Strategic Management Chapter 1-5 Quizzes

A firm pursuing a best-cost provider strategy: a) Seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation. b) Tries to have the best cost (as compared to its rivals) for each activity in the industry's value chain. c) Achieves competitive advantage because its operating activities are "best-in-class" or "best-in-world." d) Follows a hybrid strategy based upon superior resources and a narrow market niche.

a

A focused low-cost strategy: a) Involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors. b) Is the hardest of the four generic types of competitive strategies to employ successfully. c) Involves the use of deep price discounting to capture customers. d) Entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques.

a

A strategy that distinguishes a company from its rivals and provides a sustainable competitive advantage: a) Is a company's most reliable ticket to above-average profitability. b) Is based heavily upon the emergent elements of its strategy. c) Is a reliable indicator that the company has a profitable business model. d) Is logical because the strategies of rival companies are often predicated on strikingly different business models.

a

A viable business model: a) Sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit. b) Lays out a compelling case for how the strategy will yield competitive advantage. c) Explains how high profit margins will be achieved despite charging relatively low prices to customers. d) Is always closely linked to the company's business strategy.

a

A winning strategy is one that: a) Makes the company a market leader, is ethically and socially responsible, and maximizes profits. b) Is highly profitable and boosts the company's market share. c) Passes the profitability test, the ethics and social responsibility test, the customer satisfaction test, and the shareholder wealth test. d) Its the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance.

d

According to both the text discussion and the summary in Table 2.3, which of the following is not a common shortcoming of company vision statements? a) Incomplete or vague—short on specifics b) Overly reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of buyers) c) Overly broad—so umbrella-like and all-inclusive that the company could head in almost any direction, pursue most any opportunity, or enter most any business d) Lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable

d

In making an overall assessment of a company's competitive strength, the answer to which questions are of particular interest? a) Is the company's resource strength sufficient to allow it to earn bigger profits than rivals and are market opportunities unique, rare, long-lasting, and not able to be copied by rivals? b) Is the company's resource strength sufficient to allow it to earn bigger profits than rivals and are market opportunities unique, rare, long-lasting, and not able to be copied by rivals? c) How does the company rank relative to competitors on each important market success factor and is the company's resource strength sufficient to allow it to earn bigger profits than rivals? Incorrect d) How does the company rank relative to the competitors on each important market success factor and does the company have a net competitive advantage or disadvantage versus major competitors?

d

Managers must chart a company's strategic course by a) Ensuring excess production capacity and/or inventory. b) Building a bigger dealer network. c) Ensuring that marketing and promotion programs are state-of-the-art. d) Developing a thorough understanding of the company's external and internal environments.

d

Which one of the following is not a good indicator of how well a company's present strategy is working? a) Whether it is achieving its stated financial and strategic objectives b) Whether it is an above-average industry performer c) Whether the firm's sales and earnings are increasing or decreasing d) Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities

d

Which of the following is not a relevant factor in conducting a PESTEL analysis? a) How frequently sellers alter their prices, how sensitive buyers are to price differences among sellers, whether an item being purchased is a good or a service, and whether buyers purchase frequently or infrequently b) Interest rates, exchange rates, unemployment rates, inflation rates, and economic growth c) Cultural, lifestyle, and demographic changes d) The birth of new industries, new knowledge, and disruptive technologies

a

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? a) Sticking with an outdated business model b) Focusing on a narrow market niche within an industry c) Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals d) Developing an advantage based on offering more value for the money

a

Which one of the following is not a characteristic of an effectively worded strategic vision statement (see Table 2.2)? a) Directional (is forward-looking; describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future) b) Concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders) c) Graphic (paints a clear picture) d) Easy to communicate (ideally, explainable in 10 minutes)

b

Which one of the following is not an integral part of the managerial process of crafting and executing strategy? a) Developing a strategic vision b) Choosing a strategic intent c) Setting objectives and crafting a strategy to achieve them d) Evaluating performance and initiating corrective adjustments in the company's long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.

