Strategic Management: Test 1 Study Guide, Ch. 1 Book Quiz, Ch. 2 Book Quiz, Ch. 3, ch 4, Chapter 5, Strategic Management Chapter 5

ability

relates to each firm's resources and the flexibility they provide.

competitive action

a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position.

competitive response

a strategic or tactical action the firm takes to counter the effects of a competitor's competitive action.

What is a competitor analysis? a. An analysis of companies with which a firm competes directly b. A robust analysis of one specific competitor c. An internal report of what a competitor may discover if the competitor analyzed the company d. A SWOT analysis of a competitor

a. An analysis of companies with which a firm competes directly

General Electric (GE), the multinational conglomerate, is researching rivals in the appliance industry by analyzing the financials, current product offerings, and strategies of competitors in order to gain insight as to how to gain a competitive advantage. Which of the following is GE performing? a. Competitor analysis b. Industry analysis c. External environmental analysis d. General analysis

a. Competitor analysis

A company is debating whether to enter a new industry. The first order of business is to conduct an analysis of the five forces. Why is this a crucial first step in the decision-making process of entering a new industry? a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail. b. If the barrier for entry is high, and suppliers and buyers have little bargaining power, the venture will most likely fail. c. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed. d. If the barrier for entry is high, and suppliers and buyers have strong bargaining positions, the venture will most likely succeed.

a. If the barrier for entry is low, and suppliers and buyers have strong bargaining positions, the venture will most likely fail.

competitive behavior

the set of competitive actions and responses a given firm takes to build or defend its competitive advantages and to improve its market position.

competitive dynamics

all competitive behavior--that is the total set of actions and responses taken by all firms competing within a market--is called

A business-level strategy is:

an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in a specific product market.

Competitors

are firms operating in the same market, offering similar products, and targeting similar customers

Which of the following capabilities meets the criteria for being a core competency, in that it is rare, valuable, costly to imitate, and nonsubstitutable?

b. A company history and brand

Which of the following would be considered a product market stakeholder? a. A private equity firm investing in a biomedical firm b. A local pipefitters union dealing with a plumbing contractor c. A member of an ownership family in a privately owned company d. A store manager of a retail chain

b. A local pipefitters union dealing with a plumbing contractor

You are starting a new business. Which of the following is the best source of information regarding gathering competitive intelligence in an ethical manner? a. State laws b. A professional association c. Employees d. Suppliers

b. A professional association

Which of the following could be a part of the analysis stage of the strategic management process? a. A mission and vision task force developing these foundational statements for the company b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers c. The collection of financial data used to track the success of the strategic plans the company is pursuing d. The selection of strategies the company will pursue to achieve its financial goals and satisfy its shareholders

b. A review of a company's competitive landscape, identifying competitors, naming their differentiations, and detailing a profile of those competitors' customers

Which of the following describes a company that has delivered above-average returns to its investors? a. A biotech firm that recently announced it has received FDA approval for its new orphan drug to treat a rare heart condition and will be able to sell the treatment for $10,000 per year per patient beginning in the fall b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets c. A retail company that announced it saw growth in same-store sales from last year to this year and will open 250 new stores to capitalize on its growing popularity d. An airline that reported weaker-than-projected earnings this year because of increased maintenance costs for its aging fleet of planes

b. A tool manufacturer that announced it will increase its dividend payment—the highest dividend amongst all of its industry competitors—for the upcoming quarter due to market share gains in overseas markets

Which of the following is NOT a concern of a competitor analysis? a. Information about what drives the competitor, as shown by its future objectives b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet c. Information about what the competitor is doing and can do, as revealed by its current strategy d. Intelligence about what the competitor believes about the industry, as shown by its assumptions

b. Data on what the competitor's available funds are for innovation, as shown by its balance sheet

d. competitive action.

Fast food chain, Bob's Bigger Burgers, has just launched a campaign to market its new pound and a half burger against its competitor, Lou's Burgers, who has previously sold the biggest burger at a pound and a quarter. Bob's Bigger Burger's strategic move against Lou's Burgers is a: a. competitive response. b. strategic response. c. tactical response. d. competitive action.

b. rapid and inexpensive

Fast-cycle markets are markets in which the firms' capabilities that contribute to competitive advantages aren't shielded from imitation and where imitation is often __________. a. slow and inexpensive b. rapid and inexpensive c. rapid and expensive d. slow and expensive

b. resource similarity.

FedEx and United Postal Service compete in many of the same markets and have similar types of truck and airplane fleets, similar levels of financial capital, and other similarities. These tangible and intangible resources between the two firms describes the: a. resource differentiation. b. resource similarity. c. market similarity. d. market differentiation.

competitors

Firms operating in the same market, offering similar products, and targeting similar customers are: a. allies. b. competitors. c. multimarket competitors. d. market commonality.

What are the different ways that companies can differentiate themselves? What are the key steps in developing a differentiation strategy?

Ways to differentiate: -products that have different, valued features that are sold at a premium price -differentiate the products along as many dimensions as possible. -less product similarity helps insulate company from competition with rivals. Differentiation strategy is an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them.

b. In slow-cycle markets, firms can shield themselves from imitation.

What is an advantage of being a part of a slow-cycle market as opposed to a fast-cycle market? a. In slow-cycle markets, firms must innovate rapidly in order to stay competitive. b. In slow-cycle markets, firms can shield themselves from imitation. c. In slow-cycle markets, firms can innovate at a slower pace, although it's often expensive. d. In slow-cycle markets, firms can innovate at a faster pace, and it's often inexpensive

c. A firm will not understand its competitor

What is the outcome of a firm not performing a competitor analysis? a. A firm will better understand their competitor b. A firm will be able to defend its competitive market position c. A firm will not understand its competitor d. A firm can find market commonalities

Which of the following statements regarding firms following a differentiation strategy is NOT true?

When a firm succeeds at differentiating its products, it acts as a magnet attracting potential new entrants into the market.

About six months ago, a mid-sized manufacturer of athletic shoes decided to pursue an integrated cost leadership/differentiation strategy. The company reduced its internal costs by consolidating the number of colors and variations it offers to customers, savings that the company passed on to consumers. At the same time, the research and development (R&D) team added a patented sole to all of its shoes. Which of the following represents the best argument for the company to continue pursuing its current business-level strategy?

"It's true we've seen our net sales decline, but our gross profit has increased and our volumes are up year-over-year. Our patent for the sole has been approved, and the legal department says we're good to go on our advertising claims about the new sole."

reputation

"the positive or negative attribute ascribed by one rival to another based on past competitive behavior."

Drivers of Competitive Behavior

-Awareness, motivation, and ability -influenced by market commonality and resource similarity

What are the different forms of imitation?

-Direct imitation -bells and whistles -additions to the product/service -stripping -ex. online banking -substitution -ex. kodak used to dominate the film/photography firm. competitors were polaroid and they gave instant photos. Kodak's response to this was quick service system, getting photos developed while you're shopping.

You should know the key elements of the Resource Based Model. What are resources, capabilities and core competencies?

-Resources are inputs to the firm's production process. -Capabilities are tangible and intangible resources combines. They are used to complete the organizational tasks required to produce, distribute, and service the goods and services the firm provides to customers for the purpose of creating value for them. -Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.

Know the difference between tangible and intangible resources.

-Tangible resources are assets that can be observed and quantified. -Intangible resources are assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate.

What are the criticisms of the IO model?

-The external environment imposes pressures and constraints that determine strategic choices -Similarity in strategically relevant resources causes competitors to pursue similar strategies -Resource differences among competitors are short-lived due to resource mobility across firms -Strategic decision makers are rational and engage in profit-maximizing behaviors

What are the components of the General Environment?

