ECON 136 Business Strategies Final MC
102. A company attempting to be successful with a broad differentiation strategy has to: differentiation strategy has to: a. study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. b. incorporate more differentiating features into its product/service than rivals. c. concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). d. have a widely known and highly respected brand name image. e. provide a top-of-the-line product and sell it at premium prices.
a
105. Brands create customer loyalty, which in turn: a. increases the perceived cost of switching to another product. b. strengthens the product's quality. c. validates the motivation for alternate products. d. provides monetary incentive for using the product. e. All of these.
a
12. One of the frequently used successful and dependable strategic approaches is: a. to come up with a distinctive element that builds strong customer loyalty and yields a winning competitive edge. b. to aggressively pursue all of the growth opportunities the company can identify. c. to develop a product/service with more innovative performance features than what rivals are offering and to provide customers with better after-the-sale service. d. to come up with a business model that enables a company to earn bigger profits per unit sold than rivals. e. to charge a lower price than rivals and thereby win sales and market share away from rivals.
a
13. Changing circumstances and ongoing managerial efforts to improve the strategy: a. account for why a company's strategy evolves over time. b. explain why a company's strategic vision undergoes almost constant change. c. make it very difficult for a company to have concrete strategic objectives. d. make it very hard to know what a company's strategy really is. e. All of these.
a
14. Strategy is about competing differently than rivals, thus strategy success is about: a. the sources of sustained advantages and superior profitability. b. those emergent, unplanned, reactive, and adaptive strategies that are more appropriate than deliberate or intended ones that drive the realized strategy. c. matching internal resources and capabilities to the industry environment. d. keeping the firm current with the rapid pace of change in the industry. e. All of these.
a
16. A company's business model: a. zeros in on the customer value proposition and its related profit formula. b. is management's storyline for how the strategy will result in achieving the targeted strategic objectives. c. details the ethical and socially responsible nature of the company's strategy. d. explains how it intends to achieve high profit margins. e. sets forth the actions and approaches that it will employ to achieve market leadership.
a
20. Which of the following are integral parts of the managerial process of crafting and executing strategy? a. Developing a strategic vision, setting objectives, and crafting a strategy. b. Developing a proven business model, deciding on the company's strategic intent, and crafting a strategy c. Setting objectives, crafting a strategy, implementing and executing the chosen strategy, and deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage. d. Coming up with a statement of the company's mission and purpose, setting objectives, choosing what business approaches to employ, selecting a business model, and monitoring developments. e. Deciding on the company's strategic intent, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ.
a
25. Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of: a. inspiring company personnel to unite behind managerial efforts to get the company moving in the intended direction. b. helping company personnel understand why "making a profit" is so important. c. making it easier for top executives to set stretch objectives. d. helping lower-level managers and employees better understand the company's business model. e. All of these.
a
26. A company's mission statement typically addresses which of the following questions? a. Who are we and what do we do? b. What objectives and level of performance do we want to achieve? c. Where are we going and what should our strategy be? d. What approach should we take to achieve sustainable competitive advantage? e. What business model should we employ to achieve our objectives and our vision?
a
29. Which of the following is the best example of a well-stated financial objective? a. Increase earnings per share by 15 percent annually. b. Gradually boost market share from 10 percent to 15 percent over the next several years. c. Achieve lower costs than any other industry competitor. d. Boost revenues by a percentage margin greater than the industry average. e. Maximize total company profits and return on investment.
a
3. A company's strategy consists of the action plan management is taking to: a. grow the business, stake out a market position, attract and please customers, compete successfully, conduct operations, and achieve performance objectives. b. compete against rivals and establish a sustainable competitive advantage. c. make its product offering more distinctive and appealing to buyers. d. develop a more appealing business model than rivals. e. identify its strategic vision, its strategic objectives, and its strategic intent.
a
33. The task of stitching together a strategy: a. entails addressing a series of how's: how to grow the business, how to please customers, how to outcompete rivals, how to respond to changing market conditions, and how to achieve strategic and financial objectives. b. is primarily an exercise in deciding which of several freshly emerging market opportunities to pursue. c. is mainly an exercise that should be dictated by what is comfortable to management from a risk perspective and what is acceptable in terms of capital requirements. d. requires trying to copy the strategies of industry leaders as closely as possible. e. is mainly an exercise in good planning.
