MGMT 490: Chapter 6 - Learnsmart, Activity and Quiz questions

On average, the number of strategic alliances increases by what percentage annually? 10% 50% 25% 90%

25%

Approximately what percentage of strategic business alliances fail each year? 25% 60% to 70% 50% 80% to 90%

60% to 70%

Which companies have used disruptive product innovations to create new markets? Amazon British Airways K-Mart Apple Music

Amazon Apple Music

What is an example of a strategically sound outsourcing relationship? A toy manufacturer outsources assembly operations to a location where labor costs are high. An industry-leading shoe company outsources its IT operations to a leading technology firm. A major retailer outsources marketing operations to a start-up company. A technology firm outsources key software development operations to focus on less crucial operations.

An industry-leading shoe company outsources its IT operations to a leading technology firm.

Launching a preemptive strike type of offensive strategy entails A. Cutting prices below a weak rival's costs B. Moving first to secure an advantageous position that rivals are prevented or discouraged from duplicating C. Using hit-and-run tactics to grab sales and market share away from complacent or distracted rivals

B. Moving first to secure an advantageous position that rivals are prevented or discouraged from duplicating

What are reasons that mergers and acquisitions sometimes fail? Cost savings are less than anticipated. Increased bargaining power with suppliers drives up the cost of operations. Enhanced market rivalry drives down prices for products and services. Gains in competitive advantage materialize more slowly than was anticipated.

Cost savings are less than anticipated. Gains in competitive advantage materialize more slowly than was anticipated.

What are some of the negative effects that mergers and acquisitions can have on personnel? Competition among staff may boost productivity. Employees may resist efforts to mesh the cultures of the two companies. Managers may make mistakes when deciding which systems to integrate. Difficulty coping with new management may lead to lower morale.

Employees may resist efforts to mesh the cultures of the two companies. Managers may make mistakes when deciding which systems to integrate. Difficulty coping with new management may lead to lower morale.

Which statement about establishing the technical standard in an industry is true? Early movers rarely attempt to dislodge a first mover in an industry by setting new standards. Establishing a technical standard is an experience-based advantage that can grow over time. Late movers are typically the companies that set industry technical standards. Establishing a technical standard is of little value because industries rarely converge around a single standard.

Establishing a technical standard is an experience-based advantage that can grow over time.

What statement about winning standard wars among early movers is true? Establishing relationships with other participants in the sector can help a firm win a standard war. Participants in a standard have little to gain by keeping prices low. Making allies that produce complementary products is counterproductive because the company will lose market share. Fast-cycle product development can be a significant hindrance to winning a standard war.

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

Choose the intended outcome that did not happen with Expedia's manager and acquisition of HomeAway, Inc.

Expedia suppressed its rival company orbitz's breakthroughs in management or technology

strategic offensives as a general rule, be based on

Exploiting a company's strongest competitive assets -- its most valuable resources and capabilities

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

False

True or False: Interpersonal relationships are irrelevant to the success of strategic alliances. True

False

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

False

Which statements are true concerning horizontal scope? It can be expanded through company mergers and acquisitions. It is the range of product and service segments that a firm serves within its product and service market. It is the extent to which a firm engages in the activities that make up the industry's entire value chain system. It is defined by the range of activities that may extend from initial production to after-sale customer service.

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

Which statements about strategic alliances among large corporations is true? It is not uncommon for large corporations to have up to 50 strategic alliances. Large corporations tend to shy away from strategic alliances because the benefits tend to be minimal. Large corporations have less capacity than smaller companies to sustain strategic alliances. Large corporations can be well-served by managing their strategic alliances like a portfolio.

It is not uncommon for large corporations to have up to 50 strategic alliances. Large corporations can be well-served by managing their strategic alliances like a portfolio.

Which statements are true concerning vertical scope? It is the range of product and service segments that a firm serves within its product and service market. It can be reduced through company mergers and acquisitions. It is the extent to which a firm engages in the activities that make up the industry's entire value chain system. It is defined by the range of activities that may extend from initial production to after-sale customer service.

