Principles of Management Chapter 10
The preferred strategy for Cash cows is: A. stability or modest growth. B. targeting only the most promising of the Cash Cows. C. retrenchment of some of the Cash Cows. D. decrease of current operations. E. growth and further resource investments.
A
A _____ strategy primarily identifies how a division or strategic business unit will compete in its product or service domain. A. branding B. business C. corporate D. functional E. marketing
B
The preferred strategy for Dogs is: A. stability or modest growth. B. retrenchment. C. decrease of current operations. D. to grow or retrench the dogs. E. growth and heavy resource investments.
B
A _____ strategy guides activities within one specific area of operations. A. branding B. divisional C. corporate D. functional E. business
D
A _____ begins with a systematic evaluation of the organization's resources and capabilities and focuses on identifying the organization's core competencies. A. functional strategy B. mission statement C. flanking strategy D. branding analysis E. SWOT analysis
E
A strategic leader needs to reduce the sense of urgency so as to achieve the best results.
F
Which of the following allows organizations to make profits while selling products or services at low prices that their competitors can't profitably match? A. Cost leadership strategy B. Stuck-in-the-middle strategy C. Focused differentiation strategy D. Differentiation strategy E. Co-opetition strategy
A
Which of the following examples best captures the function of a strategic leader? A. Vincent ensures the optimum allocation and consistent use of resources in his firm. B. Don refrains from pressurizing his subordinates and allows them to be complacent. C. Clarence allows her employees to carve their own paths rather than acting as a teacher. D. Hethilda limits her interactions with her subordinates and disapproves the questioning of her orders. E. Sarah trusts her subordinates and does not cross-check their work.
A
Food Lord, a fast food chain, is expanding its operations in several states in the country. Which of the following is this an example of? A. Growth through concentration B. Diversification C. Vertical integration D. Retrenchment E. Divestiture
A
The preferred strategy for Stars is: A. stability or modest growth. B. targeting only the most promising of the stars. C. retrenchment of some of the stars. D. decrease of current operations. E. growth and further resource investments.
E
Bella Dairy Products, a company producing ice creams, has recently bought two dairy farms. This strategic action falls under the category of _____. A. growth through concentration B. vertical integration C. retrenchment D. divestiture E. franchising
B
Businesses or products with high market shares in high-growth markets are referred to as _____ in the BCG Matrix. A. Cash Cows B. Stars C. Question Marks D. Dogs E. Apples
B
The less attractive the industry structure, the harder it will be to make good strategic choices.
T
In a(n) _____ alliance, firms typically join together to sell and deliver products or services. A. supplier B. distribution C. contracting D. vertical E. outsourcing
B
Vibgyor Inc. is a newly established organization which manufactures home appliances. The company is in the process of selecting the locations for its production facilities and an appropriate manufacturing technology. This information indicates that the company is developing its _____ strategy. A. contingency B. competitive C. business-level D. marketing E. tactical
C
Syntagmatic, an educational consultancy firm, is particular about recruiting qualified professionals, so as to provide more value to its global clients. The company strives to maintain its high standard as well as to provide good insurances to its employees. Which of the following operating objectives is the primary focus of Syntagmatic? A. Social responsibility B. Cost efficiency C. Market share D. Human talent E. Financial health
D
Decisions related to choices about product and service mix, facilities locations, and new technologies are most likely to be a part of the _____ strategy of an organization. A. branding B. marketing C. corporate D. functional E. business
E
In a hyper-competition situation, a firm faces only a few competitors.
F
In a supplier alliance, firms join together to sell and distribute products or services.
F
Competitive advantage is the ability to do something so well that one outperforms competitors.
T
Compsolute, an IT company, enters into a partnership with Double Edge Finances. The terms of the agreement state that Compsolute would purchase the service of Double Edge Finance's finance team for a period of five years. This is an appropriate example of a(n) _____ alliance. A. supplier B. distribution C. outsourcing D. co-opetition E. equity strategic
C
One of the differences between Stars and Cash cows is that: A. Cash Cows produce high profits. B. the strategy for Cash Cows is retrenchment. C. Cash Cows have little upside potential. D. Cash Cows can easily penetrate expanding markets. E. the strategy for Cash Cows is growth.