-demographic -economic -political/legal -sociocultural -technological -global -sustainable physical environment

You should know what are the building blocks of a business level strategy (aka generic strategy): Which customers we will serve? What needs of the target customers will be served? And how will those needs be served?

-look outside to identify threats and opportunities -look inside at resources, capabilities, and practices -consider strategies for addressing threats and opportunities -being a good "fit" among strategy-supporting activities -create alignment

Which of the following is an example of a subscription business model?

. We Craft Box, which delivers monthly craft supplies and instructions for children for about $25 per month

Many companies pursue an integrated cost leadership/differentiation strategy, working to lower cost structures while also enhancing their products and services. To successfully pursue this strategy, companies could:

. invest in developing total quality management (TQM) systems and improving marketing effectiveness.

b. slow-cycle market.

A pharmaceutical company has a patented antidepressant that has few side effects, and has dominated the market. The company has slowly been conducting research and development to improve this drug. The slow nature of drug development categorizes the pharmaceutical company as part of a: a. fast-cycle market. b. slow-cycle market. c. standard-cycle market. d. no-cycle market.

c. Ability

A new family-owned organic grocer has been successful since its grand opening nearly a year ago. With little competition in the area, the organic grocery has been particularly successful in serving organic food consumers. The grocer has just found out that Whole Foods will be starting construction on a new store nearby. The grocery feels that its family ownership and locally grown foods offerings give it a position in which to take action against the developing Whole Foods. However, as a small business, the organic grocery does not have the financial means to launch a rivalry against Whole Foods. In this instance, the organic grocery is missing which driver of competitive behavior? a. Awareness b. Motivation c. Ability d. The grocery is not missing any driver of competitive behavior

Which of the following might be an alternative definition of business-level strategy?

A plan for how the company will compete in its industry against its rivals to achieve a competitive advantage

How is a business model different from a business-level strategy?

A business model describes what a firm does while a business-level strategy describes how it does it.

c. competitive action.

A firm seeking to improve its market position or proactively defend its competitive advantage would be engaging in a: a. competitive response. b. strategic action. c. competitive action. d. tactical action.

c. second mover.

A firm that responds to the first mover's competitive action, typically though imitation, is called a: a. first mover. b. late mover. c. second mover. d. last mover.

Which of the following scenarios represents a company that has selected a differentiation strategy?

A grocery store chain is converting its local neighborhood stores to warehouses. The chain eliminates shopping in the aisles and instead has customers select items online or through an app. The customers can then pick up their items in a drive-through without having to leave their vehicles.

What are strategic groups? How are they useful?

A strategic group is a set of firms emphasizing similar strategic dimensions and using a similar strategy. The notion of strategic groups can be useful for analyzing an industry's competitive structure. Such analyses can be helpful in diagnosing competition, positioning, and the profitability of firms competing within an industry.

d. competitive action.

A strategic response to engaging in competitive rivalry is called a: a. competitive response. b. strategic action. c. tactical action. d. competitive action

You should know what is meant by Value Chain Analysis, what are its key elements, and how it is related to strategic activities like outsourcing.

A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. Key elements: -supply chain management -operations -distribution -marketing (including sales) -follow up service When the firm cannot create value in either a value chain activity or a support function, outsourcing is considered.

Make sure you know what is meant by above average returns.

Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk

What is an industry? What are industry boundaries? Why is defining them important? How should strategic managers deal with changing industry boundaries?

An industry is a group of firms producing products that are close substitutes. -industry boundaries can change rapidly. When you are examining your industry, be conscious of this. It helps executives determine the arena in which their firm is competing. A definition of industry boundaries focuses attention on the firm's competitors. Defining industry boundaries enables the firm to identify its competitors and producers of substitute products. A definition of industry boundaries helps executives determine key factors for success. A definition of industry boundaries gives executives another basis on which to evaluate their firm's goals. -They should be willing to change their perception of industry and have multiple perceptions of the industry.

d. Fast-cycle market

Apple quickly launches their next wave of innovative iPhones in order to keep up with competitors like Samsung and Microsoft. Imitation is rapid and inexpensive in the smartphone industry. Apple is a part of what kind of market? a. Standard-cycle market b. Slow-cycle market c. Medium-cycle market d. Fast-cycle market

A software firm has chosen to implement a differentiation strategy, offering its product in a Software as a Service (SaaS) platform with a monthly subscription. Most of the firm's competitors are selling their products as a one-time purchase. Which of the following represents the greatest risk to the strategy?

An established competitor has announced it will begin offering its programs in a SaaS model next quarter.

Among firms utilizing a differentiation strategy, which of the following best exemplifies the typical relationship between consumers' brand loyalty and price sensitivity, and the effect it has on a brand's rivalry with competitors?

Apple's customers tend to be extremely brand loyal and are thus more tolerant of price increases. However, as Samsung creates increasingly similar products, Apple will have to respond by improving the perceived value of its products.

Michelle opens a residential heating company dedicated to geothermal heating systems. She is pursuing a focused differentiation strategy, serving the needs of customers who are looking for environmentally friendly solutions to heat and cool their homes. Which of the following represents a risk to the company because Michelle is using a focus strategy rather than a broad strategy?

As renewable energy continues to gain popularity, mainstream residential heating and cooling companies that are larger and have more resources decide to offer more geothermal options.

You should know why competitive advantage may (or may not) diminish over time?

As the market changes, if you don't change your strategy, something that was a competitive advantage may not stay one.

d. competitive actions and responses.

Awareness affects the extent to which the firm understands the consequences of its: a. market commonality and resource similarity. b. competitive rivalry and dynamics. c. competitive motivation and ability. d. competitive actions and responses.

a. competitive behavior.

Awareness, motivation, and ability are drivers of: a. competitive behavior. b. competitive analysis. c. competitive rivalry. d. competitive dynamics

Difference between corporate and business strategy

Business-level strategy: focuses on how to attain and satisfy customers, offer goods and services that meet their needs, and increase operating profits. To do this, business-level strategy focuses on positioning itself against competitors and staying up to date on market trends and technology changes. Corporate strategy: seeks to make a set of business units more than the sum of its parts. It can do this by developing relationships between business units, which allows them to share resources and avoid duplication of efforts.

c. competitive behavior.

By introducing Android Pay in response to Apple Pay, Google hopes to build and defend its competitive advantages and improve its market position through: a. competitive rivalry. b. competitive dynamics. c. competitive behavior. d. competitor analysis.

b. Competitor will be less likely to respond because of BAAS's risky behavior.

Car maker, BAAS, is known for its risky competitive behavior, including drastically changing its prices over short time spans. Based on this information, what is the most likely competitor response? a. Competitor will be more likely to respond because of BAAS's risky behavior. b. Competitor will be less likely to respond because of BAAS's risky behavior. c. Competitor will be more likely to respond because of BAAS' stability in the market. d. Competitor will be less likely to respond because of BAAS' stability in the market.

What does competitor analysis mean? What are its key elements?

Competitor analysis focuses on each company against which a firm competes directly. future objectives + current strategy + assumptions + strengths and weaknesses = response profile for each competitor.

Which of the following represents a risk for companies pursuing a differentiation strategy?

Competitors' imitation of a product at a lower price causing customers to purchase their product

Which of the following represents a risk for companies pursuing a cost leadership strategy?

Competitors' innovations resulting in their ability to drive costs lower

You should know and be able to describe the different generic business level strategies? Cost leadership, differentiation, focused low cost, focused differentiation, stuck in the middle, and integrated cost differentiation strategies. What are the risks of these strategies?

