MGMT Seminar Test 1

50. Alliance management is considered an organizational capability and:

A. develops over time, out of effort and learning

ALMOST DONE

ALMOST DONE

__________ is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability. A. A strategy B. A mission statement C. Strategic intent D. A cost-price framework E. A market vision

A. A strategy

20. Which of the following is the best example of a well-stated financial objective? A. Increase earnings per share by 15 percent annually. B. Gradually boost market share from 10 percent to 15 percent over the next several years. C. Achieve lower costs than any other industry competitor. D. Boost revenues by a percentage margin greater than the industry average. E. Maximize total company profits and return on investment.

A. Increase earnings per share by 15 percent annually.

20. Identifying and assessing a company's resource strengths and weaknesses and its external opportunities and threats is called a: A. SWOT analysis. B. competitive asset/liability analysis. C. competitive positioning analysis. D. strategic resource assessment. E. company resource mappin

A. SWOT analysis.

3. A powerful tool for sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace is termed: A. VRIN tests. B. SWOT analysis. C. competitive strength analysis. D. financial and asset management analysis. E. value chain analysis.

A. VRIN tests.

44. What is the foremost question in running a business enterprise? A. What must managers do, and do well, to make a company a winner in the marketplace? B. What can employees do, and do well, to ensure customer satisfaction? C. What can shareholders do, and do well, to ensure a profitable company? D. What do customers do, how to profile customers who buy a company's product, and tailor sales strategy around them? E. What do suppliers do, and how to get supplies at the lowest cost to build a profitable business?

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

13. A company's mission statement typically addresses which of the following questions? A. Who are we and what do we do? B. What objectives and level of performance do we want to achieve? C. Where are we going and what should our strategy be? D. What approach should we take to achieve sustainable competitive advantage? E. What business model should we employ to achieve our objectives and our vision?

A. Who are we and what do we do?

38. Which of the following areas within a company's total value chain system can managers use to improve efficiency and effectiveness? A. a company's own internal activity segments, the suppliers' part, and the forward (distribution) channel portion of the value chain system B. a company's reinforced activities identified as efficiency measures for improved effectiveness C. only the internal activity segments D. only the suppliers' part E. only the distributors' channel portion

A. a company's own internal activity segments, the suppliers' part, and the forward (distribution) channel portion of the value chain system

6. Every strategy needs A. a distinctive element that attracts customers and produces a competitive edge. B. to include similar characteristics to rival company strategies. C. to pursue conservative growth built on historical strengths. D. to employ diverse and sundry operating practices for producing greater control over sales growth targets. E. to mimic the plans of the industry's most successful companies.

A. a distinctive element that attracts customers and produces a competitive edge.

14. When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called: A. a dynamic capability. B. a core competence. C. a distinct competence. D. a strategic assessment. E. a benchmarking exercise.

A. a dynamic capability.

40. The formation of a new corporation, jointly owned by two or more companies agreeing to share in the revenues, expenses, and control, is known as: A. a joint venture.B. a limited liability company.C. a partnership.D. sole proprietorship.E. an S corporation.

A. a joint venture

14. For every emerging opportunity there exists: A. a market penetration curve, and this typically has an inflection point where the business model falls into place. B. an opportunity to achieve first-mover status, which depends on analyzing the competitive status curve where all the potential rivals are encoded. C. an emerging pitfall that is a counterpoint to the intended growth. D. a normal curve scenario which signifies the average growth curve will be opportunistic. E. an intense competition that constrains the company's prospects for rapid growth and superior profitability.

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

27. Which one of the following does NOT account for WHY a company's strategy evolves from one version to another? A. a need to promote stability and retain the status quo B. the need to abandon some strategy elements that are no longer working well C. a need to respond to changing customer requirements and expectations D. a need to react to fresh strategic maneuvers on the part of rival firms E. the proactive efforts of company managers to improve obsolete aspects of the strategy

A. a need to promote stability and retain the status quo

4. The difference between a resource and a capability is: A. a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently. B. a resource is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function. C. a resource is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource. D. a resource represents the firm's fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets. E. a resource represents the firm's human assets, whereas a capability defines the skills and knowledge of these human resources.

A. a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.

25. What are value drivers? A. a set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect B. a firm's hidden success factor for creating over-the-top product features that will command the highest price in the industry C. a technique for easily identifying factors that validate a firm's performance D. a set of factors that verify the unique nature of a firm E. a set of guidelines for identifying the most promising upscale attributes to incorporate into a product

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

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

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

49. Success with a best-cost provider strategy designed to outcompete high-end differentiators requires: A. achieving significantly lower costs in providing the upscale features. B. providing significantly better product attributes in order to justify a price above what low-cost leaders are charging. C. matching the company's resources and capabilities to a low-cost provider status. D. motivating buyers to purchase upscale features that match rivals. E. achieving the lowest costs in the industry.

A. achieving significantly lower costs in providing the upscale features.

39. Best-cost provider strategies are those that: A. are a hybrid of low-cost provider and differentiation strategies that aim at providing desired attributes while beating rivals on price. B. are rewarded by providing buyers with the best attributes at a premium. C. have strategy elements related to the lowest-cost provider in the largest and fastest growing (or best) market segment. D. look for a low-cost advantage rather than a differentiation advantage. E. look for a differentiation advantage rather than a low-cost advantage.

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

42. The best strategic alliances: A. are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit.B. are those whose purpose is to create an industry key success factor.C. are those which help a company move quickly from one strategic group to another.D. involve joining forces in R&D to develop new technologies cheaper than a company could develop the technology on its own.E. aim at raising an industry's barriers to entry.

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

45. The key success factors in an industry: A. are those competitive factors that most affect industry members' abilities to prosper in the marketplace—the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak one, and between profit and loss. B. are determined by the industry's driving forces, which are essential to surviving and thriving in the industry. C. hinge on how many different strategic groups the industry has operating within the industry and their level of profitability and sustainable advantages. D. depend on how many rivals are trying to move from one strategic group to another without losing momentum. E. are a function of such considerations as how many firms are in the industry, how many have market shares above 5 percent, and whether the business models being used are similar or diverse.

A. are those competitive factors that most affect industry members' abilities to prosper in the marketplace—the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak one, and between profit and loss.

26. A vertical integration strategy can expand the firm's range of activities: A. backward into sources of supply and/or forward toward end users. B. backward into other industry business lines and/or forward to suppliers of raw materials. C. to enable the supply chain the opportunity for expansion. D. to complement the industry's horizontal value chain line of profitability. E. to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

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

41. The road to competitive advantage begins with management's efforts to: A. build organizational expertise in performing certain competitively important value chain activities. B. understand the value chain activities providing opportunity for growth. C. build value-creating activities all along the value chain. D. ensure superiority over rivals in performing even unimportant tasks and activities extremely well. E. maintain the existing chain of activities to lower cost

A. build organizational expertise in performing certain competitively important value chain activities.

5. Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves: A. 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) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry. B. building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits. C. evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors. D. assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures. E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

A. 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) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.

2. An offensive to yield good results can be short if: A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign). B. competition creates an appealing new product. C. the technology needs debugging. D. new production capacity needs to be installed. E. consumer acceptance of an innovative product takes time.

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

44. Competitive intelligence can be gleaned from: A. company press releases, company websites, management presentations, and annual reports and 10-K filings. B. SWOT analysis, PESTLE analysis, KSF analysis, and driving forces analysis. C. strategic group maps, Value Net analysis, and five force analysis D. financial ratio analysis, KSF analysis, driving forces analysis, and five forces analysis. E. KSF analysis, Value Net analysis, and driving forces analysis.

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

35. Benchmarking involves: A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities. B. checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to its direct competitors. C. studying whether a company's resource strengths are more/less powerful than the resource strengths of rival companies. D. studying how a company's competitive capabilities stack up against the competitive capabilities of selected companies known to have world-class competitive capabilities. E. comparing the best practices in one industry against the best practices in another industry.

A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.

22. When an activity becomes something a company has learned to perform proficiently and capably, the company is said to have a: A. competence. B. competitive advantage over rivals. C. key value chain proficiency. D. distinctive capability. E. resource advantage.

A. competence.

40. Functional-area strategies: A. concern the actions, approaches, and practices to be employed in managing particular functions within a business. B. specify what actions a company should take to resolve specific strategic issues and problems. C. are normally crafted by operating-level managers. D. are concerned with how to unify the firm's several different operating strategies into a cohesive whole. E. are normally crafted by the company's CEO and other senior executives.

A. concern the actions, approaches, and practices to be employed in managing particular functions within a business.

39. A company's value-creating activities can offer a competitive advantage in one of two ways: A. contribute to greater efficiency and lower costs and provide a basis for differentiation. B. contribute expense savings and enhance product exclusivity. C. reduce cost disadvantages and market price anomalies. D. contribute customer experience value and conserve operating functionality. E. contribute to competitive assets and discontinue distinctive competencies.

A. contribute to greater efficiency and lower costs and provide a basis for differentiation.

41. To succeed in predicting a competitor's next moves, company strategists need to appraise a rival's; A. current strategy, financial health, market share, resources and capabilities. B. strategic group, assumptions, resources and capabilities, financial health. C. current strategy, assumptions, resources and capabilities, objectives. D. market share, strategic group, driving forces, assumptions.E. resources and capabilities, assumptions, current strategy, objectives.

A. current strategy, financial health, market share, resources and capabilities.

42. The objective of a best-cost provider strategy is to: A. deliver superior value to value-conscious buyers at a comparatively lower price than rivals. B. offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C. attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D. out-compete rivals using low-cost provider strategies. E. translate its best-cost status into achieving the highest profit margins of any firm in the industry

A. deliver superior value to value-conscious buyers at a comparatively lower price than rivals.

2. Which of the following are integral parts of the managerial process of crafting and executing strategy? A. developing a strategic vision, Strategic Management, and crafting a strategy B. developing a proven business model, deciding on the company's strategic intent, and crafting a strategy C. Strategic Management, crafting a strategy, implementing and executing the chosen strategy, and deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage D. coming up with a statement of the company's mission and purpose, Strategic Management, choosing what business approaches to employ, selecting a business model, and monitoring developments E. deciding on the company's strategic intent, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ

A. developing a strategic vision, Strategic Management, and crafting a strategy

46. Best-cost provider strategies are appealing in those market situations where: A. diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase mid-range products. B. a company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance. C. buyers are more quality-conscious than price-conscious. D. there are numerous buyer segments, buyer needs are diverse across these segments, only a few of the segments are growing rapidly, and sellers' products are strongly differentiated. E. buyers are more performance-conscious than value-conscious.

A. diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase mid-range products.

17. A competitively valuable resource or capability is a company's: A. enabling foundation of its business model. B. equally valuable substitute resource providing a competitive advantage. C. assessment of the availability of superior substitutes. D. unsurpassed worker productivity and product quality. E. unique piecework incentive system, providing a competitive advantage

A. enabling foundation of its business model.

31. The task of stitching together a strategy: A. 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. B. is primarily an exercise in deciding which of several freshly emerging market opportunities to pursue. C. is mainly an exercise that should be dictated by what is comfortable to management from a risk perspective and what is acceptable in terms of capital requirements. D. requires trying to copy the strategies of industry leaders as closely as possible. E. is mainly an exercise in good planning.

A. 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.

19. Mergers and acquisitions are often driven by such strategic objectives as: A. expanding a company's geographic coverage or extending its business into new product categories. B. reducing the number of industry key success factors. C. reducing the number of strategic groups in the industry. D. facilitating a company's shift from a low-cost leadership strategy to a focused low-cost strategy. E. lengthening a company's value chain and thereby putting it in a better position to deliver superior value to buyers.

A. expanding a company's geographic coverage or extending its business into new product categories.

11. Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of: A. explaining "where we are going and why" and, more importantly, inspiring and energizing company personnel to unite to get the company moving in the intended direction. B. helping company personnel understand why "making a profit" and "having a business plan" are so important. C. making it easier for top executives to set and communicate the company's stretch objectives. D. helping lower-level managers and employees better understand the company's business model. E. aiding lower-level managers and employees in formulating and achieving a balanced scorecard.

A. explaining "where we are going and why" and, more importantly, inspiring and energizing company personnel to unite to get the company moving in the intended direction.

