but then goes on to explain how Michael Porter closed the gap between military and business thinking with his definition of business strategy. Select the option that best defines strategy in the context of business. -Battle plans often need to be changed by field commanders due to shifting battlefield realities. Business strategies often have to adapt to changing competitive conditions. -Generals make battle plans based upon the forces available to them and their understanding of the enemy's forces. Business leaders create strategies based upon their firm's capabilities and their understanding of their competitor's capabilities. -Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete. -Generals are trying to win battles, against enemy combatants. Business leaders are trying to win market share against competitors. -Generals can be so removed from the front lines that they lose touch with the common soldiers. Senior executives can be so insulated by the organization hierarchy that they don't understand the realities of the common worker.

Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete.

To test the merits of a firm's strategy and distinguish it as a winning strategy, which major question needs to be addressed? -Is the company's strategy ethical and socially responsible, and does it put enough emphasis on good product quality and good customer service? -Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? -Is the strategy resulting in the development of additional competitive capabilities? -Is the strategy helping the company achieve a sustainable competitive advantage, and is it resulting in better company performance? -Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?

Is the strategy helping the company achieve a sustainable competitive advantage, and is it resulting in better company performance?

A company's strategy is NOT concerned with management's choices about how to -attract and please customers. -stake out the same market position as successful rival companies. -grow the business. -compete successfully. -conduct operations and improve the company's financial and market performance.

stake out the same market position as successful rival companies.

A company's strategy: -is mostly proactive and consists of strategy elements that are both planned and realized as planned. -tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective. -consists of initial and developing approaches aiming to ensure long-term growth. -is mainly affected by a reactive approach because uncertainty is high. -generally consists of new strategy elements and strategic moves that emerge as changing conditions warrant.

tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective.

An evolving strategy for a ride-share business like Uber or Lyft is not likely to be triggered by: -their need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations. -the proactive efforts of their managers to fine-tune and improve one or more pieces of the strategy. -their need to abandon some strategy features that have been faltering or are no longer working well. -their need to respond to the newly initiated actions and competitive moves of manufacturers of autonomous vehicles. -their need to respond to short-term swings in the stock market that impact timing of an initial public offering (IPO).

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

Which of the following is most accurate regarding Apple's ability to maintain a sustainable competitive advantage in the desktop and laptop computer, smartphone, and entertainment technology industry? -Apple's customer value proposition and profit formula do not allow it to maintain a sustainable competitive advantage long term. -Apple's strategy is virtually impossible to imitate and it's highly unlikely that any competitors could grab market share away from it. -Competitors would find it relatively easy to imitate Apple's strategy and take substantial market share from it. -Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for. -Apple must lower its prices dramatically if it is to effectively compete against lower-priced rivals in the long term.

Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for.

Apple's strategy has proven successful, largely due to: -competing head-on in the existing technology market. -limiting store growth to maintain the "exclusivity" of the brand image. -keeping prices competitive with rivals. -Apple's ability to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use and seamless integration across platforms. -being an early mover in essentially creating a distinctive new market segment and using a differentiation strategy to build demand for its brand.

Apple's ability to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use and seamless integration across platforms.

Patagonia, a multinational sports apparel company, is planning to launch its extreme weather gear product line in Nepal and the Kingdom of Bhutan; both are considered to be emerging markets. What would you advise Patagonia to omit from consideration in crafting a strategy to enhance future profits in these two emerging markets? -Create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs. -Devise a marketing plan that aims at mass customer segments, consisting of attractive advertisements and offers on products. -Implement a diversification plan that aims at adding health and fitness centers to its existing line of products. -Chart an acquisition plan that aims at acquiring local smaller-scale sports apparel manufacturers that seek funding and offer a complementary product lineup. -Establish a distribution plan to set up more supply outlets than any other rivals in the location.

Create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs.