Cost Leadership Risks: -Loss of competitive advantage to new technologies -too much focus on cost reductions may occur at expense of customers' perceptions of differentiation -competitors may successfully imitate the cost leader's strategy Focus Risks: -a focusing firm may be "out-focused" by its competitors -a large competitor might set its sights on a firm's niche market -customer preferences in a niche market may change to more closely resemble those of a broader market Differentiation Risks: -The price differential between the differentiators' product and the cost leader's product becomes too larger -differentiation ceases to provide value for what the customer is willing to pay -experience narrows customers' perceptions of the value and differentiated features -counterfeit goods replicate the differentiated features of the firm's products

How do the different strategies help companies deal with adverse conditions such as high bargaining power of suppliers and other factors discussed in the text?

Cost Leadership Strategy: -a cost leader generally operates with margins greater than the margins earned by its competitors, thus making it possible for the cost leader to absorb its suppliers' price increases. -to reduce costs, some firms may outsource an entire function to a single or a small number of suppliers. Differentiation Strategy: -higher costs from suppliers can be: -absorbed by high margins earned by the firm -passed on to customers through price increases Focus Strategy: -A focus strategy leads to success when the firm: -serves a segment well whose unique needs are so specialized that broad-based competitors choose not to serve that segment -creates value for a segment that exceeds the value created by industry-wide competitors. Integrated Cost Leadership/ Differentiation Strategy: -Flexibility is required to learn how to use primary value chain activities and support functions in ways to produce differentiated products at relatively low costs. (three sources): -flexible manufacturing systems -information networks -total quality management systems Stuck in the middle: -compete at a disadvantage -are unable to earn more than average returns

What are the key steps and requirements in implementing cost leadership and differentiation strategies?

Cost Leadership key steps: -relatively standardized products -features acceptable to many customers -lowest competitive price Cost Leadership requirements: -constant effort to reduce costs through: -building efficient scale facilities -tight control of production costs and overhead -minimizing costs of sales, R&D and service -"state of the art" manufacturing facilities -monitoring costs of activities provided by outsiders -simplification of processes Differentiation Key Steps: -value provided by unique feature and value characteristics -command premium price -high customer service -superior quality -prestige or exclusivity -rapid innovation Differentiation Requirements: -constant efforts to differentiate products through: -developing new systems and processes -shaping perceptions through advertising -quality focus -capability in R&D -maximize human resource contributions through low turnover and high motivation

An oil company develops an innovative refining process that reduces the time required to produce gasoline by 25 percent. The company has identified its unique process as a core competency. Which of the following strategies would be most beneficial for the company to pursue?

Cost leadership

Be sure to know the difference between cost and price from a strategic management perspective.

Cost- the amount of money that a firm pays to deliver products or service to the customer. Price- what the customer pays to obtain the product/service

Dan Jones, the owner of Harbor Home Remodeling, has been researching demographic information on homeowners in his area. He has learned that younger people are moving out of the region—a trend that's expected to continue—while middle-aged and older people are remaining in their homes. In order to differentiate his firm and better compete against rival, general remodeling firms in this environment, which strategy would best enable Dan to fulfill his purpose?

Dan should "perform activities differently" and pursue a focused differentiation strategy. He could specialize in remodeling homes to meet the unique needs of aging people, such as installing wheelchair ramps and low-threshold showers.

You should know what is meant by entry tickets and core rigidities? Why are they important for strategic managers?

Entry tickets: valuable and non-substitutable capabilities -refers to those competencies that a firm must necessarily have to survive in the industry. For a firm to have at least average returns it must possess all entry tickets relevant to an industry. Core competencies: -a large set of competencies that firms may possess (they are unique, valuable, and imperfectly imitable.) -No one core competency can be possessed by all firms. -for a firm to have super-normal profits, a firm must possess some core competencies. Core rigidities: former core competencies that now generate inertia and stifle innovation. These things are important for strategic managers because they need to know all of these to create the proper strategy for their company.

a. market dependence.

FreeForAll is an online retailer for graphic tees and hats. Previously, it was the only mass retailer for such goods. Hatz, an in-store retailer that sells predominantly baseball hats, has just launched an ecommerce site that also features tee-shirts for sale. FreeForAll has decided to respond quickly to Hatz's competitive action. This decision is based on FreeForAll's: a. market dependence. b. competitive dynamics. c. reputation. d. market independence.

The global economy and technological changes. What are they? How are they altering the strategic landscapes? What is technological diffusion?

Global economy is one in which goods, services, people, skills, and ideas move freely across geographic borders. -it significantly expands and complicates a firm's competitive environment. Technological changes come in three categories: -technology diffusion and disruptive technologies -the information age -increasing knowledge intensity Technology diffusion is the speed at which new technologies become available to firms and when firms choose to adopt them.

c. competitor analysis.

If two well-known shoe stores, Famous Footwear and Journey's, compared their resource similarities and market commonalities, they would find that, aside from competing in the same industry and carrying some of the same shoe brands, they target very different markets. In using market commonalities and resource similarities, either Famous Footwear or Journey's can conduct a: a. SWOT analysis. b. competitive dynamics. c. competitor analysis. d. compare and contrast exercise.

What is knowledge intensity? How has it affected businesses and decision making in businesses?

Knowledge is the basis of technology and its application. In the competitive landscape of the twenty-first century, knowledge is a critical organizational resource and an increasingly valuable source of competitive advantage. -To be strategically flexible on a continuing basis and to gain the competitive benefits of such flexibility, a firm has to develop the capacity to learn. -must be integrated into the organization to create capabilities and the applied to gain a competitive advantage

d. Awareness, motivation, ability

Prioritize the three drivers of competitive action ranking their importance from least to most important. a. Ability, motivation, awareness b. Awareness, ability, motivation c. Ability, awareness, motivation d. Awareness, motivation, ability

d. dynamics

One constant improvement among smartphones of all brands is camera quality. As soon as Samsung, Google, or Apple introduces an updated phone, the others respond with equal or better quality in their next update. These competitive moves can be encompassed as the competitive _______________ of that market. a. rivalry b. analysis c. behavior d. dynamics

How are resources, capabilities, and core competencies related to each other? How does the VRIO framework apply to them?

Resources are combined to make capabilities. Those capabilities serve as a competitive advantage, which are called core competencies. -Valuable capabilities allow the firm to exploit opportunities or neutralize threats in its external environment -Rare capabilities are capabilities that few, if any, competitors possess -Costly to imitate capabilities are capabilities that other firms cannot easily develop -Nonsubstitutable capabilities are capabilities that do not have strategic equivalents.

An industry-leading technology firm utilizing a differentiation strategy has decided to increase prices on its patented product to bolster profit margins and deliver a higher return to investors. Consider the impact of this decision in light of the forces of competition. Which of the following situations should the firm prioritize?

Rivalry with existing competitors

d. competitor analysis.

Rumor has it a new restaurant is coming to town called Italia Noodles. However, the owners are waiting to compare market commonalities and resource similarities to other local Italian restaurants. Italia Noodles is conducting a: a. tactical action plan. b. competitive action. c. strategic action. d. competitor analysis.

Which of the following strategies could be implemented to improve a company's richness in its customer relationships?

Satisfaction surveys following the arrival of a product

a. markets in which the firm's competitive advantage is shielded from imitation, commonly for long periods of time, and where imitation is costly.

