MP 2

69. The research on diversification in portfolio management indicates that the best approach is probably . a. related differentiation b. related diversification c. unrelated diversification d. repositioning e. no diversification

b. related diversification

83. A(n) strategy is a corporate strategy that addresses the question "How should we compete in this industry?" a. corporate-level b. industry-level c. firm-level d. niche-specific e. SBU-level

b. industry-level

33. Deutsche Bank is the largest bank in the world. Would this give it a sustainable competitive advantage? a. yes, because it would make its operations synergistic b. no, because size is not a criteria for sustainable competitive advantage c. no, because large institutions make more effective use of resources d. no, because large organizations are always targeted for anti-trust activities e. yes, because size is directly and positively related to efficiency

b. no, because size is not a criteria for sustainable competitive advantage

43. An organization is experiencing when there is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management. a. horizontal conflict b. character of the rivalry c. strategic dissonance d. competitive inertia e. an organizational roadblock

c. strategic dissonance

89. Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who was considering developing and marketing a new brand of bleach. Which of Michael Porter's industry forces should you be most concerned about? a. bargaining power of buyers b. threat of substitute products or services c. threat of new entrants d. bargaining power of suppliers e. character of the rivalry

c. threat of new entrants

65. The is a portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share. This strategy helps them to decide how to invest corporate funds. a. investment matrix b. SWOT matrix c. BCG matrix d. portfolio management matrix e. Maslow grid

c. BCG matrix

86. is the measure of the intensity of competitive behavior between companies in an industry. a. Character of culture b. Competitive barrier c. Character of the rivalry d. Benchmarked rivalries e. Product substitutability

c. Character of the rivalry

91. When the bargaining power of suppliers and buyers is high, companies in the industry will . a. find it more difficult to be profitable b. most likely use a growth strategy c. divest themselves of all of their cash cows d. engage in organizational restructuring e. not own any stars

a. find it more difficult to be profitable

95. The positioning strategy that is always paired with one of the other two positioning strategies to produce a specialized product or service is . a. focus b. differentiation c. cost leadership d. diversification e. repositioning

a. focus

106. Under conditions of advantage, a competitive attack by the stronger rival is more likely to produce sustained competitive a. high market commonality b. high competitive autonomy c. high resource similarity d. low resource similarity e. low market commonality

d. low resource similarity

42. The highly fragmented chemical industry in Europe has experienced decreasing profits in an industry reluctance to change the way it conducts business, especially in how it competes against lower-priced U.S. imports. This is an example of . a. competitive dissonance b. strategic apathy c. competitive inertia d. strategic inertia e. competitive apathy

c. competitive inertia

60. The two major approaches to corporate-level strategy are . a. portfolio strategies and secondary strategies b. grand strategies and temporal strategies c. grand strategies and the portfolio strategy d. the Boston matrix strategy and the Maslow strategy e. major strategies and minor strategies

c. grand strategies and the portfolio strategy

50. In a situational analysis, a strategic group is a group of that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities. a. non-industry specific companies b. expert managers c. trade journals and other relevant periodicals d. other firms within an industry e. consulting firms that use the Delphi technique

d. other firms within an industry

61. Which of the following is an example of a common approach to corporate-level strategy? a. positioning strategies b. adaptive strategies c. ROI strategies d. grand strategies e. none of these

d. grand strategies

58. are the targets that managers use to measure whether their firm has developed the core competencies that it needs to achieve a sustainable competitive advantage. a. Strategic reference points b. Strategic focus points c. Differentiation targets d. Imperfectly imitable resources e. Strategic monitors

a. Strategic reference points

38. The first step in the strategy-making process is to . a. assess the need for strategic change b. conduct a situation analysis c. choose strategic alternatives d. evaluate the impact of changes on the internal environment e. create a strategic budget

a. assess the need for strategic change

94. When The Home Depot opened stores in Canada, it ran a series of ads featuring an animated hammer that showed that the U.S.-based home improvement store had the lowest prices. According to Michael Porter, which of the following positioning strategies did The Home Depot adopt to deal with existing Canadian stores that sold similar products? a. cost leadership b. diversification c. focus d. differentiation e. repositioning

a. cost leadership

70. A strategy is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use. a. grand b. growth c. stability d. retrenchment/recovery e. repositioning.