C
Which of the following is the last step in the process of strategic management? A. Strategic analysis B. Strategy formulation C. Strategy implementation D. Strategic marketing E. Strategic outsourcing
C
Restructuring by turnaround often occurs along with a change in top management.
T
In an attractive industry, there are many competitors.
F
A differentiation strategy typically seeks competitive advantage by: A. offering products that are unique and different from the competition. B. operating with lower costs than competitors. C. continuously improving operating efficiencies in purchasing. D. controlling and monitoring the performance of top management. E. including key persons in strategic planning.
A
Aries is a new company in the laundry detergent market, which already has many competitors. Researchers at Aries have devised a new, cost-efficient formula for manufacturing detergents that has made it possible for the company to charge less than its competitors and still make a profit. The strategy used by Aries is that of _____. A. cost leadership B. stuck-in-the-middle C. focused differentiation D. differentiation E. co-opetition
A
Businesses or products with high-market shares in low-growth markets are referred to as _____ in the BCG Matrix. A. Cash Cows B. Stars C. Question Marks D. Dogs E. Apples
A
Which of the following is a defining characteristic of growth through diversification? A. It involves extending business within the same business area. B. It involves acquisition of or investment in new and different business areas. C. It involves decreasing the size of operations. D. It involves selling company assets to pay creditors. E. It involves fixing specific performance problems.
B
Which of the following is a defining characteristic of the transnational strategy? A. It involves working with rivals on projects of mutual benefit. B. It seeks efficiencies of global operations with attention to local markets. C. It tries to fix specific performance problems within the organization. D. It involves expansion of the organization's current operations. E. It analyzes business opportunities according to market growth rate.
B
Which of the following strategies primarily tries to fix specific performance problems? A. Downsizing B. Turnaround C. Multidomestic D. Divestiture E. Co-opetition
B
_____ is the process of crafting strategies to guide the allocation of resources. A. Strategic analysis B. Strategy formulation C. Strategy implementation D. Strategic crafting E. Strategic outsourcing
B
What is an advantage of a SWOT analysis? A. It deliberates on the optimum use of organizational resources. B. It gives an organization a competitive advantage. C. It is an external analysis of environmental opportunities and threats. D. It analysis the external factors that give way to organizational weaknesses. E. It defines specific objectives that an organization must accomplish.
C
Which of the following is true about oligopoly? A. There are several direct competitors. B. It ensures that there is no competition for resources. C. There are only a few competitors. D. It is seen most often in the fast foods industry. E. There are many substitute products.
C
_____ are broad beliefs about what is or is not appropriate behavior. A. Corporate subcultures B. Marketing values C. Core values D. Diversified values E. Functional values
C
Businesses or products with low-market shares in low-growth markets are referred to as _____ in the BCG Matrix. A. Cash Cows B. Stars C. Question Marks D. Dogs E. Apples
D
Telkon, a mobile phone company, has recently launched a device which, apart from all the regular mobile phone features, also has an electric cigarette lighter and a small hidden knife. None of the other mobile handset makers have such a product. According to this information, which of the following business-level strategies is being used by Telkon? A. Co-opetition strategy B. Cost leadership strategy C. Focus strategy D. Differentiation strategy E. Turnaround strategy
D
Watercandy sells a range of premium confectionery products. Although the company's products are priced a little higher than those of its competitors, its customers are ready to pay for its unique flavours. Watercandy uses the _____ strategy to gain an advantage over its competitors. A. cost leadership B. stuck-in-the-middle C. focused cost leadership D. differentiation E. co-opetition
D
_____ decreases the attractiveness of the market. A. Few competitors B. High barriers to entry C. Few substitute products D. High power of customers E. Low power of suppliers
D
In single-product enterprises, business strategies are distinct from corporate strategies.
F
In the context of vertical integration, when a business acquires suppliers, it is referred to as forward vertical integration.
F
In the process of strategic management, strategic implementation is typically followed by strategic analysis.
F
Inside directors are chosen from the ranks of middle managers.
F
It is advisable to combine a cost leadership strategy with a differentiation strategy to get better results.
F
Stakeholders are individuals and groups unaffected by the organization and its strategic accomplishments.
F
The purpose of corporate strategy is to guide activities within one specific area of operations.