Slow-cycle markets are: a. markets in which the firm's competitive advantage is shielded from imitation, commonly for long periods of time, and where imitation is costly. b. markets in which the firm's capabilities that contribute to its competitive advantages aren't shielded from imitation and where imitation is often rapid and inexpensive. c. markets in which the firm's competitive advantages are partially shielded from imitation, and imitation is moderately costly. d. markets in which the firm's competitive advantage is shielded from imitation, commonly for short periods of time, and where imitation is cheap.

What are stakeholders? Why are they important? What role do they play in strategic management?

Stakeholders are individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance. Stakeholders continue to support an organization when its performance meets or exceeds their expectations. Also, research suggests that firms that effectively manage stakeholder relationships outperform those that do not. Stakeholder relationships and the firm's overall reputation among stakeholders can therefore be a source of competitive advantage.

c. markets in which the firm's competitive advantages are partially shielded from imitation, and imitation is moderately costly.

Standard-cycle markets are: a. markets in which the firm's competitive advantages are shielded from imitation, commonly for long periods of time, and where imitation is costly. b. markets in which the firm's capabilities, which contribute to its competitive advantages, aren't shielded from imitation, and where imitation is often rapid and inexpensive. c. markets in which the firm's competitive advantages are partially shielded from imitation, and imitation is moderately costly. d. markets in which the firm's competitive advantages are shielded from imitation, commonly for short periods of time, and where imitation is cheap.

What are strategic leaders? What is their role?

Strategic leaders are people located in different areas and levels of the firm using the strategic management process to select actions that help the firm achieve its vision and fulfill its mission -help the firm create value for all stakeholder groups

A construction company is pursuing a focused differentiation strategy, and after reviewing its core competencies, the leaders have decided to specialize in hospital construction. Which of the following is an example of how that strategy is addressing the bargaining power of buyers (customers)?

The company participates in competitive bidding processes, and despite often submitting a higher bid than competitors, it is awarded the job based on its expertise.

What is strategy and what are its characteristics?

Strategy- an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. -indicates what the firm will and will not do. Strategic Management Process: 1. Analyze -Analyze its external environment and internal organization to determine its resources, capabilities, and core-competencies- on which its strategy likely will be based. 2. Strategy -With the information gained from external and internal analyses, the firm develops its vision and mission and formulates one or more strategies. 3. Performance -To implement its strategies, the firm takes actions to enact each strategy with the intent of achieving strategic competitiveness and above-average returns.

Research indicates that a competitive advantage in logistics is a primary strategy that creates the most value for a cost leadership strategy. Which of the following value-creating activities should be a focus for a company pursuing a cost leadership strategy?

Supply-chain management

Know the key elements of the IO Model. (Industry definitions, General environment, and 5 forces model.)

The general environment focuses on environmental trends and their implications.: -Demographic -Economic -Political/legal -Sociocultural -Technological -Global -Sustainable Physical Environment The Industry Environment focuses on the factors and conditions influencing an industry's profitability potential.: -The threat of new entrants -The power of suppliers -The power of buyers -The threat of product substitutes -The intensity of rivalry among competing firms (Five forces model)

c. organization's size.

The likelihood of a firm taking competitive action is affected by the: a. organization's structure. b. organization's management. c. organization's size. d. organization's industry.

a. market commonality.

The number of markets with which a firm and a competitor are jointly involved, and the degree of importance of the individual markets to each is referred to as: a. market commonality. b. market analysis. c. resource similarity. d. market differentiation.

c. competitive rivalry.

The ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position is a: a. competitive behavior. b. competitive dynamics. c. competitive rivalry. d. multimarket competition.

You should know the concepts of reach, richness, and affiliation.

The reach dimension of relationships with customers is concerned with the firm's access and connection to customers. Richness, the second dimension of firms relationships with customers, is concerned with the depth and detail of the two-way flow of information between the firm and the customer. Affiliation, the third dimension, is concerned with facilitating useful interactions with customers.

Know the Five Forces Model. What are its key objectives? What factors affect the intensity of each force?

To study an industry, the firm examines five forces that affect the ability of all firms to operate profitably within a given industry. 1. threat of new entrants: -economies of scale -product differentiation -capital requirements -switching costs -access to distribution channels -cost disadvantages independent of scale -government policy 2. Bargaining Power of Suppliers: -supplier industry is dominated by a few firms -suppliers' products have few substitutes -buyer is not an important customer to supplier -suppliers' product is an important input to buyers' product -suppliers' products are differentiated -suppliers' products have high switching costs -supplier poses credible threat of forward integration. 3. Bargaining Power of Buyers: -buyers are concentrated or purchases are larger relative to seller's sales -purchase accounts for a significant fraction of supplier's sales -products are undifferentiated -buyers face few switching costs -buyers' industry earns low profits -buyer presents a credit threat of backward integration -product unimportant to quality -buyer has full information 4. Threat of Substitute Products: -products with improving price/performance tradeoffs relative to present industry products 5. Intensity of Rivalry among Competitors: -numerous or equally balanced competitors -slow growth industry -high fixed costs -high storage costs -lack of differentiation or switching costs -capacity added in large increments -diverse competitors -high strategic stakes -high exit barriers

a. Relatively easy to implement and reverse

Which characteristic best describes tactical actions? a. Relatively easy to implement and reverse b. Involves signification resources c. Difficult to implement and reverse d. Counters the effects of a competitor's actions

c. The firm's market position becomes easier to defend.

Which is not a reason for a firm to respond to a competitor's action? a. The action leads to better use of the competitor's capabilities to develop a stronger competitor advantage or an improvement in its market position. b. The action damages the firm's ability to use its core competencies to create or maintain an advantage. c. The firm's market position becomes easier to defend. d. The firm's market position becomes harder to defend.

c. Both compete in the personal computer, tablet, and smartphone industries

Which of these represent a scenario in which Apple and Google participate in multimarket competition with one another? a. Google operates a search engine and Apple offers a television streaming service b. Google offers Glass and a self-driving vehicle c. Both compete in the personal computer, tablet, and smartphone industries d. Each participate in unrelated markets

Often a company's business-level strategy can be easily identified by reviewing its marketing materials. Consider the marketing slogans of the following companies and identify which one is pursuing a business-level strategy of differentiation.

Whole Foods - America's Healthiest Grocery Store

a. FreeForAll's profits depend on holding the majority of the ecommerce hat and tee-shirt market.

Why does it make sense for ecommerce-based FreeForAll to competitively respond after brick-and-mortar based Hatz enters the ecommerce market with the same product offerings? a. FreeForAll's profits depend on holding the majority of the ecommerce hat and tee-shirt market. b. Hatz's profits depend on holding the majority of the ecommerce hat and tee-shirt market. c. FreeForAll's profits depend on its brick-and-mortar locations in the hat and tee-shirt market. d. Hatz's profits depend on its brick-and-mortar locations in the hat and tee-shirt market.

A cost leadership strategy is one in which:

a company uses process innovations, such as advanced production or distribution methods, to operate efficiently.

late mover

a firm that responds to a competitive action a significant amount of time after the first mover's action and the second mover's response.

first mover

a firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position. -emphasize R&D as a path to develop innovative goods and services -can gain customer loyalty and market share

strategic action or strategic response

a market-based move that involves a significant commitment of organization resources and is difficult to implement and reverse.

tactical action or tactical response

a market-based move that is taken to fine-tune a strategy; it involves fewer resources and is relatively easy to implement and reverse.

Which of the following describes the relationship between Intel, which makes computer processors, and Microsoft, a leading desktop software company? a. Intel and Microsoft are complementors. b. Intel and Microsoft are competitors. c. Intel is a supplier to Microsoft. d. Intel is a customer of Microsoft

a. Intel and Microsoft are complementors.