a
38. Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry? a. How many companies in the industry have good track records for revenue growth and profitability? b. What strategic moves are rivals likely to make next? c. What are the industry's key factors for future competitive success? d. Is the outlook for the industry conducive to providing attractive profitability? e. What are the driving forces in the industry, and what impact will these changes have on competitive intensity and industry profitability?
a
45. The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is the: a. Five Forces Model. b. SWOT. c. Competition Intensity Model. d. Dynamic Simulation Model. e. Competitor Profiling.
a
47. Which of the following is NOT one of the five typical sources of competitive pressures? a. The power and influence of industry driving forces. b. The bargaining power of suppliers and seller-supplier collaboration. c. The threat of new entrants into the market. d. The attempts of companies in other industries to win customers over to their own substitute products. e. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.
a
48. Rivalry increases: a. when buyer demand is growing fast or increasing. b. as it becomes more costly for buyers to switch brands. c. as the products of rival sellers becomes more strongly differentiated. d. when there is excess supply of unused production capacity, especially if high fixed costs exist. e. All of these.
a
50. Potential entrants are more likely to be deterred from actually entering an industry when: a. incumbent firms are willing and able to be aggressive in defending their market positions against entry. b. incumbent firms are complacent. c. buyers are not particularly price sensitive and the industry already contains a dozen or more rivals. d. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage. e. buyer switching costs are moderately low because of strong product differentiation among incumbent firms.
a
53. To determine how strong the threat of substitutes will be entails: a. identifying the relative price/performance relationship of the substitutes, the switching costs and the overall buyer demand for the substitute. b. identifying the attractiveness of other industries. c. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques. d. adopting a substitute product concentration factor to the buyer volume. e. All of these.
a
60. What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry? a. Strategic group mapping. b. Global industry change. c. Dynamic mapping analysis. d. Distribution analysis. e. None of these.
a
66. Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? a. The industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average. b. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor. c. Whether there are more than five key success factors and more than five barriers to entry. d. Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group. e. Whether the market leaders enjoy competitive advantages and how hard it is to develop a strongly differentiated product.
a
69. A useful way to identify a company's resources is to view them as: a. divided into two main categories, tangible and intangible. b. every productive input or competitive asset except human assets and intellectual capital, which are considered capabilities or competencies. c. physical resources, such as the company's brand, image, and reputation assets. d. an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats. e. All of these.
a
71. Organizational capabilities are virtually always: a. knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. b. more complex than resources and are exercised only through key personnel. c. require constant evaluation to ensure cooperative support from management. d. are easier and less challenging to categorize than resources because there are fewer to be concerned about. e. reflective of the industry's driving forces.
a
73. Which of the following most accurately reflect a company's resource strengths? a. Its human, physical and/or organization assets; its skills and competitive capabilities; and its achievements or attributes that enhance the company's ability to compete effectively. b. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals. c. The sizes of its profit margins and return on investment vis-à-vis those of key rivals. d. Whether it has more primary activities in its value chain than close rivals and a better overall value chain than these rivals. e. Whether it has more core competencies than close rivals.
a
79. The market opportunities most relevant to a particular company are those that: a. offer the best prospects for growth and profitability. b. provide a strong defense against threats to the company's profitability. c. embrace the most potential for product innovation. d. provide avenues for taking market share away from close rivals. e. hold the most potential to reduce costs.
a
80. Which of the following is NOT an example of an external threat to a company's future profitability? a. The lack of a distinctive competence. b. New legislation that entails burdensome and costly government regulations. c. Slowdowns in market growth. d. More intense competitive pressures. e. The introduction of restrictive trade policies in countries where the company does business.
a
94. Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment? a. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores. b. High scores indicate that a company is a power-user of best practices, while low scores signal minimal or ineffective adoption of best practices. c. The company with the lowest score has the lowest-cost value chain. d. The company with the lowest score has the strongest net competitive advantage over its rivals. e. High scores indicate which rivals are most vulnerable to competitive attack.
a
95. Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate: a. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully. b. which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups. c. which competitors are employing offensive strategies and which competitors are employing defensive strategies. d. which competitors are likely to make money and which are likely to lose money in the years ahead. e. what the industry's key success factors are.