As you saw in the video, one of the measures used to demonstrate Usain Bolt's competitive advantage in running is the number of gold medals he won during the Olympics. Which of the following measures, as described in the video, similarly demonstrates McDonald's competitive advantage in the fast-food industry? -All-day breakfast -Number of menu options -A strong leadership team -Brand recognition -Market share

Market share

If you were asked to develop a low-cost provider strategy for a startup ridesharing business, what would you most likely not recommend? -Offer low prices on short-distance rides and eliminate peak pricing for rides during rush hour. -Offer low prices on long-distance rides but hire only experienced drivers with a minimum of five years' service, pay them well above the minimum wage, and maintain peak pricing for rides during rush hour. -Offer low prices on short-distance rides and improve fleet capacity by only using passenger vans or autonomous drive vehicles for customers. -Offer low prices on short-distance rides and pay all drivers a minimum wage. -Offer low prices on long-distance rides and charge fees for any luggage.

Offer low prices on long-distance rides but hire only experienced drivers with a minimum of five years' service, pay them well above the minimum wage, and maintain peak pricing for rides during rush hour.

A company's profit formula consists of the following basic elements: -P, the price charged to customers, minus C, the company's costs. -S, the sustainable competitive advantage potential plus V, the value provided for customers, minus C, the company's costs. -C the competitive strength of the company, multiplied by S, the company's sustainable competitive advantage potential, minus V, the value provided for the customer. -M, the company's market share, multiplied by C, the competitive strength of the company, divided by S, the company's sustainable competitive advantage potential. -P, the price charged to customers, minus C, the company's costs, multiplied by M, the company's market share.

P, the price charged to customers, minus C, the company's costs.

In the video, business strategy was identified as a decision to choose "a different set of activities to deliver a unique mix of value." Which of the automotive firms follows this proposition most closely? -Tesla -Ford -Hyundai -General Motors -Toyota

Tesla

In the 'Art of War' Sun Tzu emphasized the fluid nature of competitive situations and the need for the strategist to recognize and incorporate that reality into their strategic planning. Which of the following has created the greatest uncertainty in the business environment across industries over the last 20 years? -Tax policy -The Internet -The European Union -The Federal Reserve -The U.S. government

The Internet

The group of runners that finished behind Usain Bolt was closely bunched and were said to have competitive parity. Burger King and Wendy's have a similar market share in the 5% range. Which of the following likely underlies the comparative parity of these firms? -They both target a similar customer base. -They have similar strategic resources and strategies. -They both compete against McDonald's. -They are primarily focused on hamburgers. -Their drive-through performance is poor.

They have similar strategic resources and strategies.

Ben Weprin is founder and CEO of Graduate Hotel, a growing chain of boutique hotels situated near college campuses and designed to cater to the nostalgia and local boosterism that are part of the culture of university towns. (Room keys are imprinted with the names of famous alumni, and public spaces are decorated with historical photos of campus life, vintage art and other collegiate artifacts.) Mr. Weprin and his company are trying to create a brand that will find year-round business by catering to more than just alumni coming back for once-a-year football weekends or 10-year anniversaries of their graduating classes. What is the major question that Mr. Weprin and his team need to ask about his company's strategy? -What must managers do, and do well, to make a company a winner in the marketplace? -What can employees do, and do well, to ensure customer satisfaction? -What can shareholders do, and do well, to ensure a profitable company? -What do customers do, how to profile customers who buy a company's product, and tailor sales strategy around them? -What do suppliers do, and how to get supplies at the lowest cost to build a profitable business?

What must managers do, and do well, to make a company a winner in the marketplace?

Sustainable competitive advantage means a firm outperforms its peers over a sustained period of time. Such superior performance is noticed by the peer group that attempts to identify the source of the performance and copy it. This concept is called "benchmarking." Which of the following demonstrates a benchmarking process? -When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs. -Bolt competed in the 100-meter dash against a group of other runners to see which among them was the fastest. -Bolt's naturally athletic gifts and hard training drove him to be the best. -Sogelau Tuvalu switched from the shot put to the 100-meter dash. -Winning the 100-meter and 200-meter races in two Olympics will likely never be repeated.