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

Which statement about joint ventures is correct? Joint ventures are less durable but involve less risk than many other types of collaborative business arrangements. Partners in a joint venture retain a high degree of independence from each other. Joint ventures are more durable but involve more risk than many other types of collaborative business arrangements. Unlike a strategic-alliance partner, a joint-venture partner can walk away from the arrangement with little difficulty.

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

Which statement about strategic alliances in industries experiencing rapid technological advances is true? Many companies find strategic alliances an essential way to keep pace with technological change. Most companies prefer binding joint ventures to loose strategic alliances in industries with a high rate of technological development. Strategic alliances in industries experiencing high rates of technological development frequently limit a company's access to leading technology. Most companies that operate in industries experiencing a fast rate of technological change avoid strategic alliances.

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

Which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true? Companies that enter the supply stage of the value chain are likely to face few difficulties keeping pace with changes in technology. Matching a supplier's production efficiency often requires significant investment in research and development. Most companies that enter the supply stage of the value chain have greater production capacity than existing suppliers. Matching a supplier's production efficiency is among the least challenging obstacles to backward integration.

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

You are advising Hoffmann-LaRoche, which has set up Roche Partnering to manage more than 190 alliances in the healthcare industry. What is the greatest risk that might cause those alliances to be unstable or break apart?

One or more of the 190 partners in Roche Partnering could gain access to another company's proprietary knowledge base, technologies, or trade secrets.

How has vertical integration aided the organization in building competitive advantage?

Owning the distribution, sales, and servicing of the vehicles improves the customer experience. Closer relationships between engineering and manufacturing give Tesla greater control over product design. In-house manufacturing of key components and new parts that require frequent updates has enabled the company to learn quickly and launch new versions faster. All of these choices are correct.

Bumble, a digital dating site where women make the first move, specifically uses which strategic weapon in its offensive arsenal?

Pursuing disruptive product innovations to create new markets

Which statements concerning strategic alliances are accurate? Strategic alliances are uncommon in the business world. Strategic alliances are used by some companies as a way of managing outsourcing. Strategic alliances are used by some companies to extend their scope of operations internationally. Strategic alliances usually increase the risks associated with vertical integration without granting any of the benefits.

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

What value chain segments has Tesla chosen to enter and perform internally?

Tesla has chosen vertical integration both backward and forward in the value chain to achieve multiple strategic goals. From component manufacturing like batteries, all the way through owning the distribution sales and servicing network

Which statements about strategic alliances are generally true? The alliances involve mutual dependence and shared risk. Financial responsibility is shared among all parties of the alliance. The alliances exclude extensive collaboration and long-term agreements. All parties of the alliance contribute resources.

The alliances involve mutual dependence and shared risk. Financial responsibility is shared among all parties of the alliance. All parties of the alliance contribute resources.

Which statement concerning mergers and acquisitions is accurate? In comparison with a merger, an acquisition typically results in an enterprise with greater competitive capabilities. The difference between a merger and an acquisition relates primarily to matters of strategy and competitive advantage. In comparison with an acquisition, a merger typically results in an enterprise with a greater accumulation of new resources. The difference between a merger and an acquisition relates primarily to management control and financial arrangements.

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

What is a sign that a leading firm may be vulnerable to an offensive strategic attack? The firm's willingness to engage in a fierce battle for market share. A recent switch by the firm to a supplier with more extensive service capability. The firm's controlled and methodical diversification into other industries. The firm's use of aging technology and outdated equipment.

The firm's use of aging technology and outdated equipment.

What does the scope of the firm refer to?

The range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses

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

True

Has vertical integration strengthened its market position?

Yes. Tesla's vertical integration strategy has enabled it to quickly roll out innovative new products and launch the network that is required for widespread vehicle adaption.