a
99. The major avenues for achieving a cost advantage over rivals include: a. 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. b. having a management team that is highly skilled in cutting costs. c. being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. d. outsourcing high-cost activities to cost-efficient vendors. e. paying lower wages and salaries than rivals.
a
1. Which of the following is NOT one of the managerial considerations in determining how to compete successfully? a. How can a company attract, keep, and please customers? b. How can the company modify its entire product line to emphasize their internal service attributes? c. How should the company respond to changing economic and market conditions? d. How should the company be competitive against rivals? e. How should the company position itself in the marketplace?
b
15. A company's business model: a. concerns the actions and business approaches that will be used to grow the business, conduct operations, please customers, and compete successfully. b. is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit. c. concerns what combination of moves in the marketplace it plans to make to outcompete rivals. d. deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible. e. concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets.
b
24. An engaging and convincing strategic vision: a. ought to be done in writing rather than orally so as to leave no room for company personnel to misinterpret what the strategic vision really is. b. should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. c. tends to be more effective when top management avoids trying to capture the essence of the strategic vision in a catchy slogan. d. is most efficiently and effectively done by posting the strategic vision prominently on the company's website and encouraging employees to read it. e. should be explained after the company's strategic intent, strategy, and business model has been conveyed to company personnel.
b
32. Company objectives: a. are needed only in those areas directly related to a company's short-term and long-term profitability. b. need to be broken down into performance targets for each of its organizational levels—for separate businesses, product lines, functional departments, and individual work units. c. play the important role of establishing the direction in which it needs to be headed. d. are important because they help guide managers in deciding what the company's strategic intent should be. e. should be set in a manner that does not conflict with the performance targets of lower-level organizational units.
b
34. Strategy-making is: a. primarily the responsibility of key executives rather than a task for a company's entire management team. b. 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. c. first and foremost the function and responsibility of a company's strategic planning staff. d. first and foremost the function and responsibility of a company's board of directors. e. first and foremost the function of a company's chief executive officer—who formulates strategic initiatives and submits them to the board of directors for approval.
b
36. The task of top executives when the company faces disruptive changes in its environment is to not only raise questions about the appropriateness of its direction and strategy but also to: a. know when to continue with the present corporate culture and when to shift to a different and better corporate culture. b. ferret out the causes and decide when adjustments are needed and what adjustments are needed for improved performance and operating excellence. c. figure out whether to arrive at decisions quickly or slowly in choosing among the various alternative adjustments. d. decide whether to try to fix the problems of poor strategy execution or simply shift to a strategy that is easier to execute correctly. e. decide how to identify the problems that need fixing.
b
49. Factors that cause the rivalry among competing sellers to be weaker include: a. low buyer switching costs and rival sellers that are relatively equal in size and capability. b. rapid growth in buyer demand and high buyer switching costs. c. few industry rivals, causing any one company's actions to be easily anticipated and countered by its rivals. d. low barriers to entry and weakly differentiated products among rival sellers. e. slow growth in buyer demand and strongly differentiated products.
b
5. Which of the following is NOT something a company's strategy is concerned with? a. Management's choices about how to attract and please customers. b. Management's choices about how quickly and closely to copy the strategies being used by successful rival companies. c. Management's choices about how to grow the business. d. Management's choices about how to compete successfully. e. Management's action plan for conducting operations and improving the company's financial and market performance.
b
52. In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products? a. The costs to buyers of switching over to the substitutes are low. b. Buyers are dubious about using substitutes. c. The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements. d. Buyer brand loyalty is weak. e. Substitutes are readily available at competitive prices.
b
54. The lower the price of product substitutes, the higher their quality and performance and the lower the user's switching costs, the a. harder it is for the sellers of attractive substitutes to lure buyers to their offering. b. more intense the competitive pressures posed by substitute products. c. less intense the competitive pressures posed by substitute products. d. greater rival sellers experience strong bargaining power from both suppliers and influential customers. e. less rival sellers experience weak bargaining power from both suppliers and influential customers.
b
57. Which of the following is NOT a factor that causes buyer bargaining power to be stronger? a. Some buyers are a threat to integrate backward into the business of sellers and become an important competitor. b. Buyers are small and numerous relative to sellers. c. Buyers have considerable discretion over whether and when they purchase the product. d. Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. e. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.
b
64. Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because: a. it identifies who the industry's current market share leaders are. b. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence about what market maneuvers to expect from its rivals. c. good scouting reports help identify which rival is in which strategic group. d. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. e. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.
b
65. Which of the following can aid industries in identifying key success factors? a. Global distribution capabilities. b. Crucial product attributes and service characteristics. c. Low distribution costs. d. Accurate filling of buyer orders. e. Short delivery time capability.
b
68. A company's resources and capabilities represent: a. the firm's net working capital and related determinants for measuring operating performance and capabilities. b. the firm's competitive assets, which are considered big determinants of its competitiveness and ability to succeed in the marketplace. c. whether the firm has the industry's most efficient value chain. d. management's source of funding of new strategic initiatives. e. All of these.
b
75. A company's strengths are important because: a. they pave the way for establishing a low-cost advantage over rivals. b. they represent the quality of its competitive assets that enhance its competitiveness in the marketplace. c. they provide extra muscle in helping lengthen the company's value chain. d. they give it competitive protection against the industry's driving forces. e. they provide extra organizational muscle in turning a core competence into a key success factor.
b
82. In doing SWOT analysis and trying to identify a company's market opportunities, which of the following is NOT an example of a potential market opportunity that a company may have? a. Serving additional customer groups or market segments. b. Growing buyer preferences for substitutes for the industry's product. c. Acquiring rival firms or companies with attractive technological expertise or capabilities. d. Expanding into new geographic markets. e. Openings to win market share away from rivals.
b
83. One of the most telling signs of whether a company's market position is strong or precarious is: a. whether its product is strongly or weakly differentiated from rivals. b. whether its prices and costs are competitive with those of key rivals. c. whether it has a lower stock price than key rivals. d. the opinions of buyers regarding which seller has the best product quality and customer service. e. whether it is in a bigger or smaller strategic group than its closest rivals.
b
84. A company's value chain identifies: a. the steps it goes through to convert its net income into value for shareholders. b. the primary activities and related support activities it performs in creating customer value. c. the series of steps it takes to get a product from the raw materials stage into the hands of end users. d. the activities it performs in transforming its competencies into distinctive competencies. e. the competencies and competitive capabilities that underpin its efforts to create value for customers and shareholders.
b
86. The primary purpose of value chain analysis is to: a. segregate the company's operations into different types of functions. b. facilitate a comparison activity-by-activity of how effectively and efficiently a company delivers value to its customers, relative to its competitors. c. eliminate unproductive and obsolete functionality in the firm's operating strategy. d. compare cost structure efficiency with the operating effectiveness of rivals to determine the strategy content of rival firms. e. All of these.
b
90. The most difficult part of benchmarking is: a. the decision of whether to do it at all. b. how to gain access to information regarding rivals' practices and costs. c. when to initiate the process. d. what information to utilize in the analysis process. e. when to stop the process and move forward with strategy.
b
92. Understanding where the company is competitive requires: a. determining whether a company has a cost-effective value chain. b. 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. c. identifying a company's core competencies and distinctive competencies (if any). d. analyzing whether a company is well positioned to gain market share and be the industry's profit leader. e. developing quantitative measures of a company's chances for future profitability.
b
93. In a weighted competitive strength assessment, the sum of the weights should add up to: a. 100% b. 1.0 c. 10. d. 100. e. None of these.
b
96. Identifying the strategic issues and problems that merit front-burner managerial attention: a. is accomplished solely by analyzing the company's internal working environment. b. helps set management's agenda for taking actions to improve the company's performance and business outlook. c. is done solely by evaluating the company's own internal situation—its resources and competitive position— to help come up with a "worry list" of "how to...," "whether to...," and "what to do about..." d. is done solely as a basis for drawing conclusions about whether to stick with a company's present strategy or to modify it. e. None of these.
b
97. While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another involves: a. whether a company can build a brand name and an image that buyers trust. b. whether a company's target market is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation. c. whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader role. d. finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. e. getting in the best strategic group and establishing a dominating role.
b
10. A company's strategy and its quest for competitive advantage are tightly connected because: a. without a competitive advantage a company cannot become the industry leader. b. without a competitive advantage a company cannot have a profitable business model. c. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. d. a competitive advantage is what enables a company to achieve its strategic objectives. e. how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company.
c
100. Which of the following is NOT one of the ways that a company can achieve a cost advantage by revamping its value chain? a. Bypassing the activities and costs of distributors and dealers by selling direct to customers. b. Replacing certain value chain activities with faster and cheaper online systems. c. Increasing production capacity and then striving hard to operate at full capacity. d. Relocating facilities so as to curb the cost for shipping and handling activities. e. Streamlining operations by eliminating low value-added or unnecessary work steps and activities.
c
104. Opportunities to differentiate a company's product offering: a. are most reliably found in the R&D portion of the value chain. b. are typically located in the sales and marketing portion of the value chain. c. can exist in activities all along an industry's value chain. d. usually are tied to product quality and customer service. e. are most frequently attached to a company's manufacturing expertise and to its ability to achieve scale economies in production.
c
11. Which of the following is NOT a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? a. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage. b. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money. c. Striving to be more profitable than rivals and aiming for a competitive edge based on bigger profit margins. d. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche. e. Developing an advantage based on offering more value for the money.
c
2. A company's strategy concerns: a. the market focus and plans for offering a more appealing product than rivals. b. how it plans to make money in its chosen business. c. management's action plan for outperforming competitors and achieving superior profitability. d. the long-term direction that management believes the company should pursue. e. whether it is employing an aggressive offense to gain market share or a conservative defense to protect its market position.
c
23. Breaking down resistance to a new strategic vision typically requires that management, on an as needed basis: a. institute a balanced scorecard approach to measuring company performance, with the "balance" including a mixture of both old and new performance measures. b. inform company personnel about forthcoming changes in the company's strategy. c. reiterate the company's need for the new direction, while addressing employee concerns head-on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold. d. explain all updates and merits of the company's business model to align strategy with employee concerns. e. raise wages and salaries to win the support of company personnel for the company's new direction.
c
37. In the strategy-making, strategy-executing process, effective corporate governance requires a company's board of directors to: a. play the lead role in forming the company's strategy and then directly supervising the efforts and actions of senior executives in implementing and executing the strategy. b. provide guidance and counsel to the CEO in carrying out his/her duties as chief strategist and chief strategy implementer. c. oversee the company's strategic direction, evaluate the caliber of senior executives' skills, handle executive compensation, and oversee financial reporting practices. d. work closely with the CEO, senior executives, and the strategic planning staff to develop a strategic plan for the company and then oversee how well the CEO and senior executives carry out the board's directives in implementing and executing the strategic plan. e. review and approve the company's business model and also review and approve the proposals and recommendations of the CEO as to how to execute the business model.
c
39. Thinking strategically about the industry and competitive environment involves in-depth analysis and evaluation of such consideration as: a. the strength of the equilibrium forces driving change in the environment. b. the identification of the dominant financial risk components of the industry in which the company operates. c. the market positions of industry rivals and their relative strength, and the competitive forces rivals are facing and what impact they will have on competitive intensity and industry profitability. d. the critical factors influencing past competitive success in the industry. e. All of these.
c
56. When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous: a. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. b. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. c. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. d. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. e. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.
c
58. Competitive pressures stemming from buyer bargaining power tend to be weaker when: a. the number of buyers is small, such that each customer's business tends to be particularly important to a seller. b. buyer demand is growing slowly or maybe even declining. c. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high. d. buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. e. the buyer group consists of a few large buyers and the seller group consists of numerous small firms.
c
6. Which of the following is NOT a primary focus of a company's strategy? a. How to attract and please customers. b. How best to respond to changing economic and market conditions. c. How to achieve above-average gains in the company's stock price and thereby meet or beat shareholder expectations. d. How to compete successfully. e. How to grow the business.
c
61. A strategic group: a. consists of those industry members that are growing at about the same rate and have similar product line breadth. b. includes all rival firms having comparable profitability. c. is a cluster of industry members with similar competitive approaches and market positions in the market. d. consists of those firms whose market shares are about the same size. e. is made up of those firms having comparable profit margins.
c
63. Which of the following is NOT an appropriate guideline for developing a strategic group map for a given industry? a. The variables chosen as axes for the map should indicate important differences among rival approaches. b. The variables chosen as axes for the map don't have to be either quantitative or continuous. They can be discrete variables. c. The variables chosen as axes for the map should be highly correlated. d. Several maps should be drawn if more than one pair of variables give different exposures to the competitive positioning relationships present in the industry structure. e. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.
c
67. One important indicator of how well a company's present strategy is working is whether: a. it has more core competencies than close rivals. b. its strategy is built around at least two of the industry's key success factors. c. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. d. it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign). e. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).
c
7. A company's strategies stand a better chance of succeeding when: a. it is developed through a collaborative process involving all managers and staff from all levels of the organization. b. managers employ conservative strategic moves based on past experience and form an underlying basis of control. c. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals. d. managers copy the strategic moves of successful companies in its industry. e. managers focus on meeting or beating shareholder expectations.
c
70. Tangible resources do not include: a. physical resources. b. financial resources. c. human assets. d. technological assets. e. organizational assets.
c
72. One important indicator of how well a company's present strategy is working is whether: a. it has more core competencies than close rivals. b. its strategy is built around at least two of the industry's key success factors. c. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. d. it is customarily a first-mover in introducing new or improved products (a good sign) or a late -mover (a bad sign). e. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).
c
74. A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a: a. long-term derivative strategy. b. cash flow feasibility analysis. c. competitive advantage over other companies. d. resource deployment strategic plan. e. cost underestimation and benefit overestimation.
c
76. The difference between a core competence and a distinctive competence is that: a. a distinctive competence refers to a company's strongest resource or competitive capability, while a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity. b. a core competence usually resides in a company's base of intellectual capital, whereas a distinctive competence stems from the superiority of a company's physical and tangible assets. c. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms. d. a core competence represents a resource strength, whereas a distinctive competence is achieved by having more resource strengths than rival companies. e. a core competence usually resides in a company's technology and physical assets, whereas a distinctive competence usually resides in a company's know-how, expertise, and intellectual capital.
c
81. In order to gain value from the SWOT analysis, it is important that the company address the two most important parts of a SWOT analysis, which are: a. identifying the resource strengths and resource weaknesses. b. understanding the relationship between the strengths, weaknesses, opportunities, and threats and establishing criteria for remedying the company's shortfalls. c. drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions. d. clarifying the firm's current position and ensuring the SWOT listings are complete. e. establishing a game plan to capitalize on the company's strengths and leverage the weaknesses in light of the available opportunities.
c
85. A company's value chain consists of two broad categories of activities: a. the primary activities that it performs in seeking to deliver value to shareholders in the form of higher dividends and a higher stock price. b. the internally performed activities associated with creating and enhancing the company's competitive assets. c. two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities. d. the basic processes the company goes through in performing R&D and developing new products. e. the series of steps a company goes through to develop a new product, get it produced and distributed into the marketplace, and then start collecting revenues and earning a profit.
c
87. Activity-based costing is used to evaluate a company's cost-competitiveness and: a. determine whether the value chains of rival companies are similar or different. b. benchmark the costs of primary value chain activities against the costs of the support value chain activities. c. determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and makeup of a company's internal cost structure. d. determine the costs of each strategic action a company initiates. e. None of these.
c
91. Which of the following is NOT a good option for trying to remedy high internal costs vis-à-vis rivals' firms? a. Finding ways to detour around activities or items where costs are high. b. Redesigning the product or some of its components to permit more economical manufacture or assembly. c. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction. d. Outsourcing high-cost activities to vendors or contractors who can perform them more economically. e. Relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin America or Eastern Europe) where they can be performed more cheaply.
c
101. In which of the following circumstances is a strategy to be the industry's overall low-cost provider NOT particularly well-matched to the market situation? a. When the offerings of rival firms are essentially identical and readily available from many eager sellers. b. When there are few ways to achieve differentiation that have value to buyers. c. When price competition among rival sellers is especially vigorous. d. When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high. e. When the majority of industry sales are made to a few, large-volume buyers.
d
103. A broad differentiation strategy improves profitability when: a. it is focused on product innovation. b. differentiating enhances product performance and quality. c. the differentiating features appeal to sophisticated and prestigious buyers. d. the higher price the product commands exceeds the added costs of achieving the differentiation. e. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider
d
17. The difference between a company's strategy and a company's business model is that: a. a company's strategy is management's game plan for achieving strategic objectives while its business model is management's game plan for achieving financial objectives. b. the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. c. a company's strategy is management's game plan for realizing the strategic vision, whereas a company's business model is the game plan for accomplishing the business purpose or mission. d. strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues and costs flowing from the strategy demonstrate that the business is viable from the standpoint of being able to generate revenues sufficient to cover costs and realize a profit. e. a company's strategy is concerned with how to please customers while its business model is concerned with how to please shareholders.
d
18. Which of the following questions tests the merits of the firm's strategy and distinguishes it as a winning strategy? a. Is the company's strategy ethical and socially responsible and does it put enough emphasis on good product quality and good customer service? b. Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? c. Is the strategy resulting in the development of additional competitive capabilities? d. Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance? e. Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?
d
19. Which one of the following is NOT one of the five basic tasks of the strategy-making, strategy-executing process? a. Developing a strategic vision of where the company needs to head and what its future business makeup will be. b. Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve. c. Crafting a strategy to achieve the objectives and get the company where it wants to go. d. Developing a profitable business model. e. Executing the chosen strategy efficiently and effectively.
d
21. A company's strategic vision describes: a. "who we are and what we do." b. why the company does certain things in trying to please its customers. c. management's storyline of how it intends to make a profit with the chosen strategy. d. management's aspirations for the future and delineates the company's strategic course and long-term direction. e. what future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage.
d
22. Which one of the following is NOT a characteristic of an effectively worded strategic vision statement? a. Directional (is forward-looking, describes the strategic course that management has charted that will help the company prepare for the future). b. Easy to communicate (is explainable in 5-10 minutes, and can be reduced to a memorable slogan). c. Graphic (paints a picture of the kind of company management is trying to create and the market position(s) the company is striving to stake out). d. Consensus-driven (commits the company to a "mainstream" directional path that almost all stakeholders will enthusiastically support). e. Focused (provides guidance to managers in making decisions and allocating resources).
d
27. The difference between the concept of a company mission statement and the concept of a strategic vision is that: a. a mission concerns what to do to achieve short-term objectives, while a strategic vision concerns what to do to achieve long-term performance targets. b. the mission is to make a profit, whereas a strategic vision concerns what business model to employ in striving to make a profit. c. a mission statement deals with what to accomplish on behalf of shareholders, while a strategic vision concerns what to accomplish on behalf of customers. d. a mission statement typically concerns a company's purpose and its present business scope ("who we are and what we do and why we are here"), whereas the principal concern of a strategic vision portrays a company's aspirations for its future ("where are we going"). e. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?"
d
28. Company managers connect values to the chosen strategic vision and mission by: a. integrating the company's values into its vision and mission/business purpose into one single statement. b. using a values-based balanced scorecard to measure the company's progress in achieving the vision. c. making achievement of the values a prominent part of the company's strategic objectives. d. making it clear that company personnel are expected to live up to the values in conducting the company's business and pursuing its strategic vision. e. making adherence to the company's values the centerpiece of the company's strategy.
d
31. A "balanced scorecard" that includes both strategic and financial performance targets is a conceptually strong approach for judging a company's overall performance because: a. it assists managers in putting roughly equal emphasis on short-term and long-term performance targets. b. it entails putting equal emphasis on good strategy execution and good business model execution. c. a balanced scorecard approach pushes managers to avoid setting objectives that reflect the results of past decisions and organizational activities. d. financial performance measures are lagging indicators that reflect the results of past decisions and organizational activities, whereas strategic performance measures are leading indicators of a company's future financial performance and business prospects. e. forces managers to put equal emphasis on financial and strategic objectives.
d
4. The objectives of a well-crafted strategy require management to strive to: a. match rival businesses products and quality dimensions in the marketplace. b. build profits for short-term success. c. realign the market to provoke change in rival companies. d. develop lasting success that can support growth and secure the company's future over the long term. e. re-create their business models regularly.