When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs.

BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds of consumers, this resort caters mainly to gays with a guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage? -a low-cost provider strategy -a broad differentiation strategy -a focused low-cost strategy -a focused differentiation strategy -a best-cost provider strategy

a focused differentiation strategy

Which is not a hallmark of a cleverly crafted and well-executed strategy? -a strategy that facilitates the capture of emerging opportunities -a strategy that produces enduringly good performance -a strategy that is adaptable to changing business and market conditions -a strategy that provides direction only in terms of what the company should do -a strategy that can withstand the competitive challenges from rival firms

a strategy that provides direction only in terms of what the company should do

A company achieves sustainable competitive advantage when: -it has a profitable business model. -a sufficiently large number of buyers have a lasting preference for its products or services as compared to the offerings of competitors. -it is able to maximize shareholder wealth. -it is consistently able to achieve both its strategic and financial objectives. -its strategy and its business model are well matched and in sync.

a sufficiently large number of buyers have a lasting preference for its products or services as compared to the offerings of competitors.

Changing circumstances and ongoing managerial efforts to improve the strategy: -account for why a company's strategy evolves over time. -explain why a company's strategic vision undergoes almost constant change. -make it very difficult for a company to have concrete strategic objectives. -make it very hard to know what a company's strategy really is. are consistent with a planned strategy approach.

account for why a company's strategy evolves over time.

A strategy to achieve and maintain sustainable competitive advantage is never associated with: -opportunities to enter strategic alliances and collaborative partnerships to strengthen a company's market position and competitiveness. -direction and guidance, in terms of not only what the company should do, but also what it should not do. -carefully considered moves to compete on dimensions like quality, cost, services, locations, and customers. -competing differently from rivals—doing what competitors do not do or doing what they cannot do. -actions taken by companies to gain sales and market share irrespective of product prices and costs.

actions taken by companies to gain sales and market share irrespective of product prices and costs.

A company's business strategy is not likely to include: -actions to respond to changing market conditions or other external factors. -actions to strengthen competitiveness via strategic alliances and collaborative partnerships. -actions to strengthen internal capabilities and competitively valuable resources. -actions to manage the functional areas of the business. management's actions to revise the company's financial and strategic performance targets.

actions to manage the functional areas of the business. management's actions to revise the company's financial and strategic performance targets.

Which one of the five generic competitive strategies discussed in Chapter 1 most closely approximates the competitive approach Apple Inc. is employing? -focused low-cost provider -best-cost provider -low-cost provider -broad differentiation -focused differentiation

broad differentiation

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: -hiring and training new talent to begin operations in the emerging market. -acquiring a local computer chip marketing and distribution specialist firm in the new location. -cancelling the idea of outsourcing and retaining the existing workforce to run operations. -shifting the existing workforce to the new geographical location and paying them according to new standards. -cancelling the job cuts till the market situation and entry operations stabilize.

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

The heart and soul of a company's strategy-making effort is determining how to: -become the industry's low-cost provider. -maximize profits and shareholder value. -improve the efficiency of its business model. -maximize profits while simultaneously operating in a socially responsible manner that keeps the company's prices as low as possible. -come up with moves and actions that produce a durable competitive edge over rivals.

come up with moves and actions that produce a durable competitive edge over rivals.

Crafting a deliberate strategy involves developing strategy elements that -imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. -comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan period; big changes in strategy are thus made only once every five years. -consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. -deliberately eliminate the ongoing strategic elements and implement new planned initiatives. -consist of adaptive change plans to new market situations along with abandoned redundant ongoing elements.

consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods.

A seldom used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage is: -striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage. -outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, or technological superiority. -developing competitively valuable resources and capabilities that rivals cannot easily match, copy, or trump with capabilities of their own. -focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche. -copying the attributes of a popular product or service.

copying the attributes of a popular product or service.