1. Strategic offensives should, as a general rule, be based on: A. exploiting a company's strongest competitive assets—its most valuable resources and capabilities. B. instigating and executing the chosen strategy efficiently and effectively. C. scoping and scaling an organization's internal and external situation. D. molding an organization's character and identity. E. satisfying the buyer's needs that the company seeks to meet.

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

24. Vertical integration strategies: A. extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. B. are one of the best strategic options for helping companies win the race for global market leadership. C. offer good potential to expand a company's lineup of products and services. D. are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E. are a good strategy option for helping a company revamp its value chain and bypass low value-added activities.

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

12. Cost-efficient management of a company's overall value chain activities requires that management: A. ferret out cost-saving opportunities in every part of the value chain. B. undertake an operations functionality redesign. C. establish sales productivity and operating practices guidelines. D. re-create rivals' assembly plant structuration savings. E. pursue a differentiation strategy that can be easily copied.

A. ferret out cost-saving opportunities in every part of the value chain.

3. Which of the following rivals make the best targets for an offensive attack? A. firms with weaknesses in areas where the challenger is strong B. companies that are financially strong and possess favorable competitive market positioning C. large national firms with vast capabilities and intermittent trivial resource deficiencies D. strong and financially secure market leaders E. small local and regional firms with unrestrained capabilities

A. firms with weaknesses in areas where the challenger is strong

30. The strategic impetus for forward vertical integration is to: A. gain better access to end users and better market visibility. B. achieve the same scale economies as wholesale distributors and/or retail dealers. C. control price at the retail level. D. bypass distributors and dealers and sell direct to consumers at the company's website. E. build a core competence in mass merchandising.

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

13. The competitive pressures from substitute products tend to be stronger when: A. good substitutes are readily available. B. there are fewer number of substitute products. C. substitutes have lower performance features. D. buyers incur high costs in switching to substitutes. E. substitutes are priced above the market.

A. good substitutes are readily available.

36. Benchmarking provides a company with which of the following? A. hard evidence of cost competitiveness B. proof of resource availability C. a company strategy D. verification of total cost ownership E. improvements to internal processes

A. hard evidence of cost competitiveness

9. A sustainable competitive advantage is gained when a company: A. has durable competitive assets that are central to its strategy and superior to those of rival firms. B. has sufficient resources to expedite its strategy. C. realizes its inherent weaknesses are transformable to advantages. D. can stand out relative to rivals because of resource utilization. E. has resources in well-populated geographical locations.

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

14. An example of how companies can revamp their value chain to reduce costs is to: A. have suppliers locate their plants close to companies' own facilities. B. continue to utilize traditional methods of distribution and sales. C. not make any changes in product manufacturing but change end distribution methods. D. increase extra services to increase staffing requirements. E. facilitate the learning curve by providing superior training to new employees.

A. have suppliers locate their plants close to companies' own facilities.

16. The range of product and service segments that the firm serves within its market is known as the firm's: A. horizontal scope. B. vertical integration. C. vertical scope. D. product outsourcing. E. joint venture partnership.

A. horizontal scope.

14. Determining how strong the threat of substitutes will be entails: A. identifying the relative price/performance relationship of the substitutes, the switching costs, and the overall buyer demand for the substitute. B. identifying the attractiveness of other industries. C. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques. D. adopting a substitute product concentration factor to the buyer volume. E. judging whether industry members are capable of self-manufacturing their products.

A. identifying the relative price/performance relationship of the substitutes, the switching costs, and the overall buyer demand for the substitute.

10. Potential entrants are more likely to be deterred from actually entering an industry when: A. incumbent firms are willing and able to be aggressive in defending their market positions against entry. B. incumbent firms are complacent. C. buyers are not particularly price-sensitive and the industry already contains a dozen or more rivals. D. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage. E. buyer switching costs are moderately low because of strong product differentiation among incumbent firms.

A. incumbent firms are willing and able to be aggressive in defending their market positions against entry.

25. A core competence: A. is a more competitively valuable strength than a competence because of the key role the activities play in the company's strategy. B. typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company's balance sheet. C. usually is grounded in the technological expertise of a particular department or work group. D. is more difficult for rivals to copy than a distinctive competence. E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

A. is a more competitively valuable strength than a competence because of the key role the activities play in the company's strategy.

45. Calculating competitive strength ratings for a company and its rivals using the industry's most telling measures of competitive strength or weakness: A. is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage. B. is the most reliable indicator of which industry member has the highest overall product quality. C. is a powerful way of revealing which competitors are in the best and worst strategic groups. D. is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader. E. pinpoints which industry rivals are most insulated from the industry's driving force

A. is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage.

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

B. stake out the same market position as successful rival companies.

34. Activity-based costing: A. is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost. B. involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival. C. is a powerful tool for identifying the different pieces of a company's value chain and classifying them as primary activities and support activities. D. involves determining which value chain activities represent variable costs and which represent fixed costs. E. is a tool for identifying the activities that cause a company's product to be strongly differentiated from the products of rivals.

A. is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost.

24. 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: A. is competitively unattractive from the standpoint of earning good profits. B. offers little ability to build a sustainable competitive advantage. C. is highly conducive to achieving strong product differentiation and high customer loyalty to the company's brand. D. offers moderate to good prospects for making a reasonable profit and building a sustainable competitive advantage. E. requires that industry members have a strongly differentiated product offering in order to be profitable.

A. is competitively unattractive from the standpoint of earning good profits.

8. Organizational capabilities are virtually always: A. knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. B. more complex than resources and are exercised only through key personnel. C. require constant evaluation to ensure cooperative support from management. D. easier and less challenging to categorize than resources because there are fewer to be concerned about. E. reflective of the industry's driving forces.

A. knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge.

30. When trade-offs have to be made between achieving long-term and achieving short-term objectives: A. long-term objectives should take precedence unless the short-term performance targets have unique importance. B. long-term objectives should take precedence because of the need for future survival. C. short-term objectives should take precedence because they focus attention on delivering performance improvement. D. short-term objectives should take precedence unless the long-term performance targets are not achievable. E. long-term objectives should never take precedence until the short-term objective is achieved.

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

20. Managers of every company should be willing and ready to modify the strategy because A. market conditions and circumstances are changing over time or the current strategy is clearly failing. B. the task of crafting strategy is a one-time event. C. the strategic vision necessitates periodic updating. D. frequent changes in strategy make it very difficult for rivals to imitate. E. all strategies are reactive.

A. market conditions and circumstances are changing over time or the current strategy is clearly failing.

22. A primary reason for why mergers and acquisitions sometimes fail is due to the: A. misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes. B. execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue. C. development of effective integration plans conducive to employee satisfaction. D. advertising message detailing the merger announcement. E. creation of management-employee programs in order to foster better communication

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

50. The underlying criteria of a best-cost provider strategy usually is found in the ability of a company to: A. offer better goods at attractive prices B. create attributes that appeal specifically to niche members. C. lower overall costs more than rivals in serving niche members. D. offer buyers something attractively different from competitors' offerings. E. offer the best product at the industry's lowest possible price.

A. offer better goods at attractive prices

19. A dynamic capability is the: A. ongoing capacity to modify existing resources and capabilities to create new ones. B. improvement evaluation process for eliminating waste in the firm. C. functional and operating resources management process. D. ongoing capability to understand and establish a commitment to resource alignment. E. improvement evaluation process for repurposing waste in the firm.

A. ongoing capacity to modify existing resources and capabilities to create new ones.

33. The faster a company's business environment is changing, the more critical it becomes for its managers to: A. pay attention to early warnings of future change and be willing to experiment to establish a market position in the future. B. determine whether the company has a balanced scorecard for judging its performance. C. establish controls to monitor the impact of external changes appropriately and ensure the internal environment is maintained. D. replicate and implement only those strategies that have worked for rivals. E. determine what changes should be made to its customer value proposition

A. pay attention to early warnings of future change and be willing to experiment to establish a market position in the future.

11. The major avenues for achieving a cost advantage over rivals include: A. performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities B. having a management team that is highly skilled in cutting costs. C. being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. D. outsourcing high-cost activities to cost-efficient vendors. E. paying lower wages and salaries than rivals.

A. performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities

13. A company achieves a competitive advantage when it A. provides buyers with superior value compared to rival sellers or offers the same value at a lower cost. B. has a profitable business model. C. is able to maximize shareholder wealth. D. is consistently able to achieve both its strategic and financial objectives. E. has a strategy well-matched to its business model.

A. provides buyers with superior value compared to rival sellers or offers the same

16. Well-stated objectives are: A. quantifiable, or measurable, and contain deadlines for achievement. B. succinct and concise so as to identify the company's risk and return options. C. broad and take into account views of all the stakeholders. D. directly related to the dividend payout ratio for stockholder returns. E. representative of customers' aspirations for company performance.

A. quantifiable, or measurable, and contain deadlines for achievement.

48. The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are:

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

7. The two approaches that can make the process of uncovering and identifying a firm's capabilities more systematic are: A. resources assessment and the functional approach. B. strengths valuations and weaknesses estimations. C. sustainability resource allocation and resource bundling. D. cross-functional analysis and collaborative resource methodology. E. financial statement analysis and management support analysis.

A. resources assessment and the functional approach.

2. A company's strategy consists of the action plan management takes to A. stake out a unique market position and achieve superior profitability. B. compete against rivals and establish a transitory competitive advantage. C. concentrate on improving the existing product offering irrespective of the changing and turbulent markets. D. develop a more appealing business model than rivals.E. identify its strategic vision, its strategic objectives, and its strategic intent.

A. stake out a unique market position and achieve superior profitability.

34. What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry? A. strategic group mapping B. PESTEL analysis C. five forces framework D. the value net framework E. competitor analysis

A. strategic group mapping

27. The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to: A. strengthen the company's competitive position and/or boost its profitability. B. achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs. C. broaden the firm's product line and/or avoid the need for outsourcing. D. expand into foreign markets and/or control more of the industry value chain. E. enable use of offensive strategies and/or gain a first-mover advantage over rivals in revamping the industry value chain.

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

38. Business strategy concerns: A. strengthening the market position and building competitive advantage for a single line of business. B. ensuring consistency in strategic approach among the businesses of a diversified company. C. selecting a model for a single line of business to use in pursuing objectives that contribute to the whole of a diversified company. D. selecting a set of stretch financial and strategic objectives for a single business unit. E. choosing the most appropriate strategic intent for a specific line of business

A. strengthening the market position and building competitive advantage for a single line of business.

19. Managers can deliberately set challenging performance targets at levels high enough to promote outstanding company performance by establishing: A. stretch objectives which challenge the organization to deliver stretch gains in performance. B. mainstay objectives that although are easily attainable, and the company is obligated to meet, they are designed to spur motivation in the workforce. C. financial objectives that drive standardization of cost-efficiency and unify stringent operating specifications. D. a specifically detailed and integrated model of operating policies, practices, and procedures. E. why the company does certain things in trying to please its customers.

A. stretch objectives which challenge the organization to deliver stretch gains in performance.

26. A differentiation strategy works best when: A. technological change is fast-paced and competition revolves around rapidly evolving product features. B. buyers' needs are homogeneous. C. many rival firms are also pursuing a differentiation approach. D. there are few other ways to make a product unique to buyers. E. firms have ample excess cash to invest in R&D activities

A. technological change is fast-paced and competition revolves around rapidly evolving product features.

43. Excellent execution of an excellent strategy is A. the best test of managerial excellence and the best recipe for making a company a standout performer. B. a solid indication that managers are maximizing profits and looking out for the best interests of shareholders. C. the best test of whether a company is a "true" industry leader. D. the best evidence that managers have an emerging business model. E. the best test of whether a company enjoys sustainable competitive advantage.