F
When one hears terms like "acquisition," "merger," and "global expansion," the underlying master strategy is most likely to be one of _____. A. growth B. retrenchment C. downsizing D. turnaround E. restructuring
A
Which of the following best defines the term "sustainable competitive advantage"? A. It is the ability to outperform rivals in ways that are difficult or costly to imitate. B. It is the ability to formulate technology to gain market exposure. C. It is the ability to focus organizational energies on a unifying and compelling goal. D. It is the ability to formulate strategies efficiently to accomplish long-term goals. E. It is the ability to identify the setbacks in the organizational procedure and work towards correcting them.
A
_____ is the predominant value system for the enterprise as a whole. A. Organizational culture B. Corporate subculture C. Managerial value system D. Functional culture E. Leadership value system
A
A(n) _____ expresses an organization's reason for existence in society. A. statement of purpose B. mission statement C. cash flow statement D. net worth statement E. operating objective
B
Enigma Breweries, a distillery company, bought Suave Clothing, a premium men's fashion boutique chain. By entering a different business area, Enigma Breweries plans to grow and expand its business and profits. Which type of growth strategy has Enigma Breweries adopted? A. Growth through concentration B. Growth through diversification C. Market development strategy D. Market penetration strategy E. Product development strategy
B
Growth through _____ typically occurs by acquiring suppliers or distributors. A. strategic alliance B. vertical integration C. liquidation D. divestiture E. concentration
B
If there are many competitors and the barriers to entry are low, the: A. industry is attractive. B. industry is unattractive. C. customers have low bargaining power. D. industry is mature. E. industry is not mature.
B
Miranda Corp. changes its business strategy from a focused differentiation strategy to a focused cost leadership one, as this new strategy works better for the organization. Which of the following steps in the process of strategic management ideally includes this action? A. Strategy analysis B. Strategy formulation C. Strategy assessment D. Strategy identification E. Strategy outsourcing
B
Powerston Inc. is the market leader of car batteries primarily because of its unique distribution system. The distribution system that has given the company an advantage over its competitors is an example of the company's _____. A. co-opetition strategy B. core competency C. technical skill D. emotional intelligence E. monopolistic power
B
Process failure where the planning process becomes an end in itself, rather than a means to an end is referred to as _____. A. lack of participation error B. goal displacement C. failures of substance D. divestiture E. downsizing
B
The term _____ is often used to describe a business firm that is part of a larger enterprise. A. supplier alliance B. strategic business unit C. joint venture D. cash cow E. co-opetitor
B
Which of the following is a defining characteristic of a SWOT analysis? A. It examines the diversity at the work place and increases cohesiveness. B. It is based on the statistical principle of multivariate. C. It identifies things that inhibit optimum performance achievement. D. It determines the level of sales needed in order to breakeven. E. It is based on a year-to-year comparison of a firm's ratios.
C
Which of the following is true of a cost leadership strategy? A. It seeks competitive advantage through uniqueness. B. It works best with the product differentiation strategy. C. To succeed, it requires tight cost and managerial controls. D. It concentrates on serving a unique market segment better. E. It involves working with rivals on projects of mutual benefit.
C
_____ is the capability to inspire people to successfully engage in a process of continuous change, performance enhancement, and implementation of organizational strategies. A. Freeriding B. Scientific management C. Strategic leadership D. Social loafing E. Groupthink
C
A _____ strategy typically concentrates attention on a special market segment in the form of a niche customer group, geographical region, or product or service line. A. co-opetition B. downsizing C. turnaround D. focus E. transnational
D
The entire process of formulating and implementing strategies to accomplish long- term goals and sustain competitive advantage is referred to as: A. strategic analysis. B. strategy formulation. C. strategy implementation. D. strategic management. E. strategic outsourcing.
D
The financial statement of Labyrinth Inc., a heavy-metal industry, for the year 2013, showed a loss in revenue. The main cause was the entry of new competitors in the market, with advanced skill and expertise. The company decided to conduct an internal assessment of the organization through a SWOT analysis. What was the possible deduction arrived at by the company through its internal analysis? A. Weak management B. Strong economy C. Shortage of resources D. Obsolete technologies E. Weak market rivals
D
The transnational strategy focuses on working with rivals on projects of mutual benefit.