Procter & Gamble (P&G) is a consumer products company that is consistently implementing scanning systems of the environment. The company wants to identify early signals of environmental changes and trends. P&G's competitors also frequently utilize scanning systems but are not as competitive as P&G. Which of the following could be the reason for P&G's competitiveness? a. P&G takes quick action on ambiguous, incomplete, or unconnected data. b. The competitors are less concerned with competitive advantages. c. P&G's reports are more robust and contain insider information. d. The competitors are not as educated as P&G's executives

a. P&G takes quick action on ambiguous, incomplete, or unconnected data.

Product market stakeholders often have very different priorities, but each can exert power and influence over a company. Which of the following correctly describes a way that a product market stakeholder exerted its power to the potential detriment of a company? a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds. b. During the Great Recession, the United Auto Workers (UAW) union agreed to a pension restructuring with the three big U.S. car manufacturers. c. AIG's shareholders sued the U.S. government, arguing that the bailout the company received wasn't beneficial enough to financial investors. d. McDonald's announced wage increases for employees at its corporate-owned stores after months of protests by employees.

a. Protesters swarmed and picketed Hobby Lobby after it won a U.S. Supreme Court decision allowing it an exemption from covering employees' contraceptives on religious grounds.

A company has just invented a piece of equipment that uses a camera to ensure that drivers do not leave a child or pet unattended in the vehicle. This new product falls under which of the following segments of the general environment? a. Technological b. Political/legal c. Global d. Sociocultural

a. Technological

What is the most likely outcome for a company if the executives never analyze competitors' possible reactions to competitive actions the firm takes? a. The company will most likely not be able to compete successfully within the industry because competitors might neutralize its competitive advantage. b. The company will most likely not be able to compete successfully within the industry due to unlawful actions that it was unaware of. c. The company will still be able to compete successfully within the industry as long as it has an efficient corporate structure. d. The company will still be able to compete successfully within the industry if it has effective marketing.

a. The company will most likely not be able to compete successfully within the industry because competitors might neutralize its competitive advantage.

Value is measured by:

a. a product's performance characteristics and by its attributes for which customers are willing to pay.

Strategic groups exist because: a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies. b. government regulators have different rules for companies based on the size of the company, geographic headquarters, and number of employees. c. customers want variety in the products and services they select, and different brands can serve customers' needs differently. d. industries are one-dimensional, and all businesses within an industry utilize the same resources and same strategies to achieve their goals.

a. companies within the same industry may position themselves differently regarding distribution channels, market segments, and other differentiators, which affects their strategies.

Organizational culture is the: a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business. b. structure of a company's organizational chart of strategic leaders, including their roles and responsibilities. c. attitude of a company's owners or shareholders. d. policies and procedures detailed in the company's employee handbook.

a. complex set of ideologies, symbols, and core values that individuals throughout the firm share and that influence how the firm conducts business.

A company is analyzing its value chain to discover its value-creating activities. While formulating its strategy, the firm will:

a. consider the operational functions and support functions to determine which activities contribute the greatest value in the product or service being sold to customers.

The strategic management process is the: a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns. b. analysis of the firm's external environment and internal organization to identify external opportunities and threats. c. utilization of the resource-based model of above-average returns to identify the internal resources a company should leverage to achieve strategic competitiveness. d. set of capabilities firms use to respond to various demands and opportunities existing in today's dynamic and uncertain competitive environment.

a. full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns.

Logan is an entrepreneur and president of his own company that makes a new software product that manages benefits administration for large multinational corporations. His startup company grew quickly to a team of about 25. A new federal law recently passed by Congress will cause small-business owners to invest in software like his to manage employee health care. Logan announces that the company will be investing in training for employees to better understand small-business owners and research and development (R&D) to create a small-business version of the software. This is an example of: a. having a strong strategic orientation and promoting innovation as a strategic leader. b. utilizing the industrial organization (I/O) model of above-average returns to determine the strategic direction of the firm. c. answering to demands made by capital market stakeholders for greater profitability. d. revising a company's vision statement to reflect changes in the competitive environment.

a. having a strong strategic orientation and promoting innovation as a strategic leader.

A resource or capability can be classified as a core competency that can be a source for a sustainable competitive advantage if:

a. it is different and better than the way a competitor is executing the same capability.

The industrial organization (I/O) model of above-average returns: a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns. b. concentrates on the unique resources and capabilities of a firm to direct its strategic management process. c. is a new approach to strategic management that emphasizes technological advancement. d. is critical to competing in the global economy and the information age because of its emphasis on organizational development.

a. puts emphasis on the external environment, which plays a role in determining a company's ability to achieve above-average returns.

A company owns a patent, with six more years of protection, on a prescription medication that is used by people around the world. This resource is:

a. rare and valuable.

Capital market stakeholders are most satisfied when a company's: a. returns align with the amount of risk they incurred by investing in a company or lending the company money. b. product market stakeholders are dissatisfied. c. leadership team is earning performance-based compensation. d. employees have a low turnover rate and receive salaries that are higher than the labor market.

a. returns align with the amount of risk they incurred by investing in a company or lending the company money.

Identifying internal strengths and weaknesses is important because:

a. strategies are more successful when they are aligned with a company's resources, capabilities, and core competencies.

A core rigidity is:

a. when a resource becomes an obstacle, generating inertia and stifling innovation, often because of conditions in the external environment.

A nonprofit organization is focused on providing mental health services to the homeless in its geographic area. It serves people by ensuring they receive the public assistance they are eligible for and then connects them with care providers who have expertise working with transient patients. The company's primary expenses are the salary and benefits for its staff of social workers, and it receives government funding to cover those. However, the organization does not have enough people to fill its open positions and has a waiting list of homeless people in need of case workers. Which of these represents a weakness for the nonprofit organization?

b. Human Resources

Which of the following is an element of the economic segment? a. Income distribution b. Interest rates c. Age structure d. Ethnic mix

b. Interest rates

Marquis is the international operations manager for an athletic clothing line. As part of his responsibilities, he regularly tours the factories of the company's suppliers. He recently took a tour of one of the most efficient plants that delivers low-cost clothing. This gives his company a greater profit margin. However, on the tour, he noticed an 8-year-old child operating one of the machines. Which of the following best describes how Marquis should report back to his CEO about the plant tour? a. Marquis should present a glowing recommendation for the supplier based on its financial performance and ability to help the company deliver above-average returns through higher profitability. b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values. c. Marquis should assume that the CEO is aware of the child labor practices at the supplier because the two companies have done business together for several decades. His report should focus on the operational improvements at the plant. d. Marquis should quit. He can't work for a company that employs child labor in any way. He should contact the media immediately after he leaves the company and tell them the whole story.

b. Marquis should bring this issue to the attention of the CEO and other top leadership immediately. He has a personal, ethical objection to child labor and believes that it is also inconsistent with the company's core values.

