STR 581: Ch 6: Strengthening a Company's Competitive Position

In a strategic alliance between companies, the decision-making process should ____

allow partners to keep pace with developments in the market

Contract-based outsourcing can introduce problems because ______.

1. a company may have a difficult time monitoring the work of the outside company 2. issues arising from delays and budget overruns may be difficult to resolve 3. the outside company may lack incentive to meet the needs of the outsourcing company

in order to make a backward vertical integration strategy profitable, a company must ____.

1. achieve the same economies of scale as suppliers 2. match suppliers' production efficiency and quality

In many cases, strategic alliances are preferable to vertical integration strategies, as well as horizontal mergers and acquisitions, because strategic alliances _____.

1. are more flexible and allow for swifter responses to changing market conditions 2. can lower investment costs by requiring partners to pool resources 3. can be deployed more rapidly in attempt to gain first mover advantages

On average, the number of strategic alliances increases by what percentage annually?

25%

A joint venture can be defined as ____.

a new corporate entity that is jointly owned by two or more companies that agree to share in the revenues, expenses, and control of the new company

The term "blue ocean" refers to a market space in which ____

an industry does not yet exist and the market space is untainted by competition.

What is an example of a strategically sound outsourcing relationship?

an industry leading show company outsources its IT operations to a leading technology firm

The new owners of a long-established clothing retailer have experience in garment manufacturing and as a result they decide to expand into that business. This type of business growth is called ____.

backward vertical integration

the new owners of a long established clothing retailer have experience in garment manufacturing and as a result they decided to expand into that business. This type of business growth is called ____.

backward vertical integration

If new infrastructure is required before buyer demand can surge, a company should _____.

be careful about allocating too many resources into being first in the market

Decisions regarding the scope of a company's operations ____

concern choices about which operations that company will conduct internally and which it will not

Decisions regarding the scope of a company's operations _______.

concern choices about which operations the company will conduct internally and which it will not

Outsourcing is a strategy that involves ______.

contracting out certain value chain activities that are normally performed in house to outside vendors

Which statement about establishing the technical standard in an industry is true?

establishing a technical stand is an experience-based advantage that can grow over time

Which statement about establishing the technical standard in a industry is true?

establishing a technical standard is an experience based advantage that can grow over time

What statement about winning standard wars among early movers is true?

establishing relationships with other participants in the sector can help a firm win a standard war

Combined companies may be able to reduce supply chain costs because _______.

expanded operating capacity may increase the company's bargaining power with suppliers

True or false: A company's strategic offensive is usually based on brand-name recognition.

false

True or false: for a company making a strategic move, being a fast follower or a late mover is always better in the long run that being a first mover.

false

True or false: interpersonal relationships are irrelevant to the success of strategic alliances.

false

In a winner take all type of market, _____

first mover advantages can insulate a company from competition

Expanding along the value chain into products and services that are closer to the end user is called ____.

forward vertical integration

in order to be successful, a preemptive strike by a company needs to ____

give the company a prime position in the market that rivals cannot easily bypass

Price cutting can be an effective strategy for companies that _____

have already achieved a cost advantage

Price cutting can be an effective strategy from companies that _____.

have already achieved a cost advantage

A blue ocean strategy is a strategy that seeks to gain a competitive advantage by ____

inventing a new segment of the market that makes existing competitors no longer relevant

Which statement about joint ventures is correct?

joint ventures are more durable but involve more risk than many other types of collaborative business arrangements

Which statement about strategic alliances in industries experiencing rapid technological advances is true?

many companies find strategic alliances an essential way to keep pace with technological change

Which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true?

matching a supplier's production efficiency often requires significant investment in research and development.

When buyer preferences shift, a vertically integrated company ____.

may have difficulty adjusting its product lines to meet new demand.