A. the best test of managerial excellence and the best recipe for making a company a standout performer.

3. The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in a market is: A. the five forces framework. B. PESTEL. C. the driving forces model. D. strategic group mapping. E. SWOT analysis

A. the five forces framework

49. Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? A. the industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average B. an assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C. whether there are more than five key success factors and more than five barriers to entry D. constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group E. whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product

A. the industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average

50. Which of the following factors should a company consider when determining if an industry offers good prospects for attractive profits? A. the industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors B. an assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C. whether there are more than five key success factors, more than five barriers to entry, and more than five industry drivers D. whether the market leaders enjoy competitive advantages and how difficult it is to promote innovation to develop a strongly differentiated product or service for which a price premium may be charged E. constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group

A. the industry's growth potential, whether competition appears destined to become stronger or weaker, how the industry's driving forces might affect overall industry profitability, the company's competitive position relative to rivals, and the company's proficiency in performing industry key success factors

33. Focused strategies keyed either to low cost or differentiation are especially appropriate for situations where: A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B. most other rival firms are using a best-cost producer strategy. C. buyers have strong bargaining power and entry barriers are low. D. most industry rivals have weakly differentiated products. E. most industry participants are also using a focused differentiation strategy.

A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways.

29. Strategy is about competing differently than rivals, thus strategy success is about A. the sources of sustained advantages and superior profitability. B. those emergent, unplanned, reactive, and adaptive plans that are more appropriate than deliberate or intended ones that drive the realized strategy. C. matching internal resources and capabilities to the industry environment. D. keeping the firm current with the rapid pace of change in the industry. E. replacing proactive and reactive measures by modified ongoing strategic elements to preserve company values.

A. the sources of sustained advantages and superior profitability.

25. The stronger the collective impact of competitive pressures associated with the five competitive forces: A. the stronger are the industry's driving forces. B. the greater number of companies that can achieve a competitive advantage via differentiation. C. the larger the number of competitive advantage opportunities for industry members. D. the greater the number of industry key success factors. E. the fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader.

A. the stronger are the industry's driving forces.

7. The defining characteristic of a well-conceived strategic vision is: A. what it says about the company's future strategic course—"the direction we are headed and what our future product-market-customer focus will be." B. that it not stretch the company's resources too thin across different products, technologies, and geographic markets. C. clarity and specificity about "who we are, what we do, and why we are here." D. that it be flexible and operate in the mainstream. E. that it be within the realm of what the company can reasonably expect to achieve within four years.

A. what it says about the company's future strategic course—"the direction we are headed and what our future product-market-customer focus will be."

33. The real payoff of driving forces is to help managers understand: A. what strategy changes are needed to prepare for the impacts of the driving forces. B. the overall strength of the five competitive forces. C. whether the industry's strategic group map will be static or dynamic. D. what conditions exist in the economy at large. E. the extent to which rivals have more than two competitively valuable competencies or capabilities.

A. what strategy changes are needed to prepare for the impacts of the driving forces.

9. How valuable a low-cost leader's cost advantage is depends on: A. whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B. how easy it is for the low-cost leader to gain the biggest market share. C. the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D. the leader's ability to combine the cost advantage with a reputation for good quality. E. the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs.

A. whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.

16. The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of: A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. B. whether suppliers self-manufacture what they supply or source their items from other manufacturers. C. whether the industry's position in the growth cycle is favorable. D. whether technological change in the businesses of suppliers is rapid or slow. E. whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.

A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product.

47. Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate: A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully. B. which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups. C. which competitors are employing offensive strategies and which competitors are employing defensive strategies. D. which competitors are likely to make money and which are likely to lose money in the years ahead. E. what the industry's key success factors are.

A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully.

40. Why are crafting and executing business strategies the foremost tasks of any organization? A. Because they are necessary ingredients of a sound operational business model B. 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 C. Because the management skills of top executives are sharpened as they work their way through the strategy-making, strategy-executing processes D. Because doing these tasks helps executives develop an appropriate strategic vision, strategic intent, and set of strategic objectives E. Because of the contribution they make to maximizing value for shareholders

B. 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 of the following is NOT one of the managerial considerations in determining how to compete successfully? A. How can a company attract, keep, and please customers? B. How can a company modify its entire product line to emphasize its internal service attributes?C. How should a company respond to changing economic and market conditions? D. How should a company be competitive against rivals? E. How should a company position itself in the marketplace?

B. How can a company modify its entire product line to emphasize its internal service attributes?

18. The difference between a merger and an acquisition is that: A. a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. B. a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired). C. in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D. a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies. E. a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

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

14. The primary difference between a company's mission statement and the company's strategic vision is that: A. a mission statement explains why it is essential to make a profit, whereas the strategic vision explains how the company will be a moneymaker. B. a mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why." C. a mission deals with how to please customers, whereas a strategic vision deals with how to please shareholders. D. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?" E. a mission statement addresses "how we are trying to make a profit today," while a strategic vision concerns "how will we make money in the markets of tomorrow?"

B. a mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why."

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

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

33. A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is: A. competitive strength analysis. B. activity-based costing. C. resource cost mapping. D. SWOT analysis. E. benchmarking.

B. activity-based costing.

13. Resource and capability analysis is designed to: A. ascertain the internal marketplace of non-distinct divisions of the company. B. ascertain which of a company's resources and capabilities are competitively valuable. C. stimulate demand for a product. D. ascertain to what extent a competitor can sustain a competitive advantage. E. stimulate economic growth for companies within the industry.

B. ascertain which of a company's resources and capabilities are competitively valuable.

1. A company's competitive strategy should: A. ensure it is designed to concentrate on a small range of products so it can react quickly to competitive moves. B. be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies. C. be well matched to its resources and capabilities in order to incorporate standard attributes into its product offering. D. be supportive with its objective to become at least an average performer within its industry. E. be well attuned to doing an outstanding job of satisfying the needs and expectations of niche buyers.

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

17. A company needs financial objectives: A. to overtake key competitors on such important measures as net profit margins and return on investment. B. because without adequate profitability and financial strength, the company's ultimate survival is jeopardized. C. to convince shareholders that top management is acting in their interests. D. to translate the company's business model into action items. E. to indicate to employees that financial objectives always take precedence over strategic objectives.

B. because without adequate profitability and financial strength, the company's ultimate survival is jeopardized.

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

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

32. Management's blueprint for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment A. best describes what is meant by a company's strategy. B. best describes what is meant by a company's business model. C. accounts for why a company's financial objectives are at the stated level. D. portrays the essence of a company's business purpose or mission. E. is what is meant by the term strategic intent.

B. best describes what is meant by a company's business model.

43. In a single-business company, the strategy-making hierarchy consists of: A. business strategy, divisional strategies, and departmental strategies. B. business strategy, functional strategies, and operating strategies. C. business strategy and operating strategy. D. managerial strategy, business strategy, and divisional strategies. E. corporate strategy, divisional strategies, and departmental strategies

B. business strategy, functional strategies, and operating strategies.

28. Perceived value and signaling value are often an important part of a successful differentiation strategy because: A. of the standardization of buyer needs and preferences. B. buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be. C. buyer satisfaction cannot be achieved until a product's value is promoted through clever ads. D. differentiation is all about selling products to sophisticated buyers. E. there are no other ways to differentiate a product.

B. buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.

8. Strategic alliances are: A. the cheapest means of developing new technologies and getting new products to market quickly.B. collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective.C. a proven means of reducing the costs of performing value chain activities.D. best used to insulate a company from the impact of the five competitive forces.E. the best way to help insulate a firm from the adverse impacts of industry driving forces.

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

47. In identifying an industry's key success factors, strategists should: A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. D. consider what it will take to overtake the company with the industry's overall best strategy. E. focus their attention on what it will take to capitalize on the impacts of the industry's driving forces.

B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage.

6. What a company's top executives are saying about where the company is headed long term with respect to its future product-market-customer-technology mix: A. indicates what kind of business model the company is going to have in the future. B. constitutes the strategic vision for the company C. signals what the firm's emergent strategy will be. D. serves to define the company's business plan. E. indicates what kind of products and services the company plans to offer in the future.

B. constitutes the strategic vision for the company

41. Entering into strategic alliances and collaborative partnerships can be competitively valuable because: A. working closely with outsiders is essential in developing new technologies and new products in virtually every industry.B. cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.C. they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages.D. they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations.E. they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

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

39. Business strategy, as distinct from corporate strategy, is chiefly concerned with: A. deciding what new businesses to enter, which existing businesses to get out of, and which existing business to remain in. B. deciding how to build competitive advantage and improve performance in a particular line of business. C. making sure the strategic intent of a particular business is in step with the company's overall strategic intent and strategy. D. coordinating the competitive approaches of a company's different business units. E. what business model to employ in each of the company's different businesses.

B. deciding how to build competitive advantage and improve performance in a particular line of business.

32. Evaluating the industry's driving forces, as a whole, requires understanding their influence on the attractiveness of industry environment and generally are: A. determined by the sizes of strategic groups and the power of rival firms' competitive strategies. B. defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years. C. the cause of a reduction in the bargaining power of buyers. D. triggered by movement in the economy, higher or lower interest rates, or important new strategic alliances. E. triggered by such factors as growing competitive pressures from substitute products, and the efforts of rival firms to employ new or different offensive strategies.

B. defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years.

43. Understanding where the company is competitive requires: A. determining whether a company has a cost-effective value chain. B. developing quantitative strength ratings for the company and key rivals on each industry key success factor and each pivotal resource, capability, and value chain activity. C. identifying a company's core competencies and distinctive competencies (if any). D. analyzing whether a company is well positioned to gain market share and be the industry's profit leader. E. developing quantitative measures of a company's chances for future profitability

B. developing quantitative strength ratings for the company and key rivals on each industry key success factor and each pivotal resource, capability, and value chain activity.

43. A rival's strategic moves and countermoves are: A. indicators for the visualization of strategic mapping techniques. B. enabled and constrained by the set of capabilities they have at hand. C. measured by the extent to which they can unveil financial objectives. D. responses to the broader definition of the industry opportunities. E. signs of the competitive pressures from the industry.

B. enabled and constrained by the set of capabilities they have at hand.

18. The higher the switching costs for industry members, the more it can: A. limit supplier bargaining power. B. enhance supplier bargaining power. C. enhance the quality of parts and components being supplied, and in effect reduce defect rates. D. provide important cost savings for the collaborative supplier-seller relationship. E. limit the supply of products and/or services.

B. enhance supplier bargaining power.

48. The task of top executives when the company faces disruptive changes in its environment is to not only raise questions about the appropriateness of its direction and strategy, but also to: A. know when to continue with the present corporate culture and when to shift to a different and better corporate culture. B. ferret out the causes and decide when adjustments are needed and what adjustments are needed for improved performance and operating excellence. C. figure out whether to arrive at decisions quickly or slowly in choosing among the various alternative adjustments. D. decide whether to try to fix the problems of poor strategy execution or simply shift to a strategy that is easier to execute correctly. E. decide how to identify the problems that need fixing.

B. ferret out the causes and decide when adjustments are needed and what adjustments are needed for improved performance and operating excellence.

31. A broad differentiation strategy generally produces the best results in situations where: A. buyer brand loyalty is low. B. few rival firms are following a similar differentiation approach. C. new and improved products are introduced only infrequently. D. most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E. perceived value of a product is not of great importance.

B. few rival firms are following a similar differentiation approach.

21. Mergers and acquisitions: A. are nearly always successful in achieving their desired purpose. B. frequently do not produce the hoped-for outcomes. C. are generally less effective than forming alliances or partnerships with these same companies. D. are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. E. are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

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

48. A company's biggest vulnerability in employing a best-cost provider strategy is: A. relying too heavily on outsourcing. B. getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies. C. getting trapped in a price war with low-cost leaders. D. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E. not having a sustainable distinctive competence in cost reduction.

B. getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

37. The big risk of employing an outsourcing strategy is: A. causing the company to become partially integrated instead of being fully integrated.B. hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.C. hurting a company's R&D capability.D. putting the company in the position of being a late mover instead of an early mover.E. increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

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

37. The most difficult part of benchmarking is: A. the decision of whether to do it at all. B. how to obtain access to information regarding rivals' practices and costs. C. when to initiate the process. D. what information to utilize in the analysis process. E. when to stop the process and move forward with strategy.

B. how to obtain access to information regarding rivals' practices and costs.

30. A company's business model A. concerns the actions and business approaches that will be used to grow the business, conduct operations, and stake a competitor's market position. B. is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit. C. concerns what combination of moves in the marketplace it plans to make to outcompete rivals. D. deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible. E. concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets.

