Strategic Mgmt Questions- Midterm

Sonia, the owner of a local consulting business that provides small and medium-sized organizations with hardware and software and support for information systems, has asked you to explain the five forces model of industry attractiveness to her. What would not be considered one of the five forces?

competitive pressures stemming from incremental innovations within the information systems industry

Functional-area strategies

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

Crafting a deliberate strategy involves developing strategy elements that

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

Examples of important cost drivers in a company's value chain do not include

customer service

Supplier bargaining power is weaker when

industry members have the potential to integrate backward and self-manufacture their own requirements.

A strategic group

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

An example of a potential weakness or competitive deficiency is

lack of attention to customer needs.

Which of the following pairs of variables are least likely to be useful in drawing a strategic group map?

level of profitability and size of market share

The generic types of competitive strategies include

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

Strategic objectives are goals concerned primarily with an organization's

market standing. competitive position.

The lower the user's switching costs, the

more intense the competitive pressures posed by substitute products.

Strategy-making is

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

The major avenues for achieving a cost advantage over rivals include

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

Stretch objectives are helpful because they

prevent employees from settling for a comfortable level of performance. motivate employees to be more productive. help an organization perform at its full potential.

A company's value chain consists of

primary activities that are foremost in creating value for customers and the requisite support activities.

A company's realized strategy is a combination of

proactive and reactive elements

A typical company's strategy is often both ______, meaning that it plans ways to improve the company's competitiveness, and ______, meaning that it responds to unforeseen market conditions.

proactive; reactive

A company achieves a competitive advantage when it

provides buyers with superior value compared to rival sellers or offers the same value at a lower cost.

Well-stated objectives are

quantifiable or measurable, and contain deadlines for achievement.

Employees at various levels within an organization are best served by performance objectives that

relate specifically to what their departments are doing.

The competitive pressure created by the presence of substitute products increases when the substitutes are

seen as comparable in terms of quality and performance. readily available and attractively priced.

Performance targets should be set for the organization's

separate businesses. product lines. individual work units.

To measure how well a company is moving in the intended direction, it is important to

set objectives

For a resource or capability to be competitively superior it

should be competitively valuable.

SWOT analysis is a simple but powerful tool for

sizing up a company's resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being.

Resource and capability analysis is a powerful tool for

sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace.

When setting objectives, which types of performance targets must be established?

strategic financial

The most reliable leading indicators are

strategic outcomes that measure competitiveness and market position.

Managers can deliberately set challenging performance targets at levels high enough to promote outstanding company performance by establishing

stretch objectives that challenge the organization to deliver stretch gains in performance.

A "balanced scorecard" for measuring company performance

strikes a balance between financial and strategic objectives.

Powerful ______ can end up eroding industry profitability by ______ higher prices.

suppliers; charging

A company's values or core values concern

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

Strategic group mapping is a visual technique for displaying

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

The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in a market is

the five forces framework.

External threats to a company's future profitability and well-being do not include

the lack of a well-known brand name with which to attract new customers and help retain existing customers

The five forces of competitive pressures do not include

the power and influence of social/demographic trends.

The competitive pressures on companies within an industry come from all of the following except

those associated with environmental factors such as water shortages.

A government oil company is having trouble with the private refineries and transporters to whom it delegates important stages of production. It decides to become more active along the entire supply chain from locating deposits to retailing the fuel to consumers. Which of the following does it intend to achieve?

vertical integration

Under what circumstances would an extreme stretch goal involving radical expectations be most likely to succeed?

when the company has plenty of resources available when the company's recent performance has been strong

Two of the three best indicators as to how well a company's strategy is working are

(1) whether the company is achieving its stated financial and strategic objectives, and (2) whether it is gaining customers and increasing its market share.

In making an overall assessment of a company's competitive strength, the answer to which questions are of particular interest?

(1) How does the company rank relative to the competitors on each important market success factor? and (2) Does the company have a net competitive advantage or disadvantage versus major competitors?

Financial objectives are important for (Select all that apply.)

increasing profit margins. increasing revenue. achieving shareholder satisfaction.

______ is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability.

A strategy

It is generally best for companies to craft objectives that

can be measured. include a deadline for achieving the objective.

Suppliers of ______ are in a weak bargaining position because there is no reason to choose the product of one supplier over that of another except for price.

commodities

Benchmarking involves

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

When an activity becomes something a company has learned to perform proficiently and capably, the company is said to have a

competence

When a company strives to achieve an extreme stretch goal but fails because the goal was simply too difficult, what will most likely happen?

Employees will lose their motivation.