A firm with a vertical integration strategy that seeks full integration _____.

participates in all stages of the industry value chain system

A firm with vertical integration strategy that seeks full integration _____.

participates in all stages of the industry value-chain system

A vertically integrated firm ____

participates in multiple stages of an industry's value chain system

Adept followers have an opportunity to meet the achievement of industry pioneers at far lower costs when ____.

second movers can produce equal or better products than pioneers while avoiding the pioneer's costly mistakes

Cultural differences among companies in a strategic relationship _____

should be respected and treated sensitively if the partners hope to have a productive relationship

A merger can be defined as ___

the combining of two or more companies into a single corporate entity

A merger can be defined as ____.

the combining of two or more companies into a single corporate entity

A company's strategic offensive should be based on ____

the company's strengths as well as its rivals strengths and weaknesses

If the race to market leadership in a particular industry is a marathon, ______

there may be enough time for fast followers and late movers to catch up

When companies pursue operations that require new capabilities _____

they may find that the new operations require skills that the company lacks

When companies pursue operations that require new capabilities, ____

they may find that the new operations require skills that the company lacks

Companies that outsource strategically important operations run the risk of ____

weakening their ability to sustain their competitive advantage in areas vital to the company's success

Which two firms would be the best targets for an offensive strategic attack by a company?

1. regional firms with limited capabilities 2. firms in danger of going out of business

If the race to market leadership in a particular industry is a marathon, ____

there may be enough time for fast followers and late movers to catch up

In industries in which technological developments occur at a fast pace, a strategic alliance can benefit a company by _____.

1. speeding up the company's cycles of learning 2. granting the company quick access to the latest technological know-how

Which statements concerning strategic alliances are accurate?

1. strategic alliances are used by some companies to extend their scope of operations internationally 2. strategic alliances are used by some companies as a way of managing outsourcing

the best strategic offensives for companies involve which of the following?

1. striving to convert a competitive advantage into a sustainable advantage 2. overwhelming rivals with swift and decisive action

The best strategic offensives for companies involve which of the following?

1. striving to convert a competitive advantage into a sustainable advantage 2. overwhelming rivals with swift and decisive action

Lowering prices can be a successful competitive strategy for a company if _____

1. the company convinces buyers that its products are as good as its competitors' products 2. its competitors maintain product prices at higher levels

Vertically integrated companies may face challenges realizing economies of scale because ____.

1. the company is too small 2. their production levels often fall below the minimum efficient scale

What are recommended strategies for companies that manage a large number of strategic alliances?

1. to continue to seek promising new alliances 2. to break relationships that no longer serve a useful purpose 3. to restructure alliances to optimize collaborative effort

In industries with changing boundaries, a company may pursue an acquisition strategy in order to _____.

1. be prepared to respond to the various directions the industry might take 2. expand into new geographic regions 3. become more flexible in its capacity to respond to buyers' changing needs

In industries with changing boundaries, a company may pursue an acquisition strategy in order to ______.

1. become more flexible in its capacity to respond to buyers' changing needs 2. be prepared to respond to the various directions the industry might take 3. expand into new geographic regions

Which of the following are conditions in which first-mover advantages are most likely to arise?

1. being first in a new market builds strong brand loyalty and enhances a firm's reputation 2. Switching costs discourage a first mover's customers from seeking a different vendor

In which of the following ways can a firm pursue vertical integration?

1. building positions in selected stages of the value chain and avoiding participation in others 2. acquiring a company that performs activities further along the value chain, closer to the end user

Which of the following companies have used disruptive produce innovations to create new markets?

1. bumble 2. venmo

Outsourcing is a recommended strategy when an activity ____.

1. can be performed more efficiently by outside specialists 2. is not crucial to the company's ability to sustain its competitive advantage

Companies in successful business alliances understand that collaborative arrangements should be _____.

1. capable of responding to shifting market changes 2. flexible enough to keep pace with changing customer requirements

Guerrilla warfare tactic in business competition include which of the following?