B. is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit.

42. Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because: A. it identifies who the industry's current market share leaders are. B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence. C. it helps identify which rival is in which strategic group. D. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. E. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is

B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence.

44. A company's strategic plan: A. details key objectives and the strategy for achieving them. B. lays out its future direction and business purpose, performance targets and strategy. C. identifies the company's strategy and management's specific, detailed plans for implementation. D. consists of a company's strategic vision, strategic objectives, strategic intent, and strategy. E. summarizes the company's strategic vision, a strategy, and a business model.

B. lays out its future direction and business purpose, performance targets and strategy.

10. A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by: A. underpricing rivals and attracting quality-sensitive buyers in great enough numbers. B. maintaining the present price and using the lower-cost edge to earn a higher profit margin on each unit sold. C. going all out to use its cost advantage to capture a dominant share of the market. D. spending heavily on advertising to promote its cost advantage to build strong customer loyalty. E. outproducing rivals and thus having more available units for sale.

B. maintaining the present price and using the lower-cost edge to earn a higher profit margin on each unit sold.

22. Not all buyers of an industry's product have equal degrees of bargaining power with sellers, because: A. sellers in an industry provide similar products and generally their cost structures are different because of competitive advantages in their operation. B. some sellers may be less sensitive than others to price, quality, or service differences. C. along the various stages of the value chain sellers are conducive to earning attractive profits. D. the industry is a highly cohesive structure with limited fragmentation and few industry members. E. sellers are large and few in number relative to the number of buyers.

B. some sellers may be less sensitive than others to price, quality, or service differences.

20. Merger and acquisition strategies: A. are nearly always superior alternatives to forming alliances or partnerships with these same companies. B. may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C. are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy. D. seldom are superior alternatives to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. are one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

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

34. Strategy-making is: A. primarily the responsibility of key executives rather than a task for a company's entire management team. B. more of a collaborative group effort that involves all managers and sometimes key employees, as opposed to being the function and responsibility of a few high-level executives. C. first and foremost the function and responsibility of a company's strategic planning staff. D. first and foremost the function and responsibility of a company's board of directors. E. first and foremost the function of a company's chief executive officer, who formulates strategic initiatives and submits them to the board of directors for approval

B. more of a collaborative group effort that involves all managers and sometimes key employees, as opposed to being the function and responsibility of a few high-level executives.

28. For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company: A. must first be a proficient manufacturer. B. must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C. must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. D. needs to have a wide product line, so it can supply parts and components for many products. E. should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

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

29. Company objectives: A. are needed only in those areas directly related to a company's short-term and long-term financial strength. B. need to be broken down into performance targets for separate businesses, product lines, functional departments, and individual work units C. play the important role of establishing the direction towards which an organization needs to be headed. D. are important because they help guide managers in deciding what the company's strategic intent should be. E. should support, but not conflict with, the performance targets of lower-level organizational units.

B. need to be broken down into performance targets for separate businesses, product lines, functional departments, and individual work units

36. Outsourcing strategies can offer such advantages as: A. increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy.B. obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.C. speeding a company's entry into foreign markets.D. permitting greater use of strategic alliances and collaborative partnerships.E. giving a firm more direct control over the costs of value chain activities.

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

45. Which of the following principal aspects should be included in managing the strategy execution process? A. describing the strategic course that will help the company prepare for the future B. organizing the company along the lines of best practice C. surveying employees on how they think costs can be reduced and how employee morale and job satisfaction can be improvedD. exerting the external leadership needed to drive stabilizationE. tying rewards and incentives directly to profit

B. organizing the company along the lines of best practice

50. The key duties of a company's board of directors in the strategy-making, strategy-executing process include: A. coming up with compelling strategy proposals of their own to debate against those put forward by top management. B. overseeing the company's financial accounting and financial reporting practices and evaluating the caliber of senior executives' strategy-making/strategy-executing skills. C. taking the lead in developing the company's business model and strategic vision. D. taking the lead in formulating the company's strategic plan but then delegating the task of implementing and executing the strategic plan to the company's CEO and other senior executives. E. approving the company's operating strategies, functional-area strategies, business strategy, and overall corporate strategy

B. overseeing the company's financial accounting and financial reporting practices and evaluating the caliber of senior executives' strategy-making/strategy-executing skills.

8. In order to be successful with a low-cost leadership strategy, company managers have to: A. eliminate wholesale and retail intermediaries and instead sell directly to users of their product or service. B. perform value chain activities more cost-effectively than rivals and be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. C. outsource the majority of value chain activities to nations that have lower wage rates and fewer regulations. D. develop and market products and services at that absolute lowest possible cost. E. pursue backward or forward integration to deter suppliers or buyers with considerable bargaining power and leverage

B. perform value chain activities more cost-effectively than rivals and be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities.

48. A company's competitive strength scores pinpoint its strengths and weaknesses against rivals and: A. suggest the company use its strengths to exploit its own competitive liabilities. B. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities. C. point directly to the company to use its weaknesses as offensive moves to challenge rivals' weaknesses. D. suggest receptivity for astute companies to drive their operating practices if the strength scores are very low. E. point directly to accepting the competitive strength scores on face value.

B. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities.

38. The risks of a focused strategy based on either low-cost or differentiation include the: A. chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market. C. potential for the segment to be highly vulnerable to economic cycles. D. potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. potential for the segment to become too specialized for other multi-segmented rivals to enter.

B. potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market.

46. Quantitative measures of a company's competitive strength: A. signal which competitor has the most distinctive competencies and which competitor has the fewest. B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival. C. reveal which competitors are in the best and worst strategic groups. D. show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities. E. pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces.

B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival.

26. Perhaps the most reliable way for a company to improve its financial performance over time is to: A. put 100 percent emphasis on the achievement of its short-term and long-term financial objectives. B. recognize that the achievement of strategic objectives signals that the company is well positioned to sustain or improve its performance. C. substitute financial intent for strategic intent and judiciously concentrate on the mission of making a profit. D. not allocate any resources to the achievement of strategic objectives until it is very clear that the company can meet or beat its stretch financial performance targets. E. avoid use of the balanced-scorecard philosophy since achievement of financial performance targets is obviously more important than the achievement of strategic performance targets

B. recognize that the achievement of strategic objectives signals that the company is well positioned to sustain or improve its performance.

22. Strategic objectives: A. are more essential in achieving a company's strategic vision than are financial objectives. B. relate to strengthening a company's overall market standing and competitive position. C. are more difficult to achieve and harder to measure than financial objectives. D. are generally less important than financial objectives. E. help managers track an organization's true progress better than financial objectives.

B. relate to strengthening a company's overall market standing and competitive position.

21. A company's strengths are important because they: A. pave the way for establishing a low-cost advantage over rivals. B. represent the quality of its competitive assets that enhance its competitiveness in the marketplace. C. provide extra muscle in helping lengthen the company's value chain. D. give it competitive protection against the industry's driving forces. E. provide extra organizational muscle in turning a core competence into a key success factor.

B. represent the quality of its competitive assets that enhance its competitiveness in the marketplace.

45. For a best-cost provider strategy to be successful, a company must have: A. excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/features incorporated in its product. B. resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C. access to greater learning/experience curve effects and scale economies than rivals. D. one of the best-known and most respected brand names in the industry. E. a short, low-cost value chain.

B. resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.

45. In evaluating proposed or existing strategies managers should A. initiate new initiatives even though they don't seem to match the company's internal and external situation. B. 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. C. evaluate the firm's business model at least every three years. D. ensure core capabilities are incorporated for establishing a competitive advantage. E. align existing strategies with new strategies to emphasize incremental gains.

B. 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.

26. A company's strategy is increasingly effective the more it can match the company strategy to competitive conditions, so the firm can: A. pursue avenues that expose the firm to as many of the different competitive pressures as possible. B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces. C. pursue ways to identify and complement the five forces contradictions and inferences to attract competitive growth opportunities. D. pursue avenues that promote strategic thinking about how to contest competitor strengths and weaknesses and to create a checklist of potential profitability preferences. E. shift societal concerns, attitudes, and lifestyles by altering the pattern of competition.

B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.

39. The concept of strategic groups is relevant to industry and competitive analysis because: A. firms in the same strategic groups are rarely close competitors—a firm's closest competitors are usually in distant strategic groups. B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors. C. competition grows in intensity as the number and diversity of the strategic groups in an industry increases. D. the profit potential of firms in the same strategic group is usually very similar E. competitive pressures tend to be weaker within strategic groups than across strategic groups.

B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors.

30. Which of the following is MOST likely to qualify as a driving force? A. increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals B. successful introduction of innovative new products or new ways to market products C. an increase in the prices of substitute products D. decisions on the part of industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader E. decisions by one or more outsiders not to attempt to enter the industry

B. successful introduction of innovative new products or new ways to market products

34. The two big drivers of outsourcing are: A. an increased ability to cut R&D expenses and an increased ability to avoid the problems of strategic alliances. B. that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies). C. a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities. D. the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences. E. that a smaller in-house workforce and a low investment in intellectual capital will produce cost savings.

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

49. Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because: A. without a precise fix on what problems/issues a company confronts, managers cannot know what the industry's key success factors are. B. the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook. C. without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark. D. these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue. E. the "worry list" helps company managers clarify their thinking about how best to modify the company's value chain.

B. the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook.

36. A winning strategy must pass which three tests? A. the Dominant Market Test, the Sustainable Advantage Test, and the Profit Test B. the Fit Test, the Competitive Advantage Test, and the Performance Test C. the Sustainable Performance Test, the Fit Test, and the Profit Test D. the Performance Test, the Dominant Market Test, and the Fit Test E. the Fit Test, the Sustainable Advantage Test, and the Dominant Market Test

B. the Fit Test, the Competitive Advantage Test, and the Performance Test

9. In analyzing the strength of competition among rival firms, an important consideration is: A. the potential for buyers to exercise strong bargaining power. B. the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin. C. the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies. D. the extent to which some rivals have more than two competitively valuable competencies or capabilities. E. whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.

B. the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin.

19. Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. the speed with which general economic conditions and interest rates are changing. B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members. C. how many buyers purchase all of their requirements from a single seller versus how many purchase from several sellers. D. the number of buyers versus the number of sellers. E. whether industry members are spending more or less on advertising.

B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members.

2. A company's resources and capabilities represent: A. the firm's net working capital and related determinants for measuring operating performance and capabilities. B. the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace. C. whether the firm has the industry's most efficient value chain. D. the management's source of funding of new strategic initiatives. E. positive trends with relevant cultural factors related to buyers' choices and produc

B. the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace.

26. A company's realized strategy evolves from one version to the next due to A. changing management direction because of understanding several appealing strategy alternatives. B. the proactive efforts of company managers to improve the current strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategic maneuvers on the part of rival firms. C. ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy). D. pressures from shareholders to boost profit margins and pay higher dividends. E. the importance of keeping the company's business model fresh and up-to-date.

B. the proactive efforts of company managers to improve the current strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategic maneuvers on the part of rival firms.

34. What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is: A. the extra attention paid to top-notch product performance and product quality. B. their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C. greater opportunity for competitive advantage. D. their suitability for market situations where most industry rivals have weakly differentiated products. E. their objective of delivering more value for the least money.

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

12. How are a company's organizational capabilities developed and enabled? A. by strengthening the traditions that company executives are committed to maintaining B. through deployment of a company's resources or some combination of its resources C. by talking openly about the problems of the present company and determining how new behaviors will improve performance D. by shifting from decentralized to centralized decision-making E. by urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing

B. through deployment of a company's resources or some combination of its resources

12. Perhaps the most important benefit of a vivid, engaging, and convincing strategic vision is: A. helping gain managerial consensus on what resources must be developed to successfully achieve strategic objectives. B. uniting company personnel behind managerial efforts to get the company moving in the intended direction. C. helping justify the company's mission of making a profit. D. helping company personnel understand the logic of the company's business model. E. keeping company personnel well-informed.

B. uniting company personnel behind managerial efforts to get the company moving in the intended direction.

17. 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 is known as: A. horizontal scale. B. vertical scope. C. outsourcing scope. D. cooperative scaled scope. E. focal scope.

B. vertical scope.

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

B. 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

2. While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are: A. whether a company can build a brand name and an image that buyers trust. B. whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy. C. whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader's role. D. whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market. E. whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation.

B. whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy.

5. When strategic managers assess the competitive power of company resources, what matters is: A. whether it helps differentiate a company's product offering from the product offerings of rival firms. B. whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals. C. whether customers are aware of the resource and view it positively enough to boost the company's brand name reputation. D. whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company's brand image, and if it is the foundation of a cost-based advantage. E. whether the resource is technology-based or based on superior marketing know-how.

B. whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.

7. Which of the following ways are employed by defending companies to fend off a competitive attack? A. Remain steadfast to current product features and models to ensure resources are not diverted toward unproductive efforts. B. Exclude volume discounts or better financing terms from the strategic response in order to maintain current profitability levels. C. Gain product line exclusivity to force competitors to use other distributors. D. Trim the length of warranties to save money E. Stay away from competitor's clients since their loyalty will not allow them to switch.

C. Gain product line exclusivity to force competitors to use other distributors.

21. Which of the following is the best example of a well-stated strategic objective? A. Increase revenues by more than the industry average. B. Be among the top five companies in the industry in customer service. C. Overtake key competitors on product performance or quality within three years. D. Improve manufacturing performance by 5 percent within 12 months. E. Obtain 150 new customers during the current fiscal year.

C. Overtake key competitors on product performance or quality within three years.

1. The strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions—are known as: A. the industry and the competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets where a company operates. C. a company's "macro-environment." D. the competitive market environment that exists between a company and its competitors.E. the dominant economic features of a company's industry

C. a company's "macro-environment."

24. The difference between a core competence and a distinctive competence is that: A. a distinctive competence refers to a company's strongest resource or competitive capability, whereas a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity. B. a core competence usually resides in a company's base of intellectual capital, whereas a distinctive competence stems from the superiority of a company's physical and tangible assets. C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms. D. a core competence represents a resource strength, whereas a distinctive competence is achieved by having more resource strengths than rival companies. E. a core competence usually resides in a company's technology and physical assets, whereas a distinctive competence usually resides in a company's know-how, expertise, and intellectual capital

C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms.

27. The "driving forces" in an industry: A. are usually triggered by changing technology or stronger learning/experience curve effects. B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers. C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions. D. appear when an industry begins to mature but are seldom present during early stages of the industry life cycle. E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.

C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

24. Opportunities to differentiate a company's product offering: A. are most reliably found in the R&D portion of the value chain. B. are typically located in the sales and marketing portion of the value chain. C. can exist in activities all along an industry's value chain. D. usually are tied to product quality and customer service. E. are most frequently attached to a company's manufacturing expertise and to its ability to achieve economies of scale in production.

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

31. Increasing globalization of the industry can be a driving force because: A. the products of foreign competitors are nearly always cheaper or of better quality than those of domestic companies. B. foreign producers typically have lower costs, greater technological expertise, and more product innovation capabilities than domestic firms. C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities. D. it results in companies having fewer competitors and a strategic group map with fewer circles. E. market growth rates go up, product innovation speeds up, and new firms are likely to enter the industry.

C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities.

15. A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a: A. long-term derivative strategy. B. cash flow feasibility analysis. C. competitive advantage over other companies. D. resource deployment strategic plan. E. cost underestimation and benefit overestimation.

C. competitive advantage over other companies.

24. Crafting a deliberate strategy involves developing strategy elements that A. imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. B. 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. C. consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. D. deliberately eliminate the ongoing strategic elements and implement new planned initiatives. E. consist of adaptive change plans to new market situations along with abandoned redundant ongoing elements.

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

12. A creative, distinctive strategy that delivers a sustainable competitive advantage is important because A. without a competitive advantage a company cannot become the industry leader. B. without a competitive advantage a company is likely to fall into bankruptcy. C. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. D. a competitive advantage is what enables a company to achieve its strategic objectives. E. how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company.

C. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance.

47. The leadership challenges that top executives face in making corrective adjustments when things are not going well include: A. knowing when to replace poorly performing subordinates and when to do a better job of coaching them to do the right things. B. being able to discern whether to promote better achievement of strategic performance targets or whether to promote better achievement of financial performance targets. C. deciding when adjustments are needed and what adjustments to make. D. having the analytic skills to separate the problems due to a bad strategy from the problems due to bad strategy execution. E. deciding whether the company would be better off making adjustments that curtail the achievement of strategic objectives or that curtail the achievement of financial objectives.

C. deciding when adjustments are needed and what adjustments to make.

40. To build a competitive advantage by out-managing rivals in performing value chain activities, a company must: A. position itself in the industry's more favorably situated strategic group. B. develop resource strengths that will enable it to pursue the industry's most attractive opportunities. C. develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers. D. outsource all of its value chain activities to world-class vendors and suppliers. E. eliminate its resource weaknesses.

C. develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers.

29. Backward vertical integration can produce a: A. full integration when activities remain the domain of key suppliers. B. tapered integration if the firm consolidates all activities in-house. C. differentiation-based competitive advantage when activities enhance the performance of the final product. D. focused differentiation strategy when the market is broad and the product is a commodity. E. lower degree of flexibility in accommodating shifting buyer preferences.

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

23. When a company has a proficiency in performing a strategically and competitively important value chain activity better than its rivals, it is said to have a: A. company competence. B. core competence. C. distinctive competence. D. key value chain proficiency. E. competitive advantage over rivals.

C. distinctive competence.

26. When a company performs a particular competitively important activity truly well in comparison to its rivals, it is said to have a: A. company competence. B. strategic resource. C. distinctive competence. D. core competence. E. key success factor.

C. distinctive competence.

19. Companies pursue closer coordination and collaboration with channel suppliers to better address customer needs in order to: A. develop human resource management activities that improve the skills, expertise, and knowledge of company personnel. B. achieve low cost provider status through the value chain system. C. enhance differentiation through the value chain system. D. compensate for inadequate or outdated production capacity. E. improve their scores on the competitive assessment matrix.

C. enhance differentiation through the value chain system

3. The strategy-making, strategy-executing process is shaped by: A. management's strategic vision, strategic and financial objectives, and strategy. B. the decisions made by the compensation and audit committees of the board of directors. C. external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities. D. the challenges of developing a sound business model. E. top executives and the board of directors; very few managers below this level are involved in the process.

C. external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities.

35. A winning strategy is one that A. builds strategic fit, is socially responsible, and maximizes shareholder wealth. B. is highly profitable and boosts the company's market share. C. fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance. D. results in a company becoming the dominant industry leader. E. can pass the ethical standards test, the strategic intent test, and the profitability test.

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

31. Which of the following is typically the strategic impetus for forward vertical integration? A. being able to control the wholesale/retail portion of the industry value chain B. experiencing fewer disruptions in the delivery of the company's products to end users C. gaining better access to end users and better market visibility D. broadening the company's product line E. allowing the firm access to greater economies of scale

C. gaining better access to end users and better market visibility

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

C. get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

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

C. good strategy-making combined with good strategy execution.

8. Which of the following are characteristics of an effectively worded strategic vision statement? A. balanced, responsible, and rational B. challenging, competitive, and "set in concrete" C. graphic, directional, and focused D. realistic, customer-focused, and market-driven E. achievable, profitable, and ethical

C. graphic, directional, and focused

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

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

44. The competitive advantage of a best-cost provider is: A. having the best value chain in the industry. B. its brand name reputation. C. its capability to incorporate upscale or attractive attributes into its product offering at lower costs than rivals. D. a distinctive competence in delivering top-notch quality and customer service. E. a distinctive competence in supply chain management.

C. its capability to incorporate upscale or attractive attributes into its product offering at lower costs than rivals.

42. Operating strategies are primarily concerned with: A. what the firm's operating departments are doing and plan to do to unify the company's functional and business strategies. B. the specific plans for building competitive advantage in each major department and operating unit. C. how to manage initiatives of strategic significance within each functional area, and adding detail and completeness in ways that support functional strategies and the overall business strategy. D. how best to carry out the company's corporate strategy. E. how best to implement and execute the company's different business-level strategies.

C. how to manage initiatives of strategic significance within each functional area, and adding detail and completeness in ways that support functional strategies and the overall business strategy.

7. The rivalry among competing sellers tends to be less intense when: A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales. B. buyer demand is weak and many sellers have excess capacity and/or inventory. C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance. D. rivals have diverse strategies and objectives and are located in different countries. E. rival sellers have weakly differentiated products.

C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance.

35. A strategic group: A. consists of those industry members that are growing at about the same rate and have similar product line breadth. B. includes all rival firms having comparable profitability. C. is a cluster of industry members with similar competitive approaches and market positions in the market. D. consists of those firms whose market shares are about the same size.E. is made up of those firms having comparable profit margins.

C. is a cluster of industry members with similar competitive approaches and market positions in the market.

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

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

37. Corporate strategy for a diversified or multi-business enterprise: A. is orchestrated by mid-level managers and focuses on how to create a competitive advantage in each specific line of business the total enterprise is in. B. concerns how best to allocate resources across the departments of each line of business the company is in. C. is orchestrated by senior corporate executives and centers around the kinds of initiatives the company uses to establish business positions in different industries. D. deals chiefly with what the strategic intent of each of its business units should be. E. involves how functional strategies should be aligned with business strategies in each of the various lines of business the company is in.

C. is orchestrated by senior corporate executives and centers around the kinds of initiatives the company uses to establish business positions in different industries.

32. Identifying the primary and secondary activities that comprise a company's value chain: A. indicates whether a company's resource strengths will ultimately translate into greater value for shareholders. B. reveals whether a company's resource strengths are well-matched to the industry's key success factors. C. is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs). D. is called benchmarking. E. is called resource value analysis.

C. is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs).

39. Crafting and executing a strategy is a top-priority managerial task because A. it helps management create tight fits between a company's strategic vision and business model. B. it allows all company personnel, and especially senior executives, to know the answer to "who are we, what do we do, and where are we headed?" C. it is management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance. D. it provides clear guidance as to what the company's business model and strategic intent are, and helps keep managerial decision-making from being rudderless. E. it establishes how well executives perform these tasks and are the key determinants of executive compensation.

C. it is management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance.

8. A company's strategy stands a better chance of succeeding when A. it is developed through a collaborative process involving all managers and staff from all levels of the organization. B. managers employ conservative strategic moves based on past experience and form an underlying basis of control. C. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals. D. managers copy the strategic moves of successful companies in its industry. E. managers focus on meeting or beating shareholder expectations.

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

4. The generic types of competitive strategies include: A. market share growth provider, sales revenue leader strategy, and market share retention strategy. B. offensive strategies, defensive strategies, and counter maneuvers strategies. C. low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies. D. low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E. price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies.

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

27. The external market opportunities which are MOST relevant to a company are the ones that: A. can increase market share. B. are reinforced by the overall business strategy and reflect the business model. C. match up well with the firm's competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage. D. qualify to correct its internal weaknesses and resource deficiencies. E. are relevant for defending against the external threats to its well-being.

C. match up well with the firm's competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage

23. Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether: A. many buyers view the product's differentiating features as having value. B. most buyers have similar needs and use the product in the same ways. C. most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation. D. buyer switching costs are low and customer loyalty to any one brand is low. E. buyers are prone to shop the market for sellers offering the best price

C. most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation.

4. Launching a preemptive strike type of offensive strategy entails: A. sapping the rival's financial strength and competitive position. B. weakening the rival's resolve. C. moving first to secure advantageous competitive assets that rivals can't readily match or duplicate. D. threatening the rival's overall survival in the market. E. using hit-and-run tactics to grab sales and market share away from complacent or distracted rivals.

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

36. A focused differentiation strategy aims at securing competitive advantage by: A. providing niche members with a top-of-the-line product at a premium price. B. catering to buyers looking for an upscale product at an attractively low price. C. offering a product carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D. developing product attributes that no other company in the industry has. E. convincing a narrow, well-defined group of buyers that the company has a truly world-class product.

C. offering a product carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.

1. A company's strategic plan A. maps out the company's history. B. links the company's financial targets to control mechanisms. C. outlines the competitive moves and approaches to be used in achieving the desired business results. D. focuses on offering a more appealing product than rivals. E. lists methods of making money in its chosen business.

C. outlines the competitive moves and approaches to be used in achieving the desired business results.

49. In the strategy-making, strategy-executing process, effective corporate governance requires a company's board of directors to: A. play the lead role in forming the company's strategy and then directly supervising the efforts and actions of senior executives in implementing and executing the strategy. B. provide guidance and counsel to the CEO in carrying out his/her duties as chief strategist and chief strategy implementer. C. oversee the company's strategic direction, evaluate the caliber of senior executives' skills, handle executive compensation, and oversee financial reporting practices. D. work closely with the CEO, senior executives, and the strategic planning staff to develop a strategic plan for the company and then oversee how well the CEO and senior executives carry out the board's directives in implementing and executing the strategic plan. E. review and approve the company's business model and also review and approve the proposals and recommendations of the CEO as to how to execute the business model.

C. oversee the company's strategic direction, evaluate the caliber of senior executives' skills, handle executive compensation, and oversee financial reporting practices.

17. A low-cost leadership strategy becomes competitively powerful when: A. buyers of the product or service use the product or service in the same ways. B. the offerings of rival firms are essentially unique, different, and customized to end-users. C. price competition among rivals is absent. D. buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E. buyers have high switching costs.

C. price competition among rivals is absent.

35. Relying on outsiders to perform certain value chain activities offers such strategic advantages as: A. ensuring more costly components or services.B. improving the company's inability to innovate by allying with "best-in-class" suppliers.C. reducing the company's risk exposure to changing technology and/or changing buyer preferences.D. increasing the firm's inability to assemble diverse kinds of expertise speedily and efficiently.E. reducing its information technology and operational costs so that organizational flexibility is maintained.

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

10. Breaking down resistance to a new strategic vision typically requires that management, on an as needed basis: A. institute a Balanced Scorecard to measuring company performance, with the "balance" including a mixture of both old and new performance measures. B. inform company personnel about forthcoming changes in the company's strategy C. reiterate the company's need for the new direction, while addressing employee concerns head-on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold. D. explain all updates and merits of the company's business model to align strategy with employee concerns. E. raise wages and salaries to win the support of company personnel for the company's new direction

C. reiterate the company's need for the new direction, while addressing employee concerns head-on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold.

24. Strategic intent refers to a situation where a company: A. commits to using a particular business model to make money. B. decides to adopt a particular strategy. C. relentlessly pursues an ambitious strategic objective. D. commits to pursuing balanced-scorecard objectives. E. changes its long-term direction and decides to pursue a newly adopted strategic vision.

C. relentlessly pursues an ambitious strategic objective.

21. Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when: A. virtually all buyers have strong brand attachments and are highly brand loyal. B. demand for the product is growing rapidly. C. sales are made to buyer groups with either strong bargaining power or high sensitivity. D. sellers are racing to add the latest and greatest performance features so as to attract the patronage of important or prestigious buyers. E. buyers are very quality conscious.

C. sales are made to buyer groups with either strong bargaining power or high sensitivity.

4. The real purpose of the company's strategic vision: A. lays out how management plans to implement and execute a profitable business model. B. describes what business the company is presently in and why it has chosen certain operating practices to meet the needs of customers. C. serves as management's tool for giving the organization a sense of direction. D. defines "who we are and what we do." E. spells out a company's strategic intent, its strategic and financial objectives, and the business approaches and operating practices that will underpin its efforts to achieve sustainable competitive advantage.

C. serves as management's tool for giving the organization a sense of direction

17. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage? A. striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage B. outcompeting rivals on the basis of differentiating features such as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money C. simply trying to mimic the successful strategies of rivals D. focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche E. developing a cost advantage based on offering more value for the money

C. simply trying to mimic the successful strategies of rivals

37. The major difference between a low-cost provider strategy and a focused low-cost strategy is the: A. amount of outsourcing involved. B. length of the managerial experience curve. C. size of the buyer group to which a company is appealing. D. number of upscale attributes incorporated into the product offering. E. production methods being used to achieve a low-cost competitive advantage.

C. size of the buyer group to which a company is appealing.

13. The culture of a company can be a cost-efficient value chain activity because it can: A. allow for safeguarding internalized operating benefits. B. distinguish a company's capacity integration efforts. C. spur worker pride in productivity and continuous improvement. D. foster quality technological enhancements. E. increase a company's bargaining power with suppliers.

C. spur worker pride in productivity and continuous improvement.

39. Which of the following is defined as a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective? A. joint ventureB. vertical integrationC. strategic allianceD. forward integrationE. outsourcing

C. strategic alliance

18. What does a company specifically exhibit when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective? A. competitive edge B. sustainable advantage C. strategic intent D. financial strength E. strategic vision

C. strategic intent

46. An industry's key success factors can always be deduced by asking what factors: A. are a function of market share, entry barriers, and economies of scale, degree of vertical integration, and industry profitability that are advantageous. B. vary according to whether an industry has high or low long-term attractiveness. C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive disadvantage. D. can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies. E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.

C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive disadvantage.

18. A company requires a dynamically evolving portfolio of resources and capabilities to: A. assist the strategic planning team in overall direction. B. sustain complex manufacturing systems as a strategic recall. C. sustain its competitiveness and help drive improvements in its performance. D. sustain benefits of high market share as an interest in growth strategies. E. transform knowledge into a management style supporting competition in a globally diverse world

C. sustain its competitiveness and help drive improvements in its performance.

47. The big danger or risk of a best-cost provider strategy is: A. that buyers will be highly skeptical about paying a relatively low price for upscale attributes/features. B. not establishing strong alliances and partnerships with key suppliers. C. that rivals with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes. D. that it will be unable to achieve top-notch quality at a rock-bottom cost. E. becoming too highly integrated and not relying enough on outsourcing.

C. that rivals with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes.

38. Strategic group mapping is a visual technique for displaying: A. how many rivals are pursuing each type of strategy. B. which companies have the biggest market share and who the industry leader really is. C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors. D. which companies have the highest degrees of brand loyalty. E. which companies have failing business models

C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors.

44. Competitive strength can be determined by assigning measures based on perceived importance because: A. it provides a more accurate assessment of the strength of competitive forces. B. it eliminates the bias introduced for those firms having large market shares. C. the different measures of competitive strength are unlikely to be equally important. D. the results provide a more reliable measure of what competitive moves rivals are likely to make next. E. weighting each company's overall competitive strength by the size of its market share produces a more accurate measure of its true competitive strength.

C. the different measures of competitive strength are unlikely to be equally important.

32. A strategy of vertical integration can have substantial drawbacks, including: A. whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities. C. the environmental costs of coordinating operations across vertical chain activities. D. loss of technological know-how. E. the difficulties faced in entering outside vertical and horizontal markets.

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

13. The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when: A. new industry or market segments are yet to be developed and create altogether new consumer demand. B. fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. C. the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. D. entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. E. there are nearly always big advantages to being a slow mover rather than an early mover, especially in regards to avoiding the "mistakes" of first or early movers.

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

31. The three main areas in the value chain where significant differences in the costs of competing firms can occur include: A. age of plants and equipment, number of employees, and advertising costs. B. operating-level activities, functional area activities, and line of business activities. C. the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies. D. human resource activities (particularly labor costs), vertical integration activities, and strategic partnership activities. E. variable cost activities, fixed cost activities, and administrative activities.

C. the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies.

18. A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when: A. there are many ways to achieve product differentiation that buyers find appealing. B. buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C. the offerings of rival firms are essentially identical, standardized, commodity-like products. D. entry barriers are high and competition from substitutes is relatively weak. E. the market is composed of many distinct segments with varying buyer needs and expectations.

C. the offerings of rival firms are essentially identical, standardized, commodity-like products.

17. When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous: A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. D. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.

C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive

8. What is the goal of signalling a challenger that strong retaliation is likely in the event of an attack? A. to alleviate their fears by committing to reduce the costs of value chain activities B. to cause the challenger to begin the attack instead of waiting C. to dissuade challengers from attacking or diverting them into using less threatening options D. to create collaborative relationships with challengers E. to insulate other firms from adverse impacts resulting from the challenge

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

9. Which of the following ARE common shortcomings of company vision statements? A. too specific and too flexible B. unrealistic, unconventional, and un-businesslike C. too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on superlatives D. too graphic, too narrow, and too risky E. not customer-driven, out of step with emerging technological trends, and too ambitious

C. too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on superlatives

30. Two analytical tools useful in determining whether a company's prices and costs are competitive are: A. SWOT analysis and key success factor analysis. B. SWOT analysis and benchmarking. C. value chain analysis and benchmarking. D. competitive position assessment and competitive strength assessment. E. driving forces analysis and SWOT analysis.

C. value chain analysis and benchmarking.

21. Successful broad differentiation allows a firm to: A. be the industry's best-cost provider. B. set the industry ceiling on price. C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D. command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E. take sales and market share away from rivals by undercutting them on price.

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

25. Which of the following statements about a company's strategy is true? A. A company's strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level managers (so as to catch rival companies by surprise when the strategy is launched). B. A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches because of the risks of making on-the-spot changes. C. A company's strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. D. A company's strategy is typically a blend of proactive and reactive strategy elements. E. A company's strategy is developed mostly on the fly because of the constant efforts of managers to come up with fresh moves to keep the company's product offering clearly different and set apart from the product offerings of rival companies.

D. A company's strategy is typically a blend of proactive and reactive strategy elements.

31. Why is it important to craft a business model? A. Because it sets forth management's game plan for maximizing profits for shareholders. B. Because it details exactly how management's strategy will result in the achievement of the company's strategic intent. C. Because it is a part of an operating model that focuses on delivering excellence and creating value for external shareholders and internal labor force. D. 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. E. Because it sets forth management's long-term action plan to match the business standards set by formidable rivals.

D. 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.

38. Which of the following questions tests the merits of the firm's strategy and distinguishes it as a winning strategy? A. Is the company's strategy ethical and socially responsible and does it put enough emphasis on good product quality and good customer service? B. Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? C. Is the strategy resulting in the development of additional competitive capabilities? D. Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance? E. Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?

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

23. It is normal for a company's strategy to end up being A. a blend of offensive actions on the part of managers to improve the company's profitability and defensive moves to counteract changing market conditions. B. a combination of conservative moves to protect the company's market share and somewhat more risky initiatives to set the company's product offering apart from rivals. C. a close imitation of the strategy employed by the recognized industry leader. D. a blend of proactive actions to improve the company's competitiveness and financial performance, and adaptive reactions to unanticipated developments and fresh market conditions. E. more a product of clever entrepreneurship than of efforts to clearly set a company's product/service offering apart from the offerings of rivals.

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

1. The best indicator of how well a company's strategy is working is whether the company is: A. achieving its stated financial objectives, its financial performance equates to the industry average, and market share gains reflect short-term preferences for capacity maximization. B. attentive to its poor execution in functional areas, business goals are stretch, and the value proposition has a product focus. C. geared to initiatives designed to build market share and to promote corporate responsibility. D. achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing its market share. E. geared to initiatives to promote corporate social responsibility

D. achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing its market share.

25. The best reason for investing company resources in vertical integration (either forward or backward) is to: A. expand into foreign markets and/or control more of the industry value chain. B. broaden the firm's product line and/or avoid the need for outsourcing. C. gain a first-mover advantage over rivals in revamping the industry value chain. D. add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability. E. achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.

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

46. Experience indicates that strategic alliances:

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

36. In a diversified company, the strategy-making hierarchy consists of: A. corporate strategy and a group of business strategies (one for each line of business the corporation has diversified into). B. corporate or managerial strategy, a set of business strategies, and divisional strategies within each business. C. business strategies, functional strategies, and operating strategies. D. corporate strategy, business strategies, functional strategies, and operating strategies. E. its diversification strategy, its line of business strategies, and its operating strategies.

D. corporate strategy, business strategies, functional strategies, and operating strategies.

4. Strategy, at its essence, is about A. matching rival businesses' products and quality dimensions in the marketplace. B. building profits for short-term success. C. realigning the market to provoke change in rival companies. D. developing lasting success that can support growth and secure the company's future over the long term. E. re-creating a business model with regularity.