F
_____ is where a business closes and sells its assets to pay creditors. A. Concentration B. Diversification C. Vertical integration D. Liquidation E. Strategic alliance
D
When strategic control fails at the level of top management, it is supposed to kick in at the level of middle management.
F
A growth strategy involves expansion of an organization's current operations.
T
The presence of strong core values helps build a clear organizational identity.
T
_____ analyzes business opportunities according to market growth rate and market share. A. Flanking strategy B. BCG matrix C. Five Forces analysis D. Strategy formulation E. Logistics plan
B
Core values are broad beliefs about what is or is not appropriate behavior.
T
Emergence of new competitors and resource scarcities are environmental threats.
T
Failures of substance in strategic management show up in poor analysis and bad strategy selection.
T
A _____ strategy typically sets long-term direction for the total enterprise. A. branding B. business C. corporate D. functional E. marketing
C
A lack of participation error is most likely to occur when: A. the planning process becomes an end in itself. B. the performance of top management is not monitored. C. key persons are not included in the strategic planning. D. there is lack of efficiency in vertical communication. E. the cost leadership strategy and the differentiation strategy are used simultaneously.
C
Businesses or products with low-market shares in high-growth markets are referred to as _____ in the BCG Matrix. A. Cash Cows B. Stars C. Question Marks D. Dogs E. Apples
C
Which of the following best describes a strategy? A. It is a comprehensive plan guiding resource allocation to achieve long-term organization goals. B. It is the same as the mission of the organization. C. It is the document expressing the organization's reason for existence in society. D. It is the predominant value system of the organization as a whole. E. It is a special strength that gives an organization a competitive advantage.
A
Which of the following is true about operating objectives? A. They set forth an organization's purpose. B. They direct activities toward key performance areas. C. They represent what the underlying business model is trying to accomplish. D. They set guidelines regarding the organization's purpose and core values. E. They set standards for accomplishing the mission statement.
B
Restructuring by divestiture primarily involves: A. selling off parts of the organization to refocus on core competencies. B. working with rivals on projects of mutual benefit. C. customizing products and advertising to best fit local needs. D. joining in partnership to pursue an area of mutual interest. E. adopting standardized products and advertising for use worldwide.
A
Which of the following is the first step in the process of strategic management? A. Strategic analysis B. Strategy formulation C. Strategy implementation D. Strategic marketing E. Strategic outsourcing
A
An unattractive industry is one in which there are high barriers to entry.
F
Which of the following is a defining characteristic of a focused differentiation strategy? A. It offers a unique product to a special market segment. B. It seeks the lowest costs of operations within a special market segment. C. It analyzes business opportunities according to market growth rate. D. It focuses on substantial penetration of expanding markets. E. It involves decreasing the size of operations.
A
Verticone, a software firm, suffered heavy loss due to poor analysis and bad strategy selection. The loss occurred in this example is the result of _____. A. representativeness bias B. failures of substance C. goal displacement D. congruence bias E. endowment effect
B
Why is corporate governance essential in an organization? A. To downsize the workforce so as to earn less cost of production B. To ensure that the strategic management is successful C. To criticize and condone the status quo D. To be compliant and uncritical in endorsing all management decisions E. To avoid rigorous oversight and accountability
B
A _____ strategy primarily customizes products and advertising to best fit local needs. A. transnational B. co-opetition C. differentiation D. multidomestic E. cost leadership
D
According to Porter, which of the following is one of the five forces that affect industry competition? A. Bargaining power of intermediaries B. Market share C. Market growth rate D. Substitute products E. Workplace diversity
D
The preferred strategy for Question Marks is: A. stability or modest growth. B. retrenchment. C. decrease of current operations. D. growth and retrenchment. E. growth and heavy resource investments.
D
The strategic objective of the differentiation strategy is to attract customers who stay loyal to the firm's products and lose interest in those of its competitors.