a. grand

72. McDonald's uses a strategy (a kind of grand strategy) as it increases its profits in France by offering uniquely French products such as Croque McDo, the McDonald's version of a popular French grilled sandwich. a. growth b. decline c. retrenchment/recovery d. repositioning e. pioneering

a. growth

102. Resource similarity and are factors that determine the extent to which firms will be in direct competition with each other. a. market commonality b. resource quality c. related diversification d. product differentiation e. customer autonomy

a. market commonality

55. When doing an analysis of strategic groups to assess external environmental threats and opportunities, Firms are firms that use related but somewhat different strategies than firms. a. secondary; pioneering b. secondary; core c. transient; core d. pioneering; secondary e. core; transient

b. secondary; core

103. Which of the following organizations are most directly in competition with each other? a. Kmart and Gap b. a local flower shop and a grocery store that sells flowers c. FedEx and UPS d. an independent bookstore and a library e. HBO and UPN television network

c. FedEx and UPS

34. A(n) resource is a resource that is not controlled or possessed by many competing firms. a. rare b. imperfectly imitable c. nonsubstitutable d. strategically dissonant e. permanent

b. imperfectly imitable

Which of the following must be met if a firm's resources are to be used to achieve a sustainable competitive advantage? a. differentiation b. imperfectly imitable resources c. related diversification d. unrelated diversification e. a matrix organizational structure

b. imperfectly imitable resources

96. An industry-level strategy that is best suited to changes in the organization's external environment is a(n) . a. positioning b. differentiation c. growth d. adaptive e. diversification

d. adaptive

100. An organization which is a in terms of its adaptive strategy would NOT follow a consistent strategy. a. defender b. pioneer c. analyzer d. reactor e. prospector

d. reactor

98. Because of slowing sales, Arm & Hammer started promoting innovative uses for its baking soda. By searching for new market opportunities, the manufacturer of Arm & Hammer is using which type of adaptive strategy? a. defending b. cost leading c. analyzing d. reacting e. prospecting

e. prospecting

105. From a competitive standpoint, means that the strategic actions your company takes can probably be matched by your direct competitors. a. market commonality b. resource similarity c. character of the rivalry d. competitive inertia e. competitive autonomy

b. resource similarity

66. Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. Specialized bikes have a large share of a fast-growing market. According to the BCG matrix, specialized mountain bikes would be classified as . a. problem children b. cash cows c. exclamation points d. stars e. question marks

d. stars

76. Companies that are following a strategy would be most likely to try to improve the way in which they sell the same goods or services to the same customers. a. growth b. pioneering c. retrenchment/recovery d. portfolio e. stability

e. stability

104. As direct competitors, UPS and FedEx would have . a. a low degree of resource variability b. a high degree of market commonality c. a low degree of competitive inertia d. a low degree of market commonality e. a high degree of resource synergy

b. a high degree of market commonality

67. Deutsche Bank became the world's largest bank through mergers with Bankers Trust, a transatlantic banking operation. Since both banking companies had similar core capabilities, this would be classified as an example of ____. a. related differentiation b. related diversification c. an integrated acquisition d. competency acquisition e. unrelated diversification

b. related diversification

80. Significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or closing or selling entire lines of products or services would be characteristic of a strategy. a. portfolio b. retrenchment c. stability d. firm-level e. grand

b. retrenchment

73. When Coca-Cola acquired a water-treatment and bottling plant so it could produce and market Dasani brand bottled water, it was an example of . a. a repositioning strategy b. external growth c. niche marketing d. a retrenchment strategy e. internal growth

b. external growth

54. Which of the following statements about the strategic reference point theory is true? a. The theory does not consider risk factors. b. The theory is deterministic. c. The theory may lead to bureaucratic management. d. This theory recommends that managers do not change strategic reference points. e. None of these statements about the Strategic Reference Point Theory is true.

e. None of these statements about the Strategic Reference Point Theory is true.

75. Companies can achieve growth mainly by . • shrinking the scope of their business • growing internally through direct expansion or creating new businesses • deleting all cash cows from their portfolios • only maintaining stars in their portfolios • doing all of these

B. growing internally through direct expansion or creating new businesses

68. Which of the following statements about portfolio strategy is true? a. The evidence supports the usefulness of acquiring unrelated businesses. b. Dysfunctional consequences can occur when companies are categorized. c. The strategy may weaken the strongest performer in the corporate portfolio, the problem child. d. Labeling a top performer as a cash cow will strengthen employee morale. e. Maslow's hierarchy can be used to determine the level of motivation needed to acquire and make a success of portfolio strategy.

b. Dysfunctional consequences can occur when companies are categorized.

62. Which of the following statements is true about how the portfolio strategy can be used to help managers acquire companies that fit well with the rest of their corporate portfolio? a. The fewer businesses in which a corporation competes, the smaller its overall chances of failing. b. Risk can be reduced through related diversification (creating or acquiring companies in related businesses). c. Invest the profits and cash from mature, slow-growth businesses into newer, faster growing businesses. d. The most significant advantage of the portfolio strategy is the ability to categorize businesses as stars, exclamation points, question marks, and dogs. e. All of these statements about how the portfolio strategy can be used to help managers acquire companies that fit well with the rest of their corporate portfolio are true.

b. Risk can be reduced through related diversification (creating or acquiring companies in related businesses).