When management discovers that there are strategic conflicts among the various levels of an organization, what should management do?

Ensure all conflicts are resolved. Adapt high-level strategies to incorporate more appealing ideas from lower levels. Consider which low-level strategies might be changed to accommodate high-level strategies.

Which statements about a company's goal-setting process are true?

It should coordinate the efforts of each organizational unit. It should be a top-down process. It should involve all organizational units within the company.

Better financial performance typically results from which of the following?

competitive advantage more competitive vitality a stronger market standing

Long-term objectives are intended to do which of the following?

Prevent a nearsighted management philosophy. Prompt action now to improve the organization's performance later.

Which actions should be taken by organizational units within a company?

Produce results that help the company achieve its performance targets. See themselves as part of a team that includes the entire company. Know their strategic role within the company.

Angie, CEO of a local alternative energy company that provides power for residential and commercial customers in your community, is engaged in the process of developing a list of questions to evaluate her company's internal situation. Which question would Angie NOT raise to complete the task of her company's resources and competitive position?

Which are our least and most profitable geographic market segments?

Which of the following are not likely to happen if a company's financial objectives are met or exceeded?

Revenues will decrease. The company will go into bankruptcy. Senior executives will be fired.

Why might top executives involve lower-level managers in crafting and implementing a company strategy?

The company's operations are spread across various industries and geographic areas. The managers know more details about the operation of their specific operating units than the executives do. The organization is so big and complex that top management cannot keep track of all the parts that make up the strategy.

Why is a weighted competitive strength analysis superior to an unweighted analysis?

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

Who is primarily responsible for crafting and implementing business strategy in a multibusiness organization?

The head of each business unit

The "driving forces" in an industry

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

Which of the following are reasons for crafting and executing strategies to be important managerial tasks? (Select all that apply.)

They establish a formula for improving performance. They provide a path to competitive advantage. They lay out the means for pleasing customers.

Which statements are true about specific, measurable goals?

They motivate personnel to try harder. They help an organization remain focused on what it is trying to accomplish. They help an organization track its progress.

The four tests of a resource's competitive power are often referred to as the

VRIN test, which asks if a resource is valuable, rare, inimitable, and nonsubstitutable.

The key success factors in an industry

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

When the overall effect of the five competitive forces is moderate to weak, an industry is _____.

attractive

A company's mission statement typically addresses which question?

Who we are and what do we do?

A company's strategic vision concerns

a company's directional path and future product-customer-market-technology focus.

The strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions—are known as

a company's macro-environment.

A distinctive competence is

a competitively important activity that a company performs better than its rivals.

Every strategy needs

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

What is a stretch objective?

a performance target that will require significant effort to achieve

Which of the following are developed during the first stage in crafting a company strategy?

a set of core values a strategic vision a mission statement

A company achieves sustainable competitive advantage when

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

Financial objectives generally are not concerned with

achieving a market share of 9 percent.

Key functional strategies of a company include all of the following except

alliance and partnerships as well as merger and acquisition growth strategies.

Adapting to new conditions like new innovations by competitors, fast-changing technological developments, and constantly evaluating what is working result in

an emergent strategy

A measurement system that links financial performance goals with strategic goals is called a

balanced scorecard.

Why are crafting and executing business strategies the foremost tasks of any organization?

because a good strategy coupled with a good strategy execution are the most telling signs of good. management and allow a company to be a standout performer in the marketplace

Bargaining power of buyers is weaker when

buyers are not very price-sensitive.

The actions that a company takes in accordance with its established business practices make up its ______ strategy, in contrast with actions the company takes in response to changing market conditions.

deliberate

The five basic tasks of the strategy-making, strategy-executing process DO NOT include

developing a profitable business model.

Managers must chart a company's strategic course by

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

Understanding where a company is competitive requires

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

Actions taken in response to new strategic maneuvers by rival firms or other unanticipated market circumstances make up a company's ______ strategy.

emergent

Which of the following is not one of the principal components of strategic significance in the PESTEL analysis?

environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business

The primary purpose of value chain analysis is to

facilitate a comparison of how a company delivers value to its customers, activity by activity, relative to its competitors.

The pattern of actions and business approaches that would not define a company's strategy include actions to

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

Which of the following are impediments to a company's long-term industry success?

imitative strategies illogical strategies inadequate attempts to improve

Business strategy, in contrast to corporate strategy, involves which of the following?

improving the performance of individual business units strengthening the market position of individual business units

A route to take in developing a differentiation advantage includes

incorporating tangible features that add functionality, and increase customer satisfaction with the product specifications, functions, and styling.