Contract-based outsourcing can introduce problems because a company may have a difficult time monitoring the work of the outside company. the outside company may be better at performing the outsourced operation. issues arising from delays and budget overruns may be difficult to resolve. the outside company may lack incentive to meet the needs of the outsourcing company.

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

A joint venture can be defined as a combination of two or more companies in which one company is paid to manage the operations of the other companies. an aggressive takeover in which one company assumes control over another company's operations. a new corporate entity that is jointly owned by two or more companies that agree to share in the revenues, expenses, and control of the new company. an agreement in which two or more companies partner for an extended period of time, sharing control over operations.

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

In order to make a backward vertical integration strategy profitable, a company must increase its marketing capacity in order to fortify its relationships with end users. achieve the same economies of scale as suppliers. match suppliers' production efficiency and quality. scale back production in order to improve efficiency.

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

What are examples of ways that a firm can pursue vertical integration? acquiring a company that performs activities further along the value chain, closer to the end user building positions in selected stages of the value chain and avoiding participation in others cutting one product line in order to replace it with another product line attempting to be the first to company to enter an emerging market

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

In a strategic alliance between companies, the decision-making process should allow partners to keep pace with developments in the market. be carried out slowly and cautiously. require numerous levels of approval to counterbalance the speed of the competitive environment.q reflect the interests of the largest company in the alliance.

allow partners to keep pace with developments in the market.

The term "blue ocean" refers to a market space in which industry boundaries are well-defined and all companies understand the competitive rules of the game. intense competition increases the likelihood that a company can create a new product to secure new demand. competitive pressures obstruct a company's ability to grow and to increase its profits. an industry does not yet exist and the market space is untainted by competition.

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

Merger and acquisition strategies

are often driven by such strategic objectives as to expand a company's geographic coverage or extend its business into new product categories

A vertical integration strategy can expand the firm's range of activities

backward into other industry business lines and/or forward to suppliers of raw materials

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

backward vertical integration.

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

backward vertical integration.

If new infrastructure is required before buyer demand can surge, a company should develop complementary products and services that are not yet available be prepared to engage in a two-year sprint to gain control of the market. be careful about allocating too many resources into being first in the market. move with great speed to build the infrastructure and get its products to market.

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

In industries with changing boundaries, a company may pursue an acquisition strategy in order to be prepared to respond to the various directions the industry might take. become more flexible in its capacity to respond to buyers' changing needs. become more deeply entrenched in current operations. expand into new geographic regions.

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

The drawbacks of strategic alliances include the possibility that a company will become too dependent on a partner. overestimate the potential for sustaining a positive relationship. achieve its strategic goals faster than it originally planned. accidentally reveal knowledge that allows a partner to match core strengths.

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

The Achilles' heel (for biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategy is

becoming dependent on other companies for essential expertise and capabilities

In many cases, strategic alliances are preferable to vertical integration strategies, as well as horizontal mergers and acquisitions, because strategic alliances can lower investment costs by requiring partners to pool resources. can be deployed more rapidly in attempt to gain first-mover advantages. are more flexible and allow for swifter responses to changing market conditions. commit partners to in-house solutions to problems relating to the application of technology.

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

Guerrilla warfare tactics in business competition include which of the following? partnering with rivals in an attempt to capitalize on each other's strengths catching rivals off guard with intense burst of promotional activity raising prices to improve brand recognition and attract buyers in niche markets launching special campaigns to weaken a rival that is undergoing a period of internal discord

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

What are examples of company decisions concerned with scope of the firm? choosing to focus solely on sales rather than designing and marketing choosing to remove leather goods from a line of product offerings choosing to maintain a war chest of cash and marketable securities choosing to lower prices to gain an advantage over rivals

choosing to focus solely on sales rather than designing and marketing choosing to remove leather goods from a line of product offerings

A company that acquires another company in the same industry may be able to cut costs by hiring sales staff to extend its market reach. closing inefficient plants. combining and downsizing administrative activities. expanding research and development to introduce new products.

closing inefficient plants. combining and downsizing administrative activities.