b

Which one of the following is not something that can be learned from doing a competitive strength assessment? a) Identifying the competitive factors where a company is strongest and weakest vis-à-vis key rivals and the kinds of offensive/defensive actions the company can use to exploit its competitive strengths and reduce its competitive vulnerabilities b) The extent to which a company's customer value proposition is superior to its rivals' c) Which of the rated companies is competitively strongest and what magnitude competitive advantage it enjoys d) Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (as indicated by the differences among the companies' competitive strength scores)

b

A balanced scorecard for measuring company performance a) Entails balancing the pursuit of good bottom-line profit against the pursuit of nonprofit objectives (although achieving profitability targets is nearly always given greater emphasis). b) Involves putting equal emphasis on the achievement of financial objectives, strategic objectives, and social responsibility objectives. c) Entails setting both financial and strategic objectives and putting a balanced emphasis on their achievement. d) Helps prevent the pursuit of strategic objectives from dominating the pursuit of financial objectives.

c

A company's biggest vulnerability in employing a best-cost provider strategy is: a) Relying too heavily on price discounting. b) Adding features not needed by the majority of buyers. c) Not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs. d) Being timid in cutting its prices far enough below high-end differentiators to win away many of their customers.

c

A company's business model: a) Determines whether its strategy will be ethical or not. b) Is management's story line for how the strategy will result in achieving sustainable competitive advantage. c) Specifies a customer value proposition and develops a profit formula. d) Identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader.

c

An engaging and convincing strategic vision for a company a) Concerns management's view of how to transition the company's business model from where it is now to where it needs to be. b) Should be explained after the company's strategic intent, strategy, and business model have been conveyed to company personnel. c) Should be crafted in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. d) Ought to put "who we were and what we are doing" in writing rather than orally so as to leave no room for company personnel to misinterpret what the strategic vision really is.

c

For a best-cost provider strategy to be successful, a company must have: a) Excellent supply chain capabilities and product design expertise. b) Economies of scope or greater scale economies than rivals. c) A superior value chain configuration and unmatched efficiency in managing essential value chain activities. d) Superior product innovation skills and manufacturing capabilities.

c

Which of the following is not a good example of a marketing-related key success factor? a) A well-known and well-respected brand name b) Breadth of product line and product selection c) Proven ability to improve production processes d) Clever advertising

c

Which of the following strategic approaches becomes most appealing when a market is not important to industry leaders? a) A low-cost provider strategy b) An offensive strategy c) A focused strategy d) A broad differentiation strategy e) A best-cost provider strategy

c

A low-cost provider's basis for competitive advantage is: a) Using an everyday low pricing strategy to gain the biggest market share. b) Larger profit margins than rival firms'. c) High buyer switching costs because of the company's differentiated product offering. d) Meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price.

d

A strategic group map is a helpful analytical tool for a) Assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. b) Determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. c) Determining which company is the most profitable in the industry and why it is doing so well. d) Determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions.

d

Nothing affects a company's ultimate success or failure more fundamentally than: a) Abandoning markets as conditions change. b) How well the strategy fits the company's business model. c) Developing multiple differentiating features in comparison to rivals. d) How well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence.

d

The strategic target of a best-cost provider is: a) The extremely price-conscious customer in a low-end market range. b) The extremely price-conscious customer in a high-end market range. c) Any customer in a narrow market niche where buyers' needs and preferences are distinctively different. d) The value-conscious customer in a middle-market range.

d

Buyer bargaining power is moderate-to-weak in which of the following scenarios? a) Apple designs and manufactures its own microprocessors for mobile devices rather than buying them from Intel or Qualcomm. b) Yoghurt and products made from yogurt are highly differentiated by origin and by price. c) Buyers tend to delay purchases of luxury goods, such as OLED and 4K television sets, until they are on sale. d) Consumers can easily compare different fitness clubs and gyms over the Internet before signing up for memberships. e) The supply of soