GEB 4891 Chapter 1 Quiz
Which of the following firms uses a deliberate strategy?
A popular downtown theater that has been staging plays decides to begin booking rock and roll acts. Correct. The theater deliberately diversifies its offerings to gain more profits and strengthen its market position—it is not a result of changing internal and external environmental factors, whereas the other examples are a result of changes to market, changes in customer preferences, or changes in economic climate.
A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons as a gimmick when their bathtubs did not sell. Their bubble foam became famous among some women and led to a line of exclusive bath products for women. They established shops in various regional locations and roped in celebrities to market their products to enhance sales. Now its products are sold through retail outlets and online sites throughout the world. Which of the following is accurate?
Creating a sub-brand that offered exclusive bath products for women was an emergent strategy. Correct. Capitalizing upon the new surprising opportunity by creating a sub-brand that offered exclusive bath products for women was a reactive response to unanticipated developments and fresh market conditions.
A pharmaceutical giant acquires a manufacturer of rare specialty drugs to improve its falling share prices and invests all its wealth into the deal. Due to a deficit, it agrees to do a joint venture for the acquisition and involves a major automobile giant to fund the deal. After a rocky start, the companies now have a strong market position and generate good profits. Which of the following regarding the company's strategy is true?
It is a winning strategy. Correct. The pharmaceutical giant assessed the market, identified a suitable solution to accentuate its market position, gained a competitive edge by adding a specialty drug to its product line, and realized financial profits and a strong market position. The strategy is a winner as it clears all three tests.
A dining facility with multiple branches caters to newlywed couples only. The ambiance, special live music arrangements for each couple, and privacy of the dining sections have become a rage among newlyweds. Which of the five generic strategies has the company used?
They are using a focused differentiation strategy to gain a competitive advantage. They concentrate on a narrow buyer segment and out-compete rivals by offering customized attribute that meet the customer's specialized needs. SHORT ANSWER (not yet graded)
BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds of consumers, this resort caters mainly to gays with guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage?
a focused differentiation strategy Correct. BloomsJay caters to gay customers, focusing on a narrow customer base and providing a unique holidaying experience. It has adopted a focused differentiation strategy concentrating on a narrow customer segment and outcompeting rivals by offering customers attributes that meet their specialized needs and tastes better than rivals' offerings.
A beauty products giant that manufactures quality makeup products observes a lot of its hits by college students on its makeup tutorials. It opens another sub-brand that provides low-priced makeup services to college partygoers. Which of the five generic strategies has the company used?
a focused low-cost strategy by concentrating on a narrow buyers segment and noncompeting rivals SHORT ANSWER (not yet graded)
Why is sustainable competitive advantage so important to a winning business strategy?
a sustainable competitive advantage makes a company distinguishable from competitors and should be one of the most important goals of the company SHORT ANSWER (not yet graded)
Briefly define each of the following terms. a. Sustainable competitive advantage b. Deliberate strategy c. Emergent strategy d. Realized strategy e. Abandoned strategy
a. giving buyers a lasting reason to prefer a business' products or services over competitors b. includes planned initiatives to improve the business' financial performance and gain a competitive edge - a proactive strategy c. developed on the fly in response to unanticipated developments and new market conditions - a reactive strategy d. combination of both proactive and reactive elements e. no longer fit with the business' ongoing strategy SHORT ANSWER (not yet graded)
Management's blueprint for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment
best describes what is meant by a company's business model. Correct. The two elements of a company's business model are its customer value proposition and its profit formula. The customer value proposition lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.
Which of the following is a seldom used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage?
copying the attributes of a popular product or service Correct. Clever rivals can nearly always copy the attributes of a popular product or service, but it is substantially more difficult for rivals to match the know-how and specialized capabilities a company has developed and perfected over a long period.
What is the connection between a company's strategy and its quest for sustainable competitive advantage?
crafting a strategy that yields a sustainable competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance SHORT ANSWER (not yet graded)
Strategy, at its essence, is about
developing lasting success that can support growth and secure the company's future over the long term. Correct. Strategy at its essence is about setting a company apart from its rivals and staking out a market position that is not crowded with strong competitors. It aims doing what rivals cannot or do not do.
A winning strategy is one that
fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance. Correct. A winning strategy must fit the company's external and internal situation, build sustainable competitive advantage, and improve company performance.
A regional electric scooter manufacturer sells its scooter at a lower price than other two-wheeler manufacturers. What will make the product most attractive for customers?
high value Correct. From a customer perspective, the greater the value delivered and the lower the price, the more attractive is the company's value proposition.
Good strategy combined with good strategy execution
is the clearest indicator of good management. Correct. A good strategy and a good strategy execution are the most telling signs of good management. The rationale for using the twin standards of good strategy making and good strategy execution to determine whether a company is well managed is therefore compelling: The better conceived a company's strategy and the more competently it is executed, the more likely the company will be a standout performer in the marketplace.
Managers must be prepared to modify their strategy in response to all of the following EXCEPT
public pronouncements from rivals about monthly profit margins. Correct. Managers of every company must be willing and ready to modify the strategy in response to changing market conditions, advancing technology, unexpected moves by competitors, shifting buyer needs, emerging market opportunities, and new ideas for improving the strategy.
In evaluating proposed or existing strategies managers should
scrutinize the company's existing strategies on a regular basis to ensure they offer a good strategic fit, create a competitive advantage, and result in above-average performance. Correct. New initiatives that don't seem to match the company's internal and external situation should be scrapped before they come to fruition, while existing strategies must be scrutinized on a regular basis to ensure they offer a good strategic fit with the company's internal and external situation, create a competitive advantage, and contribute to above-average performance or performance improvements.
To improve performance, there are many different avenues for outcompeting rivals such as
strengthening competitiveness by pursuing strategic alliances and collaborative partnerships. Correct. Strategy is about competing differently from rivals—doing what competitors don't do or doing what they can't do. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen their market position and competitiveness.
Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage?
striving to be the industry's high-price provider Correct. Basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage include a low-cost provider strategy, a broad differentiation strategy, a best cost provider strategy, and a focused differentiation strategy. Charging the highest prices in an industry without offering additional value would not be a successful strategy.
Strategy is about competing differently than rivals, thus strategy success is about
the sources of sustained advantages and superior profitability. Correct. A successful strategy is a powerful one that aims at sustained competitive advantage and changes along with the evolving market and consumer needs and expectations. Such strategies are a combination of proactive and reactive elements that provide a competitive edge.