Strategic alliances are more likely to be long-lasting when they involve

collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

Strategic alliances are

collaborative formal arrangements where two or more companies join forces and agree to work competitively toward some strategically relevant objectives

In a strategic alliance, a company's proprietary knowledge and trade secrets are most vulnerable when the partnership involves vertical integration strategies. horizontal integration strategies. cost-saving measures. collaborative research and development.

collaborative research and development.

Decisions regarding the a company's scope of the firm are more important for boutiques and small businesses than for large companies. have minimal impact on the strength of a company's market position. concern choices about which operations a company will conduct internally and which it will not. refer to decisions associated with the timing of competitive moves.

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

Outsourcing is a strategy that involves contracting out certain value chain activities that are normally performed in-house to outside vendors. conducting value chain operations in-house rather than relying on outside vendors. merging with or acquiring a company that specializes in an operation further up the value chain. moving value chain activities from one division in the company to another.

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

In some cases, backward vertical integration can increase efficiency by allowing a company to outsource activities that are too costly to perform in-house. giving a company proprietary knowledge that is expensive to keep from rivals. coordinating production flows and preventing bottlenecks. improving the competitive position of existing suppliers in the value chain.

coordinating production flows and preventing bottlenecks.

All the following are signals to would-be challengers that retaliation is likely except

creating collaborative relationships with other industry leaders to block new entrants.

A company can achieve which of the following by signaling would-be business challengers that retaliation is likely in the event of any strategic attack? diverting challengers to less threatening competition driving the company's rivals out of business lowering production costs for a greater competitive advantage dissuading challengers from attacking altogether

diverting challengers to less threatening competition dissuading challengers from attacking altogether

What are examples of preemptive strikes? funding research and development to maintain a continuous flow of new product offerings entering into exclusive, long-term contracts with the best suppliers obtaining the best retail location in a mall adopting and improving on the best ideas of other companies

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

Strategic alliances are more likely to succeed if partners establish trust. protect themselves with safeguards. make mutual commitments. avoid creating explicit procedures.

establish trust. protect themselves with safeguards. make mutual commitments.

Combined companies may be able to reduce supply chain costs because mergers and acquisitions often increase the bargaining power of suppliers. suppliers typically offer favorable rates to downsized companies. suppliers will be eager to capitalize on inefficiencies in the combined entity. expanded operating capacity may increase the company's bargaining power with suppliers.

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

Vertical integration does not involve

expanding a firm's range of product and service segments within its product or service market.

What are common objectives of merger and acquisition strategies? extending business into new product categories expanding geographic coverage cutting a company's offerings of products and services gaining quick access to new technologies

extending business into new product categories expanding geographic coverage gaining quick access to new technologies

Which two firms would be the best targets for an offensive strategic attack by a company? firms in danger of going out of business regional firms with limited capabilities runner-up firms with no discernible weaknesses leading firms with superior products and happy customers

firms in danger of going out of business regional firms with limited capabilities

In a winner-take-all type of market, a first mover has little hope of obtaining a competitive advantage. first-mover advantages can insulate a company from competition. a company should consider entry only as part of a strategic partnership. a company is likely best served by being a late arrival to the market.

first-mover advantages can insulate a company from competition.

Companies in successful business alliances understand that collaborative arrangements should be unchanging in order to remain equitable for each of the allied companies. strong enough to resist changes wrought by emerging technologies. flexible enough to keep pace with changing customer requirements. capable of responding to shifting market changes.

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

Expanding along the value chain into products and services that are closer to the end user is called leapfrogging. backward vertical integration. forward vertical integration. a blue-ocean strategy.

forward vertical integration.

Mergers and acquisitions

frequently do not produce the hoped-for outcome

In order to be successful, a preemptive strike by a company needs to completely block rivals from access to the best distributors. establish a monopoly for the company in an emerging market. give the company a prime position in the market that rivals cannot easily bypass. relinquish assets to distressed rivals at low prices.

