Mgt 460 test 2

______ is the range of product and service segments that the firm serves within its market.

Horizontal scope

What is the rule for organizing the work effort to support good strategy execution?

Match the firm's organizational structure to its unique strategy.

What is the difference between economies of scale and economies of scope?

Scale refers to cost savings that accrue directly from larger-sized operations, while scope stems directly from strategic fit along the value chains of related businesses.

How would you explain the difference between a one-business company and a diversified company?

The first uses a business-level strategy, while the second uses a set of business strategies and a corporate strategy.

___ is the extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system

Vertical scope

Companies engaged in a single line of business most commonly utilize an organizational structure that can be

a functional (departmental) organizational structure.

According to the value-price-cost framework, deploying a differentiation strategy involves costs that might well exceed those of the average competitor, but with a successful differentiation strategy, that disadvantage is more than made up for by

a rise in the perceived value of the differentiated good, giving the differentiator a clear competitive advantage over the average rival.

What are value drivers?

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

A company can best accomplish diversification into new industries by

acquiring a company already operating in the target industry, creating a new business from scratch, or forming a joint venture with one or more companies to enter the target industry.

Steps to update a company's capabilities to match changing market conditions and customer expectations take place often include

acquiring, developing, and strengthening key resources and capabilities.

The process of recruiting and retaining capable employees is

always an essential ingredient of successful strategy execution.

The three tests for judging whether a particular diversification move can create value for shareholders are the

attractiveness test, the cost of entry test, and the better-off test.

A company's competitive strategy should

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

Offensive strategic moves involve all of the following except

blocking the avenues open to challengers.

Successful broad differentiation allows a firm to

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

What is the name of the process for developing new businesses as an outgrowth of a company's established business operations?

corporate venturing

A low-cost provider strategy can defeat a differentiation strategy when

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

To create value for shareholders via diversification, a company must

diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.

The most common approaches to capability building include all of the following, EXCEPT

divesting underperforming units.

The task of crafting a company's overall corporate strategy for a diversified company encompasses all of the following except

divesting well-performing businesses.

Sometimes a company can short-circuit the task of building an organizational capability in-house by

either acquiring a company that has already developed the capability or else acquiring the desired capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise.

Strategic offensives should, as a general rule, be based on

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

Unrelated businesses

have dissimilar value chains and resource requirements with no competitively important cross-business commonalities at the value chain level.

The five generic competitive strategies are not characterized by a________ strategy.

high-cost

The purposes of a defensive strategy do not include

increasing the risk of having to defend an attack.

The principal offensive strategy options include all of the following except

initiating a market threat and counterattack simultaneously to effect a distraction.

The most common building blocks for a company's organizational structure

involve a functional or departmental structure that includes process, geographic, product, or customer groups performing one or more major processing steps along the value chain.

A blue-ocean strategy

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.

A low-cost leader's basis for competitive advantage is

meaningful lower overall costs than rivals on comparable products.

A competitive strategy of striving to be the low-cost provider is particularly attractive when

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

The essence of a broad differentiation strategy is to

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

A dynamic capability is the

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

The big dilemma an acquisition-minded firm faces is whether to

pay a premium price for a successful company or buy a struggling company at a bargain price.

Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, except whether to

pay special attention to buyer segments that a rival is already serving.

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves assessing whether the move will

produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.

Accessing capabilities through an external source can be accomplished through all of these EXCEPT

promoting qualified people with the right know-how in a timely and cost-effective manner.

Good strategy execution requires which of the following?

putting those resources and capabilities into place, strengthening them as needed, and then modifying them as market conditions evolve

The decision to pursue diversification requires management to resolve which industries to enter and whether to enter, and includes such decisions as the following, except

selecting the appropriate value chain operating practices to improve the financial outlook

The three components of building a capable organization are

staffing the organization, building core competencies and competitive capabilities, and structuring the organization and work effort.

A firm's organizational structure is comprised of

the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered.

A broad differentiation strategy improves profitability when

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

The transaction costs of completing a business agreement or deal of some sort, over and above the price of the deal, can include all of the following except

the premium cost.

What does the scope of the firm refer to?

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

The essential requirement for different businesses to be "related" is that

their value chains exhibit competitively valuable cross-business commonalities.

The timing of a strategic move can be just as important as the choice of move to make, therefore a company's best option with respect to timing of an action is

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

A pitfall to avoid in pursuing a differentiation strategy is

trying to differentiate on the basis of attributes or features that are easily and quickly copied.

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are

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