TaylorTech, a high-quality metals finishing company, is struggling with its margins. TaylorTech has raw materials delivered to its foundry in Pittsburgh, where the company melts the metals into castings. The firm then polishes them as a value-added process before selling the custom castings to customers. Its unique process is rare in the United States, is very secretive, and results in a more efficient cast that commands a premium price. Unfortunately, the casting process is becoming more expensive due to increased wage pressure from the workers specializing in casting. With these issues, TaylorTech has to make a decision. Which is the most viable option for TaylorTech to increase its margins?

b. Outsourcing of the casting process

A local community arts nonprofit organization is seeking to expand its programming and is considering putting just one new program in place this year. It may choose painting workshops for people with disabilities, summer camps for young children, a musical performing arts series for skilled musicians, or classes for seniors. The organization's most committed volunteer is a kindergarten teacher who has offered to be the leader of whichever new program the organization implements. If the nonprofit is utilizing the resource-based model of above-average returns, in which of the following ways should it expand its programming? a. Painting workshops for people with disabilities because they are not currently being offered by any other organizations in the community b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage c. A musical performing arts series for skilled musicians because it has the widest appeal in the community d. Classes for seniors because they can be hosted during the day and have good attendance among those who are retired

b. Summer camps for young children because the organization should use the knowledge of its passionate volunteer to its greatest advantage

Which of these might be a definition for a value-generating activity?

b. The core competencies that a company holds that make it possible for it to serve customers in a different way from its competitors

The country's largest landscape company is the result of a merger between two multistate firms, Brickman Group and ValleyCrest. Now called BrightView, the $2 billion firm was created in 2015. The company is operating in a fragmented industry dominated by small, local businesses. Which of the following identifies a relevant competitive force and a way the company might leverage it? a. Bargaining Power of Buyers: BrightView can expect customers to purchase from it because of brand loyalty. b. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs. c. Bargaining Power of Suppliers: BrightView will have difficulty leaving the landscape industry because of its investment in this merger and the cost of all of the landscape equipment included among both companies' assets. d. Complementors: BrightView will need to collaborate with other companies to develop outdoor products because there are not enough complementary products in the marketplace to make homeowners value their landscaping.

b. Threat of New Entrants: BrightView may be able to lessen the impact of this force in a low-barrier industry through economies of scale, specifically discounts on bulk purchases of raw material inputs.

Cell phones and digital music files are examples of: a. hypercompetition. b. disruptive technologies. c. knowledge. d. core competencies.

b. disruptive technologies.

An assumption of the industrial organization (I/O) model of above-average returns that supports the need for a firm to find the most attractive industry in which to compete is that: a. the external environment imposes pressures and constraints that determine the strategies that would result in above-average returns. b. firms possess the same types of resources with value and those resources are mobile across companies. c. differences in resources and capabilities are the basis of competitive advantage. d. organizational decision makers are rational individuals who are committed to acting in the firm's best interests, as shown by their profit-maximizing behaviors.

b. firms possess the same types of resources with value and those resources are mobile across companies.

Firms achieve strategic competitiveness by: a. being the first to try a new business strategy. b. formulating and implementing a value-creating strategy. c. creating a vision for a company. d. starting a new company.

b. formulating and implementing a value-creating strategy.

The _____ environment is the set of factors that directly influences a firm and its competitive actions and responses. a. internal b. industry c. economic d. competitor

b. industry

A capability is nonsubstitutable when:

b. it does not have strategic equivalents.

A lawyer has grown his law firm, gaining new clients in two diverse areas - estate law and immigration law. He's not sure which specialty will become his focus in the long run. At the same time, he believes he has enough work to support hiring a paralegal. However, he is having trouble hiring a paralegal who can manage both types of clients. He was able to find a freelance paralegal referral service that connects lawyers to paralegals who have experience in a variety of specialties. He might consider outsourcing through the referral service because:

b. it provides him with the flexibility to gain capabilities to serve both types of clients without making a long-term investment.

One example of a tangible resource might be a:

b. network of distribution centers in strategic locations around the world.

An internal analysis is important because:

b. not all strategies will work for all firms; successful strategies must be aligned with a company's strengths.

A telecommunications company is impacted by government regulations of the wireless spectrum, cell tower locations, and Internet accessibility. The company decides to hire a lobbying firm to represent its interests with the U.S. government, specifically the FCC, FTC, and Congress. This is an example of a company dealing with the _____ segment of the general environment. a. social b. political/legal c. sociocultural d. economic

b. political/legal

Hypercompetition describes a competitive landscape in which: a. there are thousands of companies competing within the same industry for the same group of customers. b. rivalry tends to occur among global competitors who innovate regularly and successfully. c. the business is dominated by a single company, pushing all competitors to imitate its strategies and develop similar resources. d. the industry has a high cost of entry in capital investment, research and development (R&D), or hiring of talented employees.

b. rivalry tends to occur among global competitors who innovate regularly and successfully.

Outsourcing is:

b. the purchase of a value-creating activity or support function activity from an external supplier.

According to the resource-based model of above-average returns, differences in firms' performance across time can be attributed to the: a. strength and effectiveness of managers. b. unique capabilities and resources of each company. c. industry's structural characteristics. d. effective implementation of pricing strategies.

b. unique capabilities and resources of each company.

A _____ is a picture of what the firm wants to be and, in broad terms, what it wants to achieve. a. mission b. vision c. capability d. competitive advantage

b. vision

Suppliers are most powerful when a company: a. buys from a supplier in large quantities, making up 50 percent or more of the supplier's total sales. b. would have switching costs if it went to a different supplier because the current supplier's products are unique. c. has the capability of producing the end product without the supplier. d. has multiple suppliers to choose from that produce similar components at similar quality.

b. would have switching costs if it went to a different supplier because the current supplier's products are unique.

You are hired as a strategic analyst for a Fortune 500 company. Your first task is to develop a competitive intelligence report to find key insights on the rivals' latest actions, current capabilities, and potential future actions. Being new to this type of report and the ethical protocols, what should be your first action? a. Call the competitors' CEO for an interview. b. Infiltrate the competitors' headquarters and plant devices to receive information. c. Contact the Strategy and Competitive Intelligence Professionals association. d. Analyze the publicly released financial records from six months ago.

c. Contact the Strategy and Competitive Intelligence Professionals association.

A CEO is in an argument with his Board of Directors over the direction of the software company he is leading. The CEO wants to branch out and take advantage of its competencies and capabilities to pursue opportunities enabled by new technology that are forecasted to be very profitable. But, these activities are not what the company is used to, and it would have to develop hardware alongside its specialty in software. The Board is arguing that the company is a software company and should remain a software company. What concept must the CEO overcome?

c. Core rigidity

Myspace, the social networking site, was a leader and innovator for modern social networking. However, not long after Myspace's peak, a new social networking site was quickly gaining ground, Facebook. Myspace was quickly made obsolete because of Facebook's superior functionality, design, and features. What was Myspace lacking that resulted in the company losing its competitive advantage?

c. Costly-to-imitate capabilities because it became inexpensive to start a social networking site

Through research and development (R&D), a cable company has found a way to use its existing network lines to serve customers with a new product offering—home security systems. The company is offering the service with a lower monthly fee than most other security companies. However, the sales force didn't see a lot of interest among its customers who had an existing security system from a competitor until the firm ran a promotion for reduced prices on equipment and free installation. Which of the competitive forces is at play? a. Cost conditions b. Bargaining power of suppliers c. Customer switching costs d. Complementors

c. Customer switching costs

Which of the following company statements is a vision statement? a. Nike: Just Do It. b. Disney: To be one of the world's leading producers and providers of entertainment and information. c. Habitat for Humanity: A world where everyone has a decent place to live. d. Allstate: You're in good hands with Allstate.

c. Habitat for Humanity: A world where everyone has a decent place to live.