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

Price cutting can be an effective strategy for companies that hope to duplicate the cost advantage of their rivals. are seeking a cost advantage. have already achieved a cost advantage. have numerous rivals attempting to lower prices.

have already achieved a cost advantage.

A merger or acquisition that extends business into new product categories helps a company fill gaps in its product line. interferes with a company's ability to offer customers the benefits of one-stop shopping. can be more cost-effective for a company than developing the product on its own. requires a company to expand the scope of its geographic coverage.

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

Good partners for a strategic alliance should bring overlapping strengths to the relationship. hold compatible views about how the alliance should be managed. share the same goals for the relationship. bring complementary strengths to the relationship.

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

Strategic alliances can be a viable alternative to horizontal mergers and acquisitions. maintaining competitive advantage. vertical integration strategies. traditional price-oriented contracts.

horizontal mergers and acquisitions. maintaining competitive advantage. traditional price-oriented contracts.

he benefits of forward vertical integration include improving a company's market visibility. differentiating a company from its competitors. increasing a company's internal costs. giving manufacturers better access to end users.

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

A company that expands its geographic coverage typically increases its bargaining power with suppliers and buyers. enhances its name recognition and brand awareness. reduces its shipping and distribution costs. focuses its marketing efforts on a smaller population of people.

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

What are typical obstacles that a company might create to deter the strategic offensive of a would-be challenger? introducing new features and adding new models scaling down product lines to create gaps offering lower prices by maintaining a line-up of economy-based products lengthening warranties and offering free support services

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

A blue-ocean strategy is a strategy that seeks to gain a competitive advantage by launching a strategic offensive that imitates the successes of relevant competitors. maintaining efforts in existing markets to render competitors irrelevant. defining a new market space that allows a company to maintain old sources of demand. inventing a new segment of the market that makes existing competitors no longer relevant.

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

An outsourcing strategy

involves farming out certain value chain activities presently performed in-house to outside vendors

The introduction of disruptive product innovations is used by risk-averse companies seeking to cut production costs. is a less risky business strategy than introducing continuous innovations. involves testing products with a large group of trial users and then rolling out the product to a small segment of the market. is a risky business strategy that has the potential to earn a company a majority of the market share.

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

Outsourcing is a recommended strategy when an activity costs more to perform externally than internally. is not crucial to the company's ability to sustain its competitive advantage. can be performed more efficiently by outside specialists. is crucial to a firm's capacity to sustain its competitive advantage.

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

What might be considered to be a major drawback of employing a outsourcing strategy?

it can follow out a firm's own capabilities and cause it to lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success

lowering prices can be a successful competitive strategy for a company if its competitors maintain product prices at higher levels. the company lowers the prices of its products without having a cost advantage over its competitors. the company convinces buyers that its products are as good as its competitors' products. its competitors respond with lower prices of their own that reduce the company's additional unit sales.

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

The primary objective of deploying a defensive strategy is to

lower the risk of being attacked, to weaken the impact of any attack that occurs, and to influence challengers to aim their efforts at other rivals.

What are examples of ways that companies signal would-be challengers that retaliation is likely? maintaining cash reserves and marketable securities to fund countermeasures publicly announcing a commitment to maintaining market share launching a preemptive strike to capture a rare opportunity using guerrilla warfare tactics to grab market share from distracted competitors

maintaining cash reserves and marketable securities to fund countermeasures publicly announcing a commitment to maintaining market share

What can lead to victory in a standard war among early movers? making use of fast-cycle product development capabilities avoiding alliances with producers of complementary products employing penetration pricing gaining the support of key customers and suppliers

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

The best targets for offensive-minded firms to challenge are

market leaders that are vulnerable.

For every emerging opportunity, there costs exists a(n)

market penetration curve and thus typically has an inflection point where the business model falls into pieces

When there are improvements in technology at the supply stage of the value chain, a vertically integrated company may be required to incur high costs for abandoning old technologies in an effort to keep pace with suppliers. is likely to improve customer service by relying on older plants and technologies. may need to continue producing suboptimal products rather than upgrading its technology. will likely be in a good position to shop the market and purchase optimal products from suppliers.