D. developing lasting success that can support growth and secure the company's future over the long term.

29. The two most important parts of SWOT analysis are: A. pinpointing the company's competitive assets and pinpointing its competitive liabilities. B. identifying the company's resource strengths and identifying the company's best market opportunities. C. identifying the external threats to a company's future profitability and pinpointing how many market opportunities it has. D. drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions to better match the company's strategy to its resource strengths and market opportunities, correct the important weaknesses, and defend against external threats. E. making accurate lists of the company's strengths, weaknesses, opportunities, and threats and then using these lists as a basis for ascertaining how well the company's strategy is working.

D. drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions to better match the company's strategy to its resource strengths and market opportunities, correct the important weaknesses, and defend against external threats.

46. A winning strategy is one that A. builds strategic fit, is socially responsible, and maximizes shareholder wealth. B. is highly profitable and boosts the company's market share. C. results in a company becoming the dominant industry leader. D. fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance. E. can pass the ethical standards test, the strategic intent test, and the profitability test.

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

28. A company needs performance targets or objectives: A. to help guide managers in deciding what strategic path to take in the event that a strategic inflection point is encountered. B. because they give the company clear-cut strategic intent. C. in order to unify the company's strategic vision and business model. D. for its operations as a whole and also for each of its separate businesses, product lines, functional departments, and individual work units. E. in order to prevent lower-level organizational units from establishing their own objectives.

D. for its operations as a whole and also for each of its separate businesses, product lines, functional departments, and individual work units.

11. The pattern of actions and business approaches that would NOT define a company's strategy include actions to A. strengthen market standing and competitiveness by acquiring or merging with other companies. B. strengthen competitiveness via strategic coalitions and partnerships. C. upgrade competitively important resources and capabilities. D. gain sales and market share with lower prices despite increased costs. E. strengthen the firm's bargaining position with suppliers and distributors.

D. gain sales and market share with lower prices despite increased costs.

29. The task of driving-forces analysis is to: A. develop a comprehensive list of all the potential causes of changing industry conditions. B. predict which new driving forces will emerge next. C. determine which of the five competitive forces is the biggest driver of industry change. D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces. E. learn what the industry key success factors are and how they might change in the future.

D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces.

28. Industry conditions change because of: A. such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers. B. newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups. C. newly emerging industry key success factors. D. important forces enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways. E. changes in the barriers to entry and the degree of competition from substitute products.

D. important forces enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways.

40. To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to: A. sell a product with the best cost at the best price. B. have the best cost (as compared to rivals) for each activity in the industry's value chain. C. provide buyers with the best attributes at the best cost. D. incorporate attractive or upscale attributes into its product offering at a lower cost than rivals. E. do a better job than rivals of adopting the best operating practices.

D. incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

36. Not all positions on a strategic group map are equally attractive because: A. small strategic groups are always less profitable than large strategic groups. B. entry and exit barriers are different for each strategic group. C. across-group rivalry is always weakest at the outer edge of the strategic group map. D. industry driving forces and competitive pressures favor some groups and disadvantage others. E. key success factors are substantially different for differently positioned industry particip

D. industry driving forces and competitive pressures favor some groups and disadvantage others.

5. A blue-ocean strategy: A. is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B. involves an unexpected (out-of-the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

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

5. The managerial task of developing a strategic vision for a company: A. concerns deciding what approach the company should take to implement and execute its business model. B. entails coming up with a fairly specific answer to "who are we, what do we do, and why are we here?" C. is chiefly concerned with addressing what a company needs to do to successfully outcompete rivals in the marketplace. D. involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense. E. entails coming up with a concrete plan for how the company intends to make money.

D. involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense.

23. A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers: A. lacks powerful driving forces. B. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms. C. makes it challenging for industry members to compete successfully unless they can strongly differentiate their products. D. is conducive to industry members earning attractive profits. E. requires that industry members have low costs in order to be competitively successful.

D. is conducive to industry members earning attractive profits.

27. A company that pursues and achieves strategic objectives: A. is likely to weaken the achievement of its short-term and long-term financial objectives. B. believes that the company's financial performance is not as important as it really is. C. is generally not strongly focused on its true mission of making a profit. D. is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives. E. is likely to be a weak financial performer because diverting resources to the pursuit of strategic objectives takes away from the achievement of financial performance targets.

D. is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives.

41. Good strategy combined with good strategy execution A. offers a sure fire guarantee for avoiding periods of weak financial performance. B. is the best sign that a company is a true industry leader. C. is a more important management function than forming a strategic vision combined with setting objectives. D. is the clearest indicator of good management. E. signals that a company has the best business model in a market.

D. is the clearest indicator of good management.

42. The value of doing competitive strength assessment is to: A. determine how competitively powerful the company's core competencies are. B. learn if the company's market opportunities are better than those of its rivals. C. learn whether a company has a distinctive competence. D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals. E. determine whether a company's resource strengths are sufficient to allow it to earn bigger profits than rivals.

D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.

37. An industry contains one strategic group when all sellers: A. are subject to the same driving forces. B. place about the same emphasis on various distribution channels. C. use the same key success factors to differentiate their products. D. pursue essentially identical strategies and have similar market positions. E. pursue varying distribution channels and product attributes, and have customer service attributes that differentiate them in the marketplace.

D. pursue essentially identical strategies and have similar market positions.

15. What separates a powerful strategy from a run-of-the-mill or ineffective one? A. the ability of the strategy to keep the company profitable B. the proven ability of the strategy to generate maximum profits C. the speed with which it helps the company achieve its strategic vision D. management's ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals and produces sustainable competitive advantage E. whether it allows the company to maximize shareholder value in the shortest possible time.

D. management's ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals and produces sustainable competitive advantage

7. A low-cost leader's basis for competitive advantage is: A. lowest possible prices for comparable products. B. a low-cost/moderate price approach to gain the biggest market share. C. high buyer switching costs. D. meaningful lower overall costs than rivals on comparable products. E. higher unit sales than rivals

D. meaningful lower overall costs than rivals on comparable products.

15. A competitive strategy of striving to be the low-cost provider is particularly attractive when: A. buyers are not very price-conscious. B. most rivals are trying to be best-cost providers. C. there are many ways to achieve product differentiation that have value to buyers. D. most buyers use the product in much the same ways, with user requirements calling for a standardized product. E. most rivals are pursuing focused low-cost or focused differentiation strategies.

D. most buyers use the product in much the same ways, with user requirements calling for a standardized product.

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

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

6. A blue-ocean type of offensive strategy: A. is an offensive attack used by a market leader to steal customers away from unsuspecting smaller rivals. B. involves a preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. offers growth in revenues and profits by discovering or inventing a new industry or distinct market segment that renders rivals largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

D. offers growth in revenues and profits by discovering or inventing a new industry or distinct market segment that renders rivals largely irrelevant and allows a company to create and capture altogether new demand.

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

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

3. Whatever strategic approach is adopted by a company to deliver value, it nearly always requires: A. that management undertake formal planning sessions with functional departments to ensure productivity improvement. B. the identification of strengths and weaknesses within the company. C. matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D. performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match. E. constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium.

D. performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match.

6. The objective of a competitive strategy is to: A. establish a competitively powerful value chain. B. grow revenues at a faster annual rate than rivals are able to grow their revenues .C. lend greater detail to the company's business model. D. provide buyers superior value relative to the offerings of rival sellers in order to attain a competitive advantage. E. get the company into the best strategic group and then dominate it.

D. provide buyers superior value relative to the offerings of rival sellers in order to attain a competitive advantage.

48. Correctly diagnosing an industry's key success factors: A. points to those things that every firm in the industry needs to attend to in order to develop product propositions. B. hints at the firm's ability to generate above-average profitability. C. reveals that the firm's capabilities and resources are aligned with operating practices of industry participants. D. raises a company's chances of crafting a sound strategy. E. raises a company's sustainability dimensions and market characteristics in line with industry dynamics.

D. raises a company's chances of crafting a sound strategy.

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

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

41. A firm pursuing a best-cost provider strategy: A. seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B. tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C. tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D. seeks to deliver superior value to buyers by satisfying their expectations on key attributes and beating rivals in meeting customer expectations on price. E. seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

D. seeks to deliver superior value to buyers by satisfying their expectations on key attributes and beating rivals in meeting customer expectations on price.

16. What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities? A. social ambiguity and causal uncertainty B. social simplicity and causal complexity C. collective complexity and causal ambiguity D. social complexity and causal ambiguity E. social simplicity and causal uncertainty

D. social complexity and causal ambiguity

33. The difference between a company's strategy and a company's business model is that A. a company's strategy is management's game plan for achieving strategic objectives while its business model is management's game plan for achieving financial objectives. B. the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. C. a company's strategy is management's game plan for realizing the strategic vision, whereas a company's business model is the game plan for accomplishing its corporate responsibility goals. D. strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues flowing from the strategy are sufficient to cover costs and realize a profit. E. a company's strategy is solely concerned with how to please customers while its business model is solely concerned with how to please shareholders.

D. strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues flowing from the strategy are sufficient to cover costs and realize a profit.

6. Tangible resources include: A. human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel. B. reputational assets, which can include the company's reputation for quality, service, and reliability as well as their reputation for fair dealings with suppliers. C. relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets. D. technological assets such as patents, copyrights, and innovation technologies. E. company culture and incentive system, which includes the norms of behavior and business principles.

D. technological assets such as patents, copyrights, and innovation technologies.

29. Broad differentiation strategies generally work best in market situations where: A. low-cost value drivers are easily obtained. B. socially complex intangible attributes such as company reputation, long-standing relationships with buyers, and image are relatively easier to imitate C. the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D. technological change is fast-paced and competition revolves around rapidly evolving product features. E. market competition revolves around slowly evolving product features.

D. technological change is fast-paced and competition revolves around rapidly evolving product features.

8. The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage, suggest the rivalry force: A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies. B. is often weak when rivals have emotional stakes in business or face high exit barriers. C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders. E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.

D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders.

15. A company's values or core values concern: A. whether and to what extent it intends to operate in an ethical and socially responsible manner. B. how aggressively it will seek to maximize profits and enforce high ethical standards. C. the beliefs and operating principles built into the company's "balanced scorecard" for measuring performance. D. the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. E. the beliefs, principles, and ethical standards that are incorporated into the company's strategic intent and business model.

D. the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.

22. A broad differentiation strategy improves profitability when: A. it is focused on product innovation. B. differentiating enhances product performance and quality. C. the differentiating features appeal to sophisticated and prestigious buyers. D. the higher price the product commands exceeds the added costs of achieving the differentiation. E. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

D. the higher price the product commands exceeds the added costs of achieving the differentiation.

15. What does the scope of the firm refer to? A. the range of activities the firm performs externally and its social responsibility activities B. to gain competitive advantage based on where it locates its various value chain activities C. the firm's capability to employ vertical integration strategies D. the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses E. to prevent foreign competition from affecting the market

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

43. What is the primary target market for a best cost-provider? A. value hunting buyers B. price-conscious buyers C. best-price driven buyers D. value-conscious buyers E. brand-conscious buyer

D. value-conscious buyers

10. The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as: A. whether the company is located all over the globe. B. whether the company's key success factors are more dominant than the key success factors of close rivals. C. whether the company has the industry's most efficient and effective value chain. D. what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats. E. what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

D. what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats.

15. Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. whether the profits of suppliers are relatively high or low. B. the average number of suppliers that each seller/industry member purchases from. C. how aggressively rival industry members are trying to differentiate their products. D. whether demand for supplier products is high and they are in short supply. E. whether the prices of the items being furnished by the suppliers are rising or falling.

D. whether demand for supplier products is high and they are in short supply.

37. Which of the following questions can be used to distinguish a winning strategy from a mediocre or losing strategy? A. How good is the company's business model?B. Is the company a technology leader? C. Does the company have low prices in comparison to rivals? D. Is the company putting too little emphasis on behaving in an ethical and socially responsible manner? E. How well does the strategy fit the company's situation?