59. The term refers to the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?" a. firm-level strategy b. corporate-level strategy c. industry-level strategy d. portfolio strategy e. vision

b. corporate-level strategy

87. Which of the following is NOT one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability? a. character of the rivalry b. existing complementary products c. bargaining power of suppliers d. threat of substitute products e. bargaining power of buyers

b. existing complementary products

48. In any organization, the are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs. a. imperfectly imitable resources b. valuable resources c. distinctive competencies d. core capabilities e. sources of innovation

d. core capabilities

49. Which of the following is a mechanism used to examine external threats and opportunities facing a firm as well as its internal strengths and weaknesses? a. organizational scanning b. internal marketing c. corporate strategy d. benchmarking e. a situational analysis

e. a situational analysis

56. A situational analysis for a manufacturer of pet food might reveal which of the following facts . a. a growing dog and cat population in the United States b. scientific research that indicates dogs need less calcium in their diet c. a less expensive, more nutritious imported brand of pet food d. a growing demand for gourmet pet food e. all of these

e. all of these

99. Among companies who use the adaptive strategies, blend the strategies used by . a. prospectors; analyzers and reactors b. analyzers; defenders and reactors c. reactors; prospectors and analyzers d. reactors; defenders and prospectors e. analyzers; defenders and prospectors

e. analyzers; defenders and prospectors

84. According to Michael Porter, five industry forces determine an industry's overall attractiveness and potential for long-term profitability. Which of the following is one of those forces Porter identified? a. existence of complementary products b. organizational structure c. existing benchmarks d. span of management e. bargaining power of suppliers

e. bargaining power of suppliers

44. While is a problem strongly associated with top managers, is a problem more likely to be associated with middle and lower-level managers. a. competitive dissonance; strategic inertia b. differentiation discrepancy; strategic dissonance c. strategic inertia; competitive dissonance d. strategic dissonance; competitive discrepancy e. competitive inertia; strategic dissonance

e. competitive inertia; strategic dissonance

88. An ad for a major brand of clothes washer reads, "Since our humble beginnings back in 1950, we have been dedicated to building machines with superior cleaning power, reliability, and style." This manufacturer is more than likely using which kind of positioning strategy? a. differentiation b. retrenchment c. diversification d. focus e. stability

a. differentiation

37. According to the text, valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage only if they are resources. a. nonsubstitutable b. substitutable c. reliable d. expensive e. imitable

a. nonsubstitutable

35. A(n) is a resource that is impossible or extremely costly or difficult for other firms to duplicate. a. rare b. imperfectly imitable c. nonsubstitutable d. strategically dissonant e. reliable

a. rare

71. In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital-intensive, less cyclical business. What type of a grand strategy was ICI using? a. retrenchment b. stability c. growth d. maturity e. cutback

a. retrenchment

82. If successful, which strategy is often followed by a growth strategy? a. retrenchment b. stability c. portfolio d. focus e. differentiation

a. retrenchment

77. Companies often choose a strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth. a. stability b. growth c. pioneering d. portfolio e. retrenchment

a. stability

53. For companies whose main products will not be seen by consumers and whose skills lie in productivity anonymity, a could be to create a brand image to create a distinctive competence. a. strategic reference point b. tactical benchmark c. strategic mission d. core advantage e. competitive sustainability

a. strategic reference point

40. Top-Flite manufactures Strata golf balls and prices these balls at about three times what ordinary golf balls cost. The Strata ball sells exceptionally well because customers perceive its patented three-layer construction to improve handling and increase distance. The patent on these golf balls gives Top-Flite a(n) . a. sustainable competitive advantage b. aggregate marketing strategy c. reliable differentiation d. strategic stance e. differential stance

a. sustainable competitive advantage

92. Cost leadership, differentiation, and focus are the three types of strategies discussed in the text. a. grand b. niche c. positioning d. restructuring e. portfolio

c. positioning

78. The purpose of a strategy is to turn around very poor company performance by shrinking the size or scope of the business. a. growth b. stability c. retrenchment d. maturity e. repositioning

c. retrenchment

79. The strategy is analogous to pruning flowers. a. growth b. stability c. retrenchment/recovery d. portfolio e. repositioning

c. retrenchment/recovery

57. According to strategic reference point theory, managers have two basic strategic alternatives. They are . a. risk-avoiding strategy and pioneering strategy b. risk-maintenance strategy and conflict-avoidance strategy c. risk-avoiding strategy and risk-seeking strategy d. frontal attack strategy and guerilla strategy e. none of these

c. risk-avoiding strategy and risk-seeking strategy

41. An organization is experiencing been successful in the past. a. strategic dissonance b. strategic inertia c. competitive dissonance d. competitive inertia e. sustained competitive disarray when it is reluctant to change strategies or competitive practices that have