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

When buyer preferences shift, a vertically integrated company may decide to abandon agreements with suppliers and distributors and rely on its in-house capabilities. will likely face minimal costs in altering its equipment and facilities to make new products. may have difficulty adjusting its product lines to meet new demand. will likely be in a good position to negotiate a mutually beneficial contract with a new supplier.

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

Merger and acquisitions strategies

may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invert a new industry

Maria, the owner/CEO of a local HR recruiting and staffing company, is considering a strategic alliance with Patricia, the owner/CEO of a local payroll company. What would not likely be a consideration for Maria and Patricia with respect to whether the proposed alliance could become successful and realize its intended benefits?

minimizing the amount of resources that the partners commit to the alliance

Outsourcing typically ______ the scope of a business's operations. narrows expands neutralizes destabilizes

narrows

Late-mover advantages (for first-mover disadvantages) are not likely to arise when

opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that create altogether new demand

Late-mover advantages (or first-mover disadvantages) are not likely to arise when

opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand.

A firm with a vertical integration strategy that seeks full integration adopts a vertical integration strategy that begins aggressively but slows down over time. combines in-house and outsourced activity in any given stage of the value chain system. starts up operations in discrete stages of the value-chain system. participates in all stages of the industry value-chain system.

participates in all stages of the industry value-chain system.

A vertically integrated firm cuts the cost of operations and limits the scope of a company's offerings. combines two companies to extend its geographic reach. concentrates on one stage of an industry's value chain system. participates in multiple stages of an industry's value chain system.

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

In industries in which technological developments occur at a fast pace, a strategic alliance can benefit a company by reducing the company's dynamic capabilities. speeding up the company's cycles of learning. granting the company quick access to the latest technological know-how. disrupting operations in the company's area of specialization.

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

Compared to vertical integration or horizontal mergers/acquisitions strategies, the principal advantages of joint venture partnerships and alliances include

potential resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment.

The benefits of defensive strategies include which of the following? protecting a firm's resources expanding a company's share of the market eliminating rivals from the market strengthening a firm's position in the market

protecting a firm's resources strengthening a firm's position in the market

A signal that would not warn challengers that strong retaliation is likely is

publicly announcing strong quarterly potential to financial analysts

Companies like amazon, Apple, Facebook and Google employ all but one of the following offensive actions to complement and supplement the choice of one of the five generic competitive strategies. which is not an example of an offensive move?

pursuing a market share leadership strategy

The concept of blue-ocean strategies does not refer to

pursuing offensive strategies that involve a preemptive strike to secure an advantageous position in a mature market segment.

Horizontal scope refers to the

range of product and service segments that a firm can serve within its focal market.

The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are

resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment

Adept followers have an opportunity to meet the achievement of industry pioneers at far lower costs when second movers can imitate the pioneer by deploying a blue-ocean strategy. market uncertainties give second movers the opportunity to move quickly and clarify needs. second movers can produce equal or better products than pioneers while avoiding the pioneer's costly mistakes. customer loyalty to the pioneer is high and buyers are reluctant to try imitative products.

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

Adept followers have an opportunity to meet the achievement of industry pioneers at far lower costs when second movers can produce equal or better products than pioneers while avoiding the pioneer's costly mistakes. market uncertainties give second movers the opportunity to move quickly and clarify needs. customer loyalty to the pioneer is high and buyers are reluctant to try imitative products. second movers can imitate the pioneer by deploying a blue-ocean strategy.

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

Cultural differences among companies in a strategic relationship should be respected and treated sensitively if the partners hope to have a productive relationship. can rarely be overcome once they become apparent. rarely interfere with the success of business relations among strategic partners. are only problematic when partners have different national origins.

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

A business guerrilla offensive is best suited for industrial leaders that are unable to slash prices for a just a brief period. industrial leaders that are seeking to reduce market visibility. small companies that lack the capacity to launch a full strategic offensive against better established rivals. small companies with large amounts of cash reserves to take on industrial leaders.

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

The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to

strengthen the company's competitive position and/or boost its profitability

The best strategic offensives for companies involve which of the following? doing what rivals expect slowly and deliberately over a long period of time striving to convert a competitive advantage into a sustainable advantage overwhelming rivals with swift and decisive action applying resources that rivals are capable of handling

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

Samsung Group's ecosystem of over 1,300 partnerships that enable productive activities, from global procurement to local marketing to collaborative R&D, is considered to have been

successful in creating strategic alliances.

Some companies have adopted forward vertical integration strategies to avoid costs associated with building relationships with end users. supplement to their core product line with iconography and memorabilia. facilitate the sale of overstocked and slow-moving items. decrease dependence on sales agents, wholesalers, and retailers.

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

First-movers are likely to experience significant advantages when switching costs discourage a first mover's customers from seeking a different vendor. being first in a new market builds strong brand loyalty and enhances a firm's reputation. an early move is associated with a very low learning curve. property rights encourage imitation of the initial move.

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

For a backward vertical integration strategy into the business of suppliers to be viable and profitable, a company must possess

the capability to achieve the same scale economies as outside suppliers and also match or best suppliers production efficiency with no drop in quality

A merger can be defined as a cooperative arrangement in which two companies work toward a common goal. an agreement by which one company operates a segment of another company's operations. the process by which one company purchases and absorbs the operations of another company. the combining of two or more companies into a single corporate entity.

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

A company's strategic offensive should be based on buyer segments that the company needs to be better equipped to serve. the company's strengths as well as its rival's strengths and weaknesses. those areas where its rival has the greatest competitive advantage. the company's customer service capabilities.

the company's strengths as well as its rival's strengths and weaknesses.

Conditions that create first-mover advantages include all of the following except

the costs of pioneering are high relative to the benefits accrued.

A strategy of vertical integration can have substantial drawbacks, including

the environmental costs of coordinating operations across vertical chain activities

What would be an example of a firm pursuing vertical integration? an airline outsourcing its customer service to a firm based in another country a shoe manufacturer and a cosmetics manufacturer merging to expand their offerings the owner of a poultry farm expanding into food distribution a clothes manufacturer in the Midwest acquiring a clothes manufacturer in the Pacific Northwest

the owner of a poultry farm expanding into food distribution

A strategic alliance can be defined as a formal agreement between two or more separate companies in which all parties agree to enter into activities previously performed by suppliers. the parties agree to work collaboratively toward one strategically relevant objective. one party agrees to divulge key elements of its business strategy in exchange for cost savings at other stages of the value chain. one company contracts out certain value-chain activities that are normally performed in-house.

the parties agree to work collaboratively toward one strategically relevant objective.

A strategic alliance can be defined as a formal agreement between two or more separate companies in which one company contracts out certain value-chain activities that are normally performed in-house. all parties agree to enter into activities previously performed by suppliers. one party agrees to divulge key elements of its business strategy in exchange for cost savings at other stages of the value chain. the parties agree to work collaboratively toward one strategically relevant objective.

the parties agree to work collaboratively toward one strategically relevant objective.

If you were advising Hoffman-Larouche, which set up Roche Partnering to manage more than 190 alliances in the healthcare industry, what might not be a reason why some of those alliances could prove to be unstable or break apart?

the partners may disagree among themselves over how to divide the profits gained from joint collaboration

Vertically integrated companies may face challenges realizing economies of scale because their production levels are typically higher than the minimum efficient scale. their production levels often fall below the minimum efficient scale. the company is too small. all the parts required in the production process will likely require the same scale of operation.

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

If the race to market leadership in a particular industry is a marathon, companies do not need to weigh the advantages and disadvantages of when to enter the market. there may be enough time for fast followers and late movers to catch up. pioneers can count on first-mover advantages seeing them through to success in the end. fast followers and late movers are usually heavily penalized.