A company has identified a core competency in providing telecommunications services for mid-sized businesses through a combination of simple technology and software, excellent customer service, and low-cost hardware. As competitors gain ground in competing for mid-sized companies, how might this core competency become a core rigidity?

c. If the company doesn't keep up with advances in technology and customers begin to expect greater value from the technology

A hospital system operates 22 physicians' offices, 5 skilled nursing facilities, and 2 hospitals. The system employs more than 500 people directly and is affiliated with more than 100 additional physicians. The system offers a wide breadth of medical services, including all of the major specialties. The system was recently recognized as the top cardiac hospital in the state. Which of these represents the company's capabilities?

c. Its complete list of medical services

Companies must be aware of technological advances within their industry and make strategic management decisions that take into account perpetual innovation and disruptive technologies. Which of the following is an example of a company that did not respond strategically to technological changes? a. After Google introduced the concept of pay-per-click advertising, a competing search engine, Bing, introduced a similar advertising model. b. Samsung, LG, and other cell phone manufacturers continued to innovate their products after the introduction of the Apple iPhone to keep up with customer expectations of smartphones. c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology. d. Amazon decided to enter into the online streaming video market with Amazon Prime Video to compete directly with Netflix.

c. Kodak revolutionized the automatic snapshot camera more than 100 years ago, making photography accessible to everyone. When innovators brought digital cameras to the marketplace, Kodak focused on making it easy for people to print their photos using this technology.

What is a set of firms emphasizing similar strategic dimensions and using a similar strategy? a. Collusion group b. Business partners c. Strategic group d. Complementors

c. Strategic group

A multidivisional corporation that manufactures large steel tanks is considering starting a new business unit to serve the transportation industry. The company is utilizing the industrial organization (I/O) model of above-average returns to develop its strategy. Which of the following decisions is consistent with this model? a. The company determines that it has an internal asset in a piece of software it developed for scheduling manufacturing processes and decides to make the software the centerpiece of its new business unit, selling it to transportation companies to manage their schedules. b. The company identifies a large steel tank it is currently selling to customers in the brewing industry and decides to begin selling it to customers in the transportation industry for transporting liquids. c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand. d. The company decides to increase its investment in research and development to catch a competitor that has surpassed it in the technology it is using to produce steel tanks.

c. The company's research into a new railcar guideline that requires all tanker cars to be replaced or retrofitted over the next five years leads its leaders to start a business that manufactures tanker cars to capitalize on the new demand.

Why have PepsiCo and The Coca-Cola Company spent so much money on product differentiation? a. To ruin the reputation of the other company b. To increase flexibility c. To foster customer loyalty d. To allow economies of scale

c. To foster customer loyalty

A software company that is seeking a sustained competitive advantage will constantly be facing obsolescence because of environmental change. To generate a sustained competitive advantage, this company must:

c. be continually building its technological capabilities to develop new skills as technology advances so that it can offer constant upgrades to meet customers' needs.

A sporting goods company developed an innovative material for the manufacture of baseball bats. For many years, the material and its process for manufacturing served as a rare and valuable capability, distinguishing it from competitors. Unfortunately, many of the baseball leagues have been changing their regulations to outlaw bats made of this material because they constitute an unfair advantage for players. As part of its internal analysis, its leaders might:

c. determine if the company's core competency is in research and development of different materials, or if it is in working with this material specifically.

An industrial fabrication firm has purchased a facility capable of housing large-scale projects - as long as 120 feet. The firm could develop this tangible resource into a capability by:

c. employing engineers who can design large projects and welders with expertise in these projects.

An intangible resource is one that:

c. is rooted deeply in the company history, is gathered over time, and is difficult for competitors to analyze or imitate.

A capability can be considered costly to imitate when:

c. it is developed because of unique historical conditions

Strategic leaders: a. can only be people in the C-suite of a company, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO). b. answer only to the demands made by capital market stakeholders for greater profitability. c. must have tenacity and a willingness to be brutally honest in order to be successful. d. revise a company's vision statement on an annual basis.

c. must have tenacity and a willingness to be brutally honest in order to be successful.

Understanding how income is distributed within and across populations informs firms of different groups': a. social class. b. disposable income. c. purchasing power. d. family structure.

c. purchasing power.

The five competitive forces include all of the following forces that shape competition within an industry EXCEPT: a. threat of new entrants. b. bargaining power of suppliers. c. rate of innovation and change. d. threat of substitute products.

c. rate of innovation and change.

A vision statement differs from a mission statement in that the vision statement: a. should be completed before a company analyzes its external environment and internal organization. b. is realistic, achievable, and measurable. c. speaks in broad terms of what the company wants to achieve. d. specifies the businesses in which the firm intends to compete and the customers it intends to serve.

c. speaks in broad terms of what the company wants to achieve.

In the resource-based model of above-average returns, a capability is: a. an input into a firm's production process. b. the foundation for a firm's mission. c. the capacity for a set of resources to perform a task or an activity in an integrative manner. d. a product of a large number of firms competing against one another in an increasing number of global economies.

c. the capacity for a set of resources to perform a task or an activity in an integrative manner.

Capabilities are:

c. the combination of tangible and intangible resources to complete the organizational tasks required to produce, distribute and service the goods or services for customers.

A product substitute would pose a threat to a company in all of the following situations EXCEPT: a. when customers face few, if any, switching costs. b. the substitute product's price is lower than the competing product's price. c. the substitute product's performance capabilities are lower than the competing product's performance capabilities. d. the substitute product's quality is equal to the competing product's quality.

c. the substitute product's performance capabilities are lower than the competing product's performance capabilities.

Companies must effectively manage their relationships with customers because:

companies must satisfy customers' needs to achieve a competitive advantage.

motivation

concerns the firm's incentive to take action or to respond to a competitor's attack, relates to perceived gains and losses.

A differentiation strategy is one in which a firm:

creates products that have features that customers value and are willing to pay a higher price for.

Cisco is a technology company looking to diversify its portfolio and compete in a new market. After conducting a scan and forecast, the consultants hired by Cisco provide several options. In which of the following economic segments should Cisco seek to compete? a. A very stable economy with low growth potential b. An unstable, new economy that has an attractively high growth potential c. A stable economy with a declining growth potential d. A relatively stable economy with strong growth potential

d. A relatively stable economy with strong growth potential

Which of the following would be deemed unethical when developing competitor intelligence? a. Analyzing competitors' financial reports b. Attending trade shows solely to obtain knowledge of competitors' new products c. Obtaining court records in an attempt to find statements that may not be found anywhere else d. All of these actions are ethical

d. All of these actions are ethical

Car manufacturers have a large lead time on new products. If an idea for a feature on a vehicle is developed, it will likely be two years before consumers know about it and can decide if they want to buy it. Consumer trends are sometimes short lived as they are always evolving. Which external environmental analysis element is a primary focus of car manufacturers? a. Scanning b. Monitoring c. Forecasting d. Assessing

d. Assessing

An industrial tool manufacturer relies on a particular distributor network. This distributor network has the largest online outlet and store network, and its product lines are aimed at construction workers. The distributor network is seeking a manufacturer to provide it with private-label products, as it has decided to offer only its own product line in this category of industrial tools. Now, the industrial tool company must decide whether to agree to this proposition or lose this network as a customer. This is an example of which of the competitive forces at play in this industry? a. Industry competitive structure b. Rivalry among competing firms c. Bargaining power of suppliers d. Bargaining power of buyers

d. Bargaining power of buyers

In the toy industry, Mattel is one of the world leaders, especially with its line of Barbie dolls. However, it has faced competition from MGA Entertainment, who has produced Bratz dolls since the 1990s. Which of the following statements is true about the strategic group in which these companies compete? a. The two companies occupy different strategic groups and will likely have very different competitive forces and different strategies. b. The companies are dealing with the same competitive forces as all of the other companies in the toy industry. c. Since they are both toy companies, they both have the ability to quickly pursue the toy truck market with minimal investment. d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

d. By competing in the same strategic group, the two companies are dealing with customers who view their products as direct substitutes for each other.

he executive leadership team of a large corporation is analyzing a report. The report's contents have information that can be used to better understand and anticipate a competitor's objectives, strategies, assumptions, and capabilities. Which of the following is the term for the report being analyzed? a. External environmental analysis b. Internal analysis c. SWOT analysis d. Competitor intelligence

d. Competitor intelligence

Tockit is a children's toy developer that uses the resource-based model of above-average returns. Which of the following steps does it use in its business? a. Study the external environment, especially the industry environment. b. Use the firm's strengths to implement the strategy. c. Find the most attractive industry in which to compete. d. Determine the firm's capabilities.

d. Determine the firm's capabilities.