Unanticipated developments and fresh market conditions require a[n] _______ strategy. -deliberate -market-driven -customer-oriented -emergent -proactive

emergent

Why would managers not consider drastically modifying their company's strategy? -changing market conditions -advancing technology -shifting buyer needs -mounting evidence that the strategy is not working well -employee demands for better working conditions

employee demands for better working conditions

Troopline Inc., an online laptop retailer, sells laptops of similar range and features as other online laptop retailers. Which of the value propositions would not benefit the company? -providing free delivery of purchased laptops -allowing customers to pay through gift coupons -updating the site with better high-resolution pictures of laptops -providing mobile friendly version of the site and compatible apps for mobile users -establishing a comparison feature tab that allows customers to compare offerings from other online retailers

establishing a comparison feature tab that allows customers to compare offerings from other online retailers

The most significant signs of a well-managed company are: -the eagerness with which executives set stretch financial and strategic objectives and develop an ambitious strategic vision. -aggressive pursuit of new opportunities and a willingness to change the company's business model whenever circumstances warrant. -good strategy-making combined with good strategy execution. -a visionary mission statement and a willingness to pursue offensive strategies rather than defensive strategies. -a profitable business model and a balanced scorecard approach to measuring the company's performance.

good strategy-making combined with good strategy execution.

A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage: -is a reliable indicator that the company has a socially responsible business model. -is achievable in emerging but not mature industries. -is a company's most reliable ticket to above-average profitability. -signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. -is the best indicator that the company's strategy and business model are well-matched and properly synchronized.

is a company's most reliable ticket to above-average profitability.

The heart and soul of a company's strategy-making effort: -is figuring out how to become the industry's best-cost provider. -is figuring out how to develop a winning customer value proposition and profit formula. -concerns how to improve the efficiency of business operations. -deals with how management plans to operate in a socially responsible manner, while keeping the company's prices as low as possible. -is the actions and moves in the marketplace that managers take to gain a competitive advantage over rivals.

is the actions and moves in the marketplace that managers take to gain a competitive advantage over rivals.

A company's strategy is shaped by -the market environment and the competitive pressure created by the rivalry within the industry. -its core values, mission, and strategic vision. -its resources, capabilities, competitiveness, and market position. -its capital reserves and future growth potential. -management analysis and choice in part, as well as by the necessity of adapting.

management analysis and choice in part, as well as by the necessity of adapting.

In crafting a company's strategy, managers: -face the biggest challenge of how closely to replicate strategies of successful companies in the industry. -have comparatively little freedom in choosing the "hows" of strategy. -are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility. -need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals. Correct -are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-be-different" strategies are rarely successful.

need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals.

A company's strategy is a "work in progress" and evolves over time because of the: -importance of developing a fresh strategic plan every year that keeps employees from becoming bored with executing the same strategy year after year. -ongoing need to imitate the new strategic moves of the industry leaders. -need to make regular adjustments in the company's strategic vision. -ongoing need of company managers to react and respond to changing market and competitive conditions. -frequent need to modify key elements of the company's business model.

ongoing need of company managers to react and respond to changing market and competitive conditions.

Apple's strategy of corporate responsibility is illustrated by: -continuously investing in R&D and frequently introducing products. -aggressively expanding their company owned stores globally. -cultivating a diverse work force rooted in transparency. -designing and developing its own operating systems, hardware, application software and services. -requiring suppliers to comply with established standards for safe working conditions, fair treatment of workers and environmentally safe manufacturing.

requiring suppliers to comply with established standards for safe working conditions, fair treatment of workers and environmentally safe manufacturing.

The customer value proposition lays out the company's approach to: -meeting profitability guidelines without the risk of losing customers. -operating efficiently given the current level of customers. -embracing rival company approaches to gaining customers. -satisfying customer wants and needs at a price that customers will consider a good value. -assuring that the company makes enough profits based on its per-unit cost.

satisfying customer wants and needs at a price that customers will consider a good value.