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

When companies pursue operations that require new capabilities, they are likely to find that new businesses across the value chain have the same success factors as their core operation. they are likely to enhance their capacity to keep pace with changes in technology. they are unlikely to experience difficulties realizing early profits from the new operations. they may find that the new operations require skills that the company lacks.

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

A company that aggressively pursues an online sales strategy risks signaling too strong a strategic commitment to dealers. losing the benefits that accrue from channel conflict. retaliation from suppliers. threatening crucial relationships with distribution allies.

threatening crucial relationships with distribution allies.

What is the soundest approach for timing a company's offensive or defensive strategic moves? to be aware of first-mover advantages and disadvantages to minimize risk by being a late mover to always strike first to raise the odds of landing a high payoff to be a fast follower and cut into a rival's newly won competitive advantage

to be aware of first-mover advantages and disadvantages

The defensive approach that companies use most frequently to defend their market position is to disguise the fact that they will retaliate strongly to a strategic attack. to block avenues that competitors might use to launch a strategic offensive. to pursue continuous product innovation to draw sales and market share away from less-innovative rivals. to deploy blue-ocean strategies that open new markets.

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

The defensive approach that companies use most frequently to defend their market position is to pursue continuous product innovation to draw sales and market share away from less-innovative rivals. to deploy blue-ocean strategies that open new markets. to block avenues that competitors might use to launch a strategic offensive. to disguise the fact that they will retaliate strongly to a strategic attack.

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

What are recommended strategies for companies that manage a large number of strategic alliances? to sustain relationships that have produced meager results to break relationships that no longer serve a useful purpose to restructure alliances to optimize collaborative effort to continue to seek promising new alliances

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

When a company considers whether to pursue an emerging market opportunity aggressively or cautiously, the company needs to determine whether the race to market leadership will be a marathon or a sprint. to bear in mind that any first-mover advantages can be fleeting. to ignore how quickly a pioneering innovation is likely to catch on with buyers. to assume that any innovation providing the market opportunity will catch on quickly with consumers.

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

What are reasons for a company to favor Internet retailing? to improve business relationships with wholesalers to lower costs for end users to lower distribution costs to increase brand recognition

to lower costs for end users to lower distribution costs to increase brand recognition

What are some reasons that companies adopt defensive strategies? to lower the risk of being attacked by competitors to minimize the impact of any competitive attack that occurs to encourage more challenges from a variety of rivals to make an aggressive move to improve a company's competitive advantage over rivals

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

The extent to which a firm engages in the various value chain activities, from initial activities all the way to after-sales activities, is called

vertical scope

Companies that outsource strategically important operations run the risk of assuming too much control over critical operations. reducing operating costs of the company that they partner with. reducing the capabilities of the company responsible for performing the outsourced activity. weakening their ability to sustain their competitive advantage in areas vital to the company's success.

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

In which situations do adept followers have an advantage over first movers? when imitators can achieve the same benefits as pioneers with lower costs when market uncertainties make it difficult to predict which products will succeed when the first-mover's products do not perform well when first-movers are in a position to keep pace with rapid market evolution

when imitators can achieve the same benefits as pioneers with lower costs when market uncertainties make it difficult to predict which products will succeed when the first-mover's products do not perform well

When is outsourcing not beneficial?

when internal control over an activity is deemed essential

When should a company undertake a strategic offensive? when the company has no option other than to try to lessen a strong rival's competitive advantage when the company has experienced an inordinate amount of staff turnover and needs to identify the strengths of new personnel when the company identifies a chance to improve its market share at a competitor's expense when the company wants to test consumer reaction to the beta version of a new product or service

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

Under which of the following circumstances might backward vertical integration lower costs? when there are few suppliers in the market when the item being supplied is a major component of the final product when the item being supplied is a minor but costly component of the final product when there are many suppliers competing for market position by keeping prices low

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