T
The difference between a corporate strategy and a business strategy is that: A. the former sets long-term direction for the total enterprise and the latter is concerned with how a division or strategic business unit will compete in its product or service domain. B. the former focuses on how a division will compete in its product or service domain and the latter is concerned with guiding the use of organizational resources to implement business strategies. C. the former is concerned with formulating and implementing strategies while the latter is involved in crafting strategies to guide the allocation of resources. D. the former adopts standardized products and advertising for use worldwide and the latter seeks efficiencies of global operations with attention to local markets. E. the former makes decisions regarding facilities locations, and new technologies and the latter customizes products and advertising to best fit local needs
A
Which of the following is a defining characteristic of a differentiation strategy? A. The strategic objective is to attract customers who stay loyal to the firm's unique products. B. It seeks competitive advantage by operating with lower costs than competitors. C. Success with the differentiation strategy requires tight cost and managerial controls. D. It aims at products or services that are easy to create and distribute. E. It involves working with rivals on projects of mutual benefit.
A
The difference between a corporate strategy and a functional strategy is that: A. the former focuses on how a strategic business unit will compete in its product domain and the latter sets long-term direction for the total enterprise. B. the former sets long-term direction for the total enterprise and the latter guides activities within one specific area of operations. C. the former is concerned with formulating and implementing strategies while the latter is involved in crafting strategies to guide the allocation of resources. D. the former adopts standardized products and advertising for use worldwide and the latter seeks efficiencies of global operations with attention to local markets. E. the former makes decisions regarding facilities locations, and new technologies and the latter customizes products and advertising to best fit local needs.
B
Any special strength that gives an organization a competitive advantage is referred to as its _____. A. core competency B. productivity C. co-opetition ability D. emotional intelligence E. monopolistic power
A
Restructuring by downsizing primarily involves: A. decreasing the size of operations. B. working with rivals on projects of mutual benefit. C. customizing products and advertising to best fit local needs. D. joining in partnership to pursue an area of mutual interest. E. adopting standardized products and advertising for use worldwide.
A
The preferred strategy for Question Marks is to grow or retrench because: A. they produce large profits and a strong cash flow, but have little upside potential. B. they may not generate much profit at the moment, but they have an upside potential. C. the markets offer great growth opportunity, given that they are new to the market. D. they are not only high performers in the present, but they offer similar potential for the future. E. they produce little if any profit, and must be supported so that they perform better.
B
Which of the following is a defining characteristic of a focused cost leadership? A. It offers a regular product to a common market segment. B. It seeks the lowest costs of operations within a special market segment. C. It analyzes business opportunities according to market growth rate. D. It focuses on substantial penetration of expanding markets. E. It involves decreasing the size of operations.
B
Questions such as "How can we best utilize resources within a specific area of operations to implement our business strategy?" are typically asked while discussing the _____ strategy. A. branding B. divisional C. corporate D. functional E. business
D
The preferred strategy for Stars is growth because they: A. produce large profits and a strong cash flow, but have little upside potential. B. may not generate much profit at the moment, but have upside potential. C. produce large profits and a strong cash flow for only a short span of time and must be nurtured. D. are not only high performers in the present, but they offer similar potential for the future. E. produce little if any profit, and must be supported so that they perform better.
D
Fresh Nest, a retail grocery store, provides a wide variety of products to its customers. So as to keep up with the varying demand in fruits, vegetables, and other groceries, the store stocks up products according to the needs and particulars of the locality. Which of the following strategies has been adopted by Fresh Nest by this move? A. Transnational strategy B. Downsizing strategy C. Turnaround strategy D. Co-opetition strategy E. Multidomestic strategy
E
Vintop Inc., a successful designer brand, has several outlets in the U.S. To push sales growth, Vintop has decided to focus more on its primary business and open up its branches in ten different countries. This approach taken by Vintop is an example of growth through _____. A. strategic alliance B. vertical integration C. liquidation D. diversification E. concentration
E
Which of the following increases the attractiveness of a market? A. Low barriers to entry B. Many competitors C. Many substitute products D. High power of suppliers E. Few substitute products
E
A globalization strategy adopts standardized products and advertising for use worldwide.
T
Bankruptcy under U.S. law protects a firm from creditors while management reorganizes to restore solvency.
T
It is a strategic leader's job to teach the strategy and make it a "cause."
T
The Stars in a BCG matrix typically: A. produce large profits through substantial penetration of expanding markets. B. produce low profits and limited cash flow, but with little upside potential. C. may not generate much profit at the moment, but have upside potential to do so. D. produce little if any profit, and have low potential for future improvement. E. generate high profit for a short span of time and then become inactive.