Christopher is the manager of the development department for a large company. Recently, he scheduled a meeting with a challenging objective—to discuss a failing project with one of his product development teams. The project is costing a lot of time and money but does not appear to have any return on investment in sight. Which of the following approaches would demonstrate successful strategic leadership? a. He should inform them that the project they are working on is no longer aligned with the company's vision, that he's killing it, and that all of their work has been in vain. b. He should keep the project going despite its failure because he doesn't have any better projects for them to work on. c. He should blame the markets for making the project unsuccessful and announce that the company is shifting customer targets and will work on the project in the context of a new industry. d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.

d. He should start by thanking the team for their hard work on the project so far but explain the company is no longer pursuing it. He should clearly articulate his vision for the future of the company and the team and set a meeting to debrief on the project.

According to your textbook, which of the following would be considered an important step in the A-S-P strategic management process? a. Building the company's organizational chart of strategic leaders b. Acquiring a new business unit to gain access to new markets and product lines c. Utilizing an outside consultant to lead the company through the planning process d. Identifying marketplace opportunities and threats in the external environment

d. Identifying marketplace opportunities and threats in the external environment

Apple, a leader in mobile technology products, wasn't always focused on mobile technology. In 2007, the company changed its name from Apple Computers to Apple Inc. This change was indicative of a shift in the industry. Apple began introducing iPods, iPhones, iPads, iTunes, and the App Store. Apple recognized its core competencies in hardware design and software engineering should serve as the foundation of its future strategy. What tool did Apple use to determine its competitive advantage?

d. Internal analysis

During a meeting, your client told you that a new firm had approached her and presented its products to her. The new firm has the potential to become a rival. Which of the following should you research to discover the potential rival's capabilities? a. Its future objectives b. Its assumptions c. Its current strategy d. Its strengths and weaknesses

d. Its strengths and weaknesses

Southwest Airlines' decision to "perform activities differently" has allowed the organization to differentiate itself from competitors and made it a low-cost leader. Which of the following activities is NOT contributing to the firm's ability to fulfill the purpose of this business strategy?

d. Offering free in-flight meals

In an external environmental analysis, what are two important elements that need to be identified? a. Strengths and weaknesses b. Threats and strengths c. Opportunities and weaknesses d. Opportunities and threats

d. Opportunities and threats

Which of the following is the most critical criterion in prioritizing stakeholders? a. Status b. Reliability c. Degree of risk d. Power

d. Power

Which of the following is an example of the mobility of strategies and resources across firms in the mobile network industry? a. Sprint utilizes an innovative marketing strategy to illustrate its price competitiveness compared to Verizon and AT&T. b. Verizon utilizes its high capital availability to invest in a higher quantity of cell towers to achieve a broad geographic network, serving both urban and rural areas. c. A high-level engineer from AT&T is prevented from working for Verizon for five years by a non-compete agreement. d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

d. The spread of 4G technology between Verizon, AT&T, and Sprint makes the high-speed network available to nearly all mobile phone customers.

Blackberry, a one-time leader in secure cellphones, has lost its edge. Without significant upgrades or innovation, the company quickly lost marketshare to iPhones and Android devices. When attempting to imitate these advances with the Blackberry Storm product, it flopped. Blackberry was criticized as trying to leverage capabilities beyond its core competencies. What tool should Blackberry use to regain a scope of their core competencies and determine potential sources of competitive advantage?

d. Value chain analysis

Michael is the CEO of a manufacturer with plants in three countries. He currently has a product line that is manufactured only in the company's U.S. plant. That product has experienced a steady increase in its export sales to Europe over the last three years. The international sales director is recommending that the company expand manufacturing capabilities at the European plant to include this product line. Michael and his management team must consider whether to pursue this strategy. This is: a. a decision driven by the industrial organization (I/O) model of above-average returns. b. a conflict between two of the company's stakeholder groups. c. the diffusion of technology and perpetual innovation to help the company achieve its goals. d. a decision that would benefit from using the entire strategic management process.

d. a decision that would benefit from using the entire strategic management process.

Capabilities develop into core competencies that can serve as the source of competitive advantage when:

d. employees, or human capital, integrate them and deploy them to deliver value to customers.

Firms should study their internal organization as part of the strategic management process because:

d. it provides the insights the firm requires, to match what a firm can do, with what a firm might do when formulating strategies.

All of the following are analyzed during a SWOT analysis EXCEPT: a. weaknesses. b. threats. c. strengths. d. objectives.

d. objectives

If a start-up U.S.-based automobile parts supplier were to apply a global mind-set to its internal analysis, it would:

d. study all of its internal resources with an understanding of which capabilities offer value to meet the needs of U.S., Japanese, European and Korean automakers.

quality

exists when the firm's good or services meet or exceed customers' expectations.

multimarket competition

firms competing against each other in several product or geographic markets are engaged in

The effectiveness of a business-level strategy is contingent on:

he opportunities and threats in a firm's external environment and the strengths and weaknesses of a firm's resources.

As part of its selection of a business-level strategy, a firm will decide which customers it will serve, what needs those customers have that it will satisfy, and:

how it will satisfy those customers' needs using its core competencies to implement value-creating strategies.

To be successful, a firm utilizing an integrated cost leadership/differentiation strategy must:

increase the number of primary value chain activities and support functions in which it becomes competent.

second mover

is a firm that responds to the first mover's competitive action, typically through imitation. -studies customers' reactions and to product innovation -more cautious

awareness

is a prerequisite to any competitive action or response taken by the firm, refers to the extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity. -affects the extent to which the firm understands the consequences of its competitive actions and responses. -a lack of awareness can lead to excessive competition

market commonality

is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each. the number of markets in which firms compete against each other is called

fast-cycle markets

markets in which the firm's capabilities that contribute to competitive advantages aren't shielded from imitation and where imitation is often rapid and inexpensive.

standard-cycle markets

markets in which the firm's competitive advantages are partially shielded from imitation and imitation is moderately costly.

slow-cycle markets

markets in which the firm's competitive advantages are shielded from imitation, commonly for long periods of time, and where imitation is costly.

Cost leadership strategies can be attractive to companies looking to address the competitive force of rivalry with existing competitors because:

rivals are hesitant to slash their own prices to compete with a low-cost leader.

With a focus strategy, a company:

selects a more narrow group, or niche, of customers on which to concentrate its efforts.

resource similarity

the extent to which the firm's tangible and intangible resources are comparable to a competitor's in terms of both type and amount. Firms with similar types and amounts of resources are likely to have similar strengths and weaknesses

Competitor Analysis

the first step the firm takes to be able to predict the extent and nature if its rivalry with each competitor.

Differentiation strategies are successful in addressing the competitive force of the bargaining power of suppliers because:

the higher margins of the firm can reduce the influence of increases in supplier costs.

competitive rivalry

the ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position. -respond or react to rivals moves -some firms learn how to out perform their competitors -influences a firm's ability to gain and sustain competitive advantages.