E. How well does the strategy fit the company's situation?

23. Why do mergers and acquisitions sometimes fail to produce anticipated results? A. The hoped for outcomes and changes to existing operations may not eventuate. B. Cost savings are equal or better than expected. C. Gains in competitive capabilities quickly materialize. D. Efforts to mesh corporate cultures go smoothly. E. Key employees at the acquired company can quickly become disenchanted and leave.

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

18. Which of the following companies would have the LEAST bargaining power with its suppliers? A. a company that is involved in mass production of goods to cater to its expanding customer base B. a company that actively caters to a broad price-sensitive customer base C. a company that generates high quality product components from easily available raw materials for a broad customer base D. a company whose products are highly popular and easily available across most supermarkets E. a company that offers high-cost specialized products that could be used only by customers of a certain age group

E. a company that offers high-cost specialized products that could be used only by customers of a certain age group

5. Which of the following generic types of competitive strategies is typically the "best" strategy for a company to employ? A. a strategy that seeks to underprice rivals on comparable products that attract a broad spectrum of buyers B. a strategy that seeks to differentiate product offerings from rivals by offering superior attributes that attract a broad spectrum of buyers C. a strategy that concentrates on a narrow buyer segment and outcompetes rivals by offering niche members customized attributes D. a strategy that concentrates on value-conscious buyers and outcompetes rivals by offering products at attractive prices E. a strategy that is well matched to a company's internal situation; underpinned by an appropriate set of resources, know-how, and competitive capabilities; and difficult for rivals to match

E. a strategy that is well matched to a company's internal situation; underpinned by an appropriate set of resources, know-how, and competitive capabilities; and difficult for rivals to match

28. The payoff of doing a thorough SWOT analysis is: A. identifying whether the company's value chain is cost-effective vis-à-vis the value chains of rivals. B. helping strategy-makers benchmark the company's resource strengths against industry key success factors. C. enabling a company to assess its overall competitive position relative to its key rivals. D. revealing whether a company's market share, measures of profitability, and sales compare favorably or unfavorably vis-à-vis key competitors. E. assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

E. assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

19. Winning a sustainable competitive edge over competitors does NOT hinge on which of the following? A. having a distinctive competitive product offering B. building competitively valuable expertise and capabilities not readily matched, and offering distinctive products C. building experience, know-how, and specialized capabilities that have been perfected over a long period of time D. having "hard-to-beat" capabilities and impressive product innovation E. building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

E. building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

12. The competitive threat that outsiders will enter a market is weaker when: A. financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers. B. the industry's market growth is rapid. C. the pool of entry candidates is large and some have resources that would make them formidable market contenders. D. newcomers can be expected to earn attractive profits. E. buyers have little loyalty to the brands and product offerings of existing industry members.

E. buyers have little loyalty to the brands and product offerings of existing industry members.

30. A broad differentiation strategy works best in situations where: A. technological change is slow-paced and new or improved products are infrequent. B. buyer needs and uses of the product or service are very similar. C. buyers incur low costs in switching their purchases to rival brands. D. buyers have a low degree of bargaining power and purchase the product frequently. E. buyers needs and uses of the product or service are diverse.

E. buyers needs and uses of the product or service are diverse.

45. Strategic alliances are more likely to be long-lasting when they involve:

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

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

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

47. Which of the following is a seldom used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A. striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage B. 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 C. developing competitively valuable resources and capabilities that rivals can't easily match, copy, or trump with capabilities of their own D. 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 E. copying the attributes of a popular product or service

E. copying the attributes of a popular product or service

32. A low-cost provider strategy can defeat a differentiation strategy when: A. sellers are not charging a price premium. B. many rivals are pursuing a similar differentiation approach. C. a company can offset thinner profit margins per unit by selling enough additional units to increase total profits. D. there are few ways to differentiate a product or a service and many buyers perceive these differences valuable. E. customers are basically satisfied and don't think extra attributes are worth a higher price features.

E. customers are basically satisfied and don't think extra attributes are worth a higher price features.

46. Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to: A. determine whether the company has a balanced scorecard for judging its performance. B. stay on track in achieving the company's mission and strategic vision. C. keep the company's board of directors well-informed about the company's future outlook. D. determine whether the company's business model is well-matched to changing market and competitive circumstances. E. decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods.

E. decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods.

11. A resource of a firm is considered to be: A. a market opportunity. B. an environmental threat. C. the capacity of a firm to competently perform some internal activity. D. a competitive deficiency. E. deployed to develop and enable a firm's capabilities.

E. deployed to develop and enable a firm's capabilities.

41. The primary role of a functional strategy is to: A. unify the company's various operating-level strategies. B. specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully. C. support and add power to the corporate-level strategy. D. create compatible degrees of strategic intent among a company's different business functions. E. determine how to support particular activities in ways that support the overall business strategy and competitive approach

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

2. Managers must chart a company's strategic course by: A. focusing on the local environment in which they are operating. B. ensuring excess production capacity and/or inventory. C. competing fiercely for a share in the market. D. building a bigger dealer network. E. developing a thorough understanding of the company's external and internal environment.

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

32. Masterful strategies come from: A. successful managerial efforts to develop a sound strategic vision. B. doing a very thorough job of strategic planning. C. involving as many company personnel as possible in the strategy-making process. D. crafting a strategy that mimics the best parts of the strategies of the industry leaders. E. doing things differently from competitors where it counts rather than running with the herd.

E. doing things differently from competitors where it counts rather than running with the herd.

33. An outsourcing strategy: A. is nearly always a more attractive strategic option than merger and acquisition strategies. B. carries the substantial risk of raising a company's costs. C. carries the substantial risk of making a company overly dependent on its suppliers. D. increases a company's risk exposure to changing technology and/or changing buyer preferences. E. involves farming out certain value chain activities presently performed in-house to outside vendors.

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

23. Adopting a set of "stretch" financial and "stretch" strategic objectives: A. pushes the company to strive for lesser but adequate profitability levels, because the stretch objectives are considered unattainable. B. is a widely held method for creating a "scorecard" for monitoring company performance. C. helps convert the mission statement into meaningful company values. D. challenges company personnel to execute the strategy with greater enthusiasm, proficiency, and understanding. E. is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.

E. is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.

6. Market maneuvering among industry rivals: A. determines whether the industry's strategic group map will be static or dynamic. B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. C. is usually an industry's strongest driving force. D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers

E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers

35. A company's overall strategy: A. determines whether its strategic intent is proactive or reactive. B. is subject to being changed much less frequently than either its objectives or its mission statement and thus serves as the base of its strategy-making pyramid. C. should be based on a flexible strategic vision and strategic intent. D. is customarily reviewed and approved level-by-level by the company board of directors. E. is really a collection of strategic initiatives and actions devised by managers and key employees up and down the whole organizational hierarchy.

E. is really a collection of strategic initiatives and actions devised by managers and key employees up and down the whole organizational hierarchy.

49. Which of the following is not an element of a company's business strategy? A. actions to respond to changing market conditions or other external factors B. actions to strengthen competitiveness via strategic alliances and collaborative partnerships C. actions to strengthen internal capabilities and competitively valuable resources D. actions to manage the functional areas of the business E. management's actions to revise the company's financial and strategic performance targets

E. management's actions to revise the company's financial and strategic performance targets

9. Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when: A. pioneering helps build up a firm's image and reputation and creates strong brand loyalty. B. buyers remain strongly loyal to pioneering firms because of incentives and switching costs barriers. C. there is a steep learning curve and when learning can be kept proprietary. D. moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E. market uncertainties make it difficult to ascertain what will eventually succeed.

E. market uncertainties make it difficult to ascertain what will eventually succeed.

20. The essence of a broad differentiation strategy is to: A. appeal to the high-end part of the market and concentrate on providing a top-of-the-line product to consumers. B. incorporate a greater number of differentiating features into its product/service than rivals. C. lower buyer switching costs. D. outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

27. A differentiation-based competitive advantage: A. nearly always is attached to the quality and service aspects of a company's product offering. B. usually is the result of highly effective marketing and advertising to enhance the brand, raise awareness, and build consistent customer experience. C. requires developing at least one distinctive competence that buyers consider valuable. D. hinges on a company's success in developing top-of-the-line product features that will command the highest price premium in the industry. E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or noneconomic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or noneconomic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

21. Managers must be prepared to modify their strategy in response to all of the following EXCEPT A. changing circumstances that affect performance and the desire to improve the current strategy. B. competitor moves in the market and shifting needs of buyers. C. stagnating market and restrictive industrial opportunities. D. mounting evidence that the strategy is less effective. E. public pronouncements from rivals about monthly profit margins.

E. public pronouncements from rivals about monthly profit margins.

49. A company that fails to manage its strategic alliance probably has:

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

40. With the aid of a strategic group map, one can: A. identify easily the entry and exit barriers for each strategic group. B. pinpoint precisely which firms are in profitable strategic groups and which are not. C. identify which competitive forces are strong and which are weak. D. measure accurately whether across-group rivalry is stronger than within-group rivalry, and vice versa. E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.

E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.

35. A focused low-cost strategy seeks to achieve competitive advantage by: A. outmatching competitors in offering niche members an absolute rock-bottom price. B. delivering more value for lesser money than other competitors. C. performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D. dominating more market niches in the industry via a lower cost and a lower price than any other rival. E. serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

E. serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

28. In the course of crafting a strategy, which of the following is NOT a common management function? A. abandoning certain strategy elements that have grown stale or become obsolete B. modifying the current strategy when market and competitive conditions take an unexpected turn or some aspects of the company's strategy hit a stone wall C. modifying the current strategy in response to the fresh strategic maneuvers of rival firms D. taking proactive actions to improve this or that piece of the strategy E. sharing the strategy with the public to gain additional customer and shareholder support

E. sharing the strategy with the public to gain additional customer and shareholder support

5. To improve performance, there are many different avenues for outcompeting rivals such as A. realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growth. B. creating products analogous with competitors so as to be competitive in the same markets. C. pursuing similar personalized customer service or quality dimensions as rivals. D. being undecided whether or not to concentrate operations on local versus global markets. E. strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

E. strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

25. A "balanced scorecard" for measuring company performance: A. entails putting equal emphasis on financial and strategic objectives. B. entails putting balanced emphasis on profit and non-profit objectives. C. prevents the drive for achieving financial objectives from overwhelming the pursuit of strategic objectives. D. prevents the drive for achieving strategic objectives from overwhelming the pursuit of financial objectives. E. strikes a "balance" between financial and strategic objectives.

E. strikes a "balance" between financial and strategic objectives.

16. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage? A. striving to be the industry's low-cost provider B. outcompeting rivals on the basis of differentiating features that will appeal to a broad spectrum of buyers C. developing a best-cost provider strategy that gives customers more value for the money D. focusing on a narrow market niche and serving buyers' special needs and tastes E. striving to be the industry's high-price provider

E. striving to be the industry's high-price provider

10. First-mover disadvantages (or late-mover advantages) rarely ever arise when: A. the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own. C. the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D. the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E. the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

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

4. The competitive pressures on companies within an industry come from all of the following, EXCEPT: A. those associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B. those companies in other industries attempting to win buyers over to their substitute products. C. those associated with the threat of new entrants into the marketplace. D. those associated with the bargaining power of suppliers and customers. E. those associated with environmental factors such as water shortages.

E. those associated with environmental factors such as water shortages.

11. The best test of whether potential entry is a strong or weak competitive force is: A. the strength of buyer loyalty to existing brands. B. whether the industry's driving forces make it harder or easier for new entrants to be successful. C. whether the strategies of industry members are well-matched to the industry's key success factors. D. whether there are any vacant spaces on the industry's strategic group map. E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

12. Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is: A. to be the first mover. B. to be a fast follower. C. to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer—first-mover disadvantages usually overwhelm first-mover advantages). D. to be the last mover—playing catch-up is usually fairly easy and almost always is much cheaper than any other option. E. to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

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

20. Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on: A. the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive. B. how many buyers are engaged in collaborative partnerships with sellers. C. whether entry barriers are high or low and the size of the pool of likely entry candidates. D. whether the overall quality of the items being furnished by industry members is rising or falling. E. whether demand-supply conditions represent a buyer's market or a seller's market.

E. whether demand-supply conditions represent a buyer's market or a seller's market.