A
In a large conglomerate, while the enterprise on a whole will have a corporate strategy, each SBU will have its own business strategy.
T
In the context of the BCG matrix, the preferred strategy for Stars is retrenchment.
F
The preferred strategy for Cash cows is stability or modest growth because: A. they produce large profits and a strong cash flow, but have little upside potential. B. they may not generate much profit at the moment, but have upside potential. C. the markets offer great growth opportunity given that they are new to the market. D. they are not only high performers in the present, but they offer similar potential for the future. E. they produce little if any profit, and must be supported so that they perform better.
A
Strategic analysis typically refers to the process of: A. crafting strategies to guide the allocation of resources. B. revising objectives and selecting new strategies. C. formulating and implementing strategies. D. directing the total enterprise. E. analyzing the organization's competitive position.
E
The preferred strategy for dogs is retrenchment because: A. they produce large profits and a strong cash flow, and the upside potential is there. B. they may not generate much profit at the moment, but the upside potential is there. C. the markets offer great growth opportunity given that they are new to the market. D. they are not only high performers in the present, but they offer similar potential for the future. E. they produce little if any profit, and they have low potential for future improvement.
E
The strategy of working with rivals on projects of mutual benefit is referred to as _____. A. downsizing B. turnaround C. divestiture D. vertical integration E. co-opetition
E
Restructuring by divestiture is mostly followed by organizations that are focused and not complex.
F
The BCG Matrix recommends making further resource investments in Dogs.
F
The strategic management process begins with analysis of mission, values, and objectives.
T
Elaborate on the present day corporate strategies.
A key aspect of corporate strategy today is how to embrace the global economy and its mix of business risks and opportunities. An easy way to spot differences in global strategies is to notice how products are developed and advertised around the world. A firm pursuing a globalization strategy tends to view the world as one large market. It makes most decisions from the corporate headquarters and tries as much as possible to standardize products and advertising for use everywhere. The latest Gillette razors from Procter & Gamble, for example, are likely to be sold and advertised similarly around the world. Firms using a multidomestic strategy try to customize products and advertising as much as possible to fit local references in different countries or regions. McDonald's is a good example. Although you can get your standard fries and Big Mac in most locations, you can have a McVeggie in India, a McArabia Kofta in Saudi Arabia, and a Croque McDo in France. A third approach is the transnational strategy where a firm tries to operate without a strong national identity and blend seamlessly with the global economy. Ford is an example. Its Global Performance strategy draws upon design, manufacturing, and distribution expertise all over the world to build five core car platforms with common parts and components. These platforms are then modified to meet regional tastes.
List a few key responsibilities of strategic leadership.
Key responsibilities of strategic leadership are described below: A strategic leader has to maintain strategic control. This means that the CEO and other top managers should always be in touch with the strategy, how well it is being implemented, whether the strategy is generating performance success or failure, and the need for the strategy to be tweaked or changed. A strategic leader has to be the guardian of trade-offs. It is the leader's job to make sure that the organization's resources are allocated in ways consistent with the strategy. This requires the discipline to sort through many competing ideas and alternatives, to stay on course, and not to get side tracked. A strategic leader needs to create a sense of urgency. The leader can't allow the organization and its members to grow slow and complacent. Even when doing well, the leader keeps the focus on getting better and being alert to conditions that require A strategic leader needs to make sure that everyone understands the strategy. Unless strategies are understood, the daily tasks and contributions of people lose context and purpose. Everyone might work very hard, but without alignment to strategy the impact is dispersed and fails to advance common goals. A strategic leader needs to be a teacher. It is the leader's job to teach the strategy and make it a "cause." In order for strategy to work, it must become an ever-present commitment throughout the organization. This means that a strategic leader must be a great communicator. Everyone must understand the strategy and how it makes their organization different from others.
What are the terms on which Porter based his model for choosing competitive strategies? What are the three competitive strategies cited by Porter?
Porter frames the strategy analysis in terms of market scope of the product or service, and source of competitive advantage for the product or service. The three business-level strategies cited by Porter are: cost leadership, differentiation, and focus. A differentiation strategy seeks competitive advantage through uniqueness. A cost leadership strategy seeks competitive advantage by operating with lower costs than competitors. A focus strategy concentrates attention on a special market segment in the form of a niche customer group, geographical region, or product or service line.