d
55. Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: a. whether the profits of suppliers are relatively high or low. b. the number of suppliers that each seller/industry member purchases from on average. c. how aggressively rival industry members are trying to differentiate their products. d. whether demand for supplier products is high and they are in short supply. e. whether the prices of the items being furnished by the suppliers are rising or falling.
d
59. A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers: a. lacks powerful driving forces. b. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms. c. makes it challenging for industry members to compete successfully unless they can strongly differentiate their products. d. is conducive to industry members earning attractive profits. e. requires that industry members have low costs in order to be competitively successful.
d
62. Which one of the following pairs of variables is LEAST likely to be useful in drawing a strategic group map? a. Geographic market scope and degree of vertical integration. b. Brand name reputation and distribution channel emphasis. c. Product quality and product-line breadth. d. Level of profitability and size of market share. e. Price/perceived quality and image range and the extent of buyer appeal.
d
77. A core competence: a. detracts from a company's arsenal of competitive capabilities and competitive assets and is not a resource strength considered to be genuine. b. is typically results-based, residing in a company's tangible physical assets on the balance sheet. c. is often grounded in a single department's set of knowledge and expertise. d. is an activity that a firm performs proficiently that is also central to its strategy and competitive success. e. All of these.
d
78. Which of the following does NOT represent a potential core competence? a. Skills in manufacturing a high-quality product at a low cost. b. Know-how in creating and operating systems for cost-efficient supply chain management. c. The capability to fill customer orders accurately and swiftly. d. Having a wider product line than rivals. e. The capability to speed new or next-generation products to the marketplace.
d
8. In crafting a company's strategy: a. management's biggest challenge is how closely to mimic the strategies of successful companies in the industry. b. managers have comparatively little freedom in choosing the "hows" of strategy. c. managers are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility. d. managers need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals. e. managers are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-be-different" strategies rarely are successful.
d
9. The pattern of actions and business approaches that would NOT define a company's strategy include: a. actions to strengthen market standing and competitiveness by acquiring or merging. with other companies. b. actions to strengthen competitiveness via strategic coalitions and partnerships. c. actions to upgrade competitively important resources and capabilities. d. actions to gain sales and market share with lower prices despite increased costs. e. actions to strengthen the bargaining position of suppliers and distributors with rivals.
d
30. Adopting a set of "stretch" financial and "stretch" strategic objectives: a. pushes the company to strive for lesser but adequate profitability levels, because the stretch objectives are considered unattainable. b. is a widely held method for creating a "scorecard" for moderating company performance. c. helps convert the mission statement into meaningful company values. d. challenges company personnel to execute the strategy with greater enthusiasm, proficiency, and understanding. e. is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.
e
35. The primary role of a functional strategy is to: a. unify the company's various operating-level strategies. b. specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully. c. support and add power to the corporate-level strategy. d. create compatible degrees of strategic intent among a company's different business functions. e. determine how to support particular activities in ways that support the overall business strategy and competitive approach.
e
46. The competitive pressures on companies within an industry comes from those: a. associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. b. companies in other industries attempting to win buyers over to their substitute products. c. associated with the threat of new entrants into the marketplace. d. associated with the bargaining power of suppliers and customers. e. All of these.
e
51. Which one of the following increases the competitive pressures associated with the threat of entry? a. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers. b. When strong brand preference and a high degree of customer loyalty exists for the product offerings of incumbents. c. When buyer demand for the product is growing fairly slowly. d. When few outsiders have the expertise and financial resources and capabilities to hurdle whatever entry barriers exist. e. When new entrants can expect to earn attractive profits.
e
88. The value chains of company distribution channel partners are relevant because: a. their costs and margins are part of the price the ultimate consumer pays. b. the activities they perform affect sales volumes and customer satisfaction. c. they have a competitive interest in promoting higher sales volumes and customer satisfaction. d. they perform primary and support activities that are related to the entire value chain system. e. All of these apply.
e
89. A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is: a. competitive strength analysis. b. activity-based costing. c. resource cost mapping. d. SWOT analysis. e. Benchmarking.
e
98. Which of the following is NOT one of the five generic types of competitive strategy? a. A low-cost provider strategy. b. A broad differentiation strategy. c. A best-cost provider strategy. d. A focused low-cost provider strategy. e. A market share dominator strategy.
e