d. competitive inertia

52. Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Since then, the company has maintained a technological leadership in the production of bike and bike accessories and an organizational culture that encourages innovation. Technological leadership, as well as its organizational culture, are the company's . a. customer sustainabilities b. organizational advantages c. relative competencies d. core capabilities e. superlative advantages

d. core capabilities

51. Imagine Dow Chemical is conducting a situational analysis. According to its sales, Dow is the second largest chemical company in the world. BASF is the largest. Both companies use a similar strategy. Within Dow's situational analysis, BASF would be classified as a . a. cash cow b. primary firms c. unrelated firm d. core firm e. secondary firm

d. core firm

46. Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. It is recognized worldwide for its ability to design and produce superior mountain bikes. This ability is its . a. customer sustainability b. organizational advantage c. relative competence d. distinctive competence e. superlative advantage

d. distinctive competence

74. When Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce; it was an example of . a. internal growth b. a stability strategy c. a pioneering strategy d. external growth e. a repositioning strategy

d. external growth

93. The positioning strategies identified by Michael Porter are . a. entrepreneurial, growth, and stability b. diversification, acquisition, and divestment c. defender strategy; diversification, and cost leadership d. focus, cost leadership, and differentiation e. divestment; cost leadership, and diversification

d. focus, cost leadership, and differentiation

32. When making travel plans, many tourists have selected Thomas Cook, a British tour operation, because they perceive that no other tour company can duplicate the customer service and satisfaction that Thomas Cook has provided over its years of operation. Thomas Cook has apparently created a sustainable competitive advantage by using resources. a. synergistic b. valuable c. tangible d. nonsubstitutable e. rare

d. nonsubstitutable

85. According to Harvard professor Michael Porter, five industry forces (character of rivalry, threat of new entrants, threat of substitute products or services, bargaining power of suppliers, and the bargaining power of buyers) determine an industry's overall attractiveness and its . a. potential for long-term change b. potential for short-term profitability c. level of risk d. potential for long-term profitability e. potential for short-term growth

d. potential for long-term profitability

39. NTL is the largest cable company in the United Kingdom. The company has recently declared bankruptcy and needs to engage in restructuring in order to give it more flexibility and allow it to raise capital. Since it has identified the need for strategic change, what would be the organization's next step in this strategy-making process? a. finding the optimal strategic solution b. brainstorming c. conducting focus groups d. assessing the need for strategic change e. conducting a situation analysis

e. conducting a situation analysis

36. Aveda is a manufacturer and marketer of cosmetics, perfumes, hair-care, and skin-care products. To differentiate its products from other similar brands, Aveda focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. Aveda has used customer education and employee training to . a. create synergy through relationship marketing b. prevent product duplication c. make efficient use of imitative resources d. eliminate the need for nonsubstitutable resources e. create a competitive advantage

e. create a competitive advantage

97. Hohner is a company that manufactures and markets harmonicas, a product with a steady demand rate. It is so successful at what it does that the company controls 85 percent of the world's harmonica industry. In terms of the adaptive strategies, Hohner would most likely be categorized as a(n) . a. reactor b. diversifier c. stabilizer d. analyzer e. defender

e. defender

47. While are tangible, are not. a. core capabilities; distinctive competencies b. competitive advantages; differential advantages c. strengths and weaknesses; opportunities and threats d. opportunities and threats; strengths and weaknesses e. distinctive competencies; core capabilities

e. distinctive competencies; core capabilities

90. Glassmaker AFG Industries positions itself as the primary supplier of glass used in microwave doors, shower doors, and patio tables. What type of a positioning strategy does the glass manufacturer use? a. adaptive b. growth c. diversification d. differentiation e. focus

e. focus

101. Which of the adaptive strategies tends to result in the poorest performance? a. niche marketers b. analyzers c. prospectors d. defenders e. reactors

e. reactors

81. In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital-intensive, less cyclical business. If ICI is successful in making the needed changes, it will more than likely implement a strategy. a. harvesting b. revitalization c. diversification d. revival e. recovery

e. recovery

45. A , also called a SWOT analysis for strengths, weaknesses, opportunities, and threats, is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment. a. market audit b. firm-level strategy c. competitive advantage d. differentiation analysis e. situational analysis

e. situational analysis

63. Starbucks, the operator of Starbucks coffeehouses, also markets a line of compilation CDs and other non-coffee items. The making and marketing of the CDs and other non-coffee products would be an example of . a. related differentiation b. related diversification c. an integrated acquisition d. competency acquisition e. unrelated diversification

e. unrelated diversification

64. When Clorox Corporation, a manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce; it was an example of . a. related differentiation b. related diversification c. an integrated acquisition d. competency acquisition e. unrelated diversification

e. unrelated diversification