1. catching rivals off guard with intense burst of promotional activity 2. launching special campaigns to weaken a rival that is undergoing a period of internal discord

What are examples of company decisions concerned with scope of the firm?

1. choosing to focus solely on sales rather than designing and marketing 2. choosing to remove leather goods from a ling of product offerings

A company that acquires another company in the same industry may be able to cut costs by ____.

1. combining and downsizing administrative activities 2. closing inefficient plants

What are reasons that mergers and acquisitions sometimes fail?

1. cost savings are less than anticipated 2. gains in competitive advantage materialize more slowly than was anticipated

Some companies have adopted forward vertical integration strategies to _____.

1. decrease dependence on sales agents, wholesalers, and retailers 2. facilitate the sale of overstocked and slow-moving items 3. supplement to their core product line with iconography and memorabilia

A company can achieve which of the following by signaling would-be business challengers that retaliation is likely in the event of any strategic attack?

1. dissuading challengers from attacking altogether 2. diverting challengers to less threatening competition

What are some of the negative effects that mergers and acquisitions can have on personnel?

1. employees may resist efforts to mesh the cultures of the two companies 2. difficulty coping with new management may lead to lower morale 3. managers may make mistakes when deciding which systems to integrate

What can lead to victory in a standard war among early movers?

1. employing penetration pricing 2. making use of fast-cycle product development capabilities 3. gaining the support of key customers and suppliers

Strategic alliances are more likely to succeed if partners _______

1. establish trust 2. make mutual commitments 3. protect themselves with safeguards

What are common objectives of merger and acquisition strategies?

1. expanding geographic coverage 2. extending business into new product categories 3. gaining quick access to new technologies

Which statement about strategic alliances are generally true?

1. financial responsibility is shared among all parties of the alliance 2. the alliances involve mutual dependence and shared risk 3. all parties of the alliance contribute resources

A merger or acquisition that extends business into new product categories _______.

1. helps a company fill gaps in its product line 2. can be more cost effective for a company Han developing the product on its own

The benefits of forward vertical integration include ____

1. improving a company's market visibility 2. giving manufacturers better access to end users 3. differentiating a company from its competitors

A company that expands its geographic coverage typically _____.

1. increases its bargaining power with suppliers and buyers 2. enhances its name recognition and brand awareness

Which statements are true concerning vertical scope?

1. it is the extent to which a firm engages in the activities that make up the industry's entire value chain system 2. it is defined by the range of activities that may extend from initial production to after sale customer service

Which statements are true concerning horizontal scope?

1. it is the range of product and service segments that a firm serves within its product and service market 2. it can be expanded through company mergers and acquisitions

Which statements about strategic alliances among large corporations is true?

1. large corporations can be well-serves by managing their strategic alliances like a portfolio 2. it is not uncommon for large corporations to have up to 50 strategic alliances

What are examples of ways that companies signal would be challengers that retaliation is likely?

1. maintaining cash reserves and marketable securities to func countermeasures 2. publicly announcing a commitment to maintaining market share

In order to make a backward vertical integration strategy profitable, a company must ____

1. match supplier' production efficiency and quality 2. achieve the same economies of scale as suppliers

When there are improvements in technology at the supply stage of the value chain, a vertically integrated company ____.

1. may be required to incur high costs for abandoning old technologies in an effort to keep pace with suppliers 2. may need to continue producing suboptimal products rather than upgrading its technology

When there are improvements in technology at the supply stage of the value chain, a vertically integrated company ____

1. may need to continue producing suboptimal products rather than upgrading its technology 2. may be required to incur high costs for abandoning old technologies in an effort to keep pace with suppliers.

What are examples of preemptive strikes?

1. obtaining the best retail location in a mall 2. entering into exclusive, long-term contracts with the best suppliers

What are typical obstacles that a company might create to deter the strategic offensive of a would-be challenger?

1. offering lower prices by maintaining a line-up of economy based prices 2. introducing new features and adding new models 3. lengthening warranties and offering free support services

The benefits of defensive strategies include which of the following?

1. protecting a firm's resources 2. strengthening. affirms position in the market

When a company considers whether to pursue an emerging market opportunity aggressively or cautiously, the company needs ____.

1. to determine whether the race to market leadership will be a marathon or a spring 2. to bear in mind that any first mover advantages can be fleeting

When a company considers whether to pursue an emerging market opportunity, aggressively or cautiously, the company needs _____.

1. to determine whether the race to market leadership will be a marathon or a sprint 2. to bear in mind that any first mover advantages can be fleeting

What are reasons for a company to favor internet retailing?

1. to lower distribution costs 2. to increase brand recognition 3. to lower costs for end users

A business guerrilla offensive is best suited for ___

small companies that lack the capacity to launch a full strategic offensive against better established rivals

Which statement concerning mergers and acquisitions is accurate?

the difference between a merger and an acquisition relates primarily to management control and financial arrangements

What is a sign that a leading firm may be vulnerable to an offensive strategic attack?

the firm's use of aging technology and outdated equipment

What would be an example of a firm pursuing vertical integration?

the owner of a poultry farm expanding into food distribution

A strategic alliance can be defined as a formal agreement between two or more separate companies in which ______.

the parties agree to work collaboratively toward one strategically relevant objective

The drawbacks of strategic alliances include the possibility that a company will ____

1. become too dependent on a partner 2. accidentally reveal knowledge that allows a partner to match core strengths 3. overestimate the potential for sustaining a positive relationship

Good partners for a strategic alliance should ____.

1. share the same goals for the relationship 2. hold compatible views about how the alliance should be managed 3. bring complementary strengths to the relationship

What are some reasons that companies adopt defensive strategies?

1. to minimize the impact of any competitive attack that occurs 2. to lower the risk of being attacked by competitors

Strategic alliances can be a viable alternative to ______.

1. vertical integration strategies 2. horizontal mergers and acquisitions 3. traditional price-oriented contracts

When should a company undertake a strategic offensive?

1. when the company has no option other than to try to lessen a strong rival's competitive advantage 2. when the company identifies a chance to improve its market share at a competitor's expense

In which situations do adept followers have an advantage over first movers?

1. when the first movers products do not perform well 2. when imitators can achieve the same benefits as pioneers with lower costs 3. when market uncertainties make it difficult to predict which products will succeed

Under which of the following circumstances might backward vertical integration lower costs?

1. when there are few suppliers in the market 2. when the item being supplied is a major component of the final product

Approximately what percentage of strategic business alliances fail each year?

60-70%

In a strategic alliance, a company's proprietary knowledge and trade secrets are most vulnerable when the partnership involves ______.

collaborative research and development

In some cases, backward vertical integration can increase efficiency by _____

coordinating production flows and preventing bottlenecks

In some cases, backward vertical integration can increase efficiency by _____.

coordinating production flows and preventing bottlenecks

A blue-ocean strategy is a strategy that seeks to gain a competitive advantage by _____

inventing a new segment of the market that makes existing competitors no longer relevant

The introduction of disruptive product innovations _____

is a risky business strategy that has the potential to earn a company a majority of the market share

When buyer preferences shift, a vertically integrated company _______

may have difficulty adjusting its product lines to meet new demand

Outsourcing typically _______ the scope of a business's operations.

narrows

A company that aggressively pursues an online sales strategy risks ____

threatening crucial relationships with distribution allies

A company that aggressively pursues an online sales strategy risks ______

threatening crucial relationships with distribution allies

What is the soundest approach for timing a company's offensive or defensive strategic moves?

to be aware of first-mover advantages and disadvantages

The defensive approach that companies use most frequently to defend their market position is _______.

to block avenues that competitors might use to launch a strategic offensive

True or false: strategic alliances are preferable to horizontal mergers and acquisitions in a fast-paced market with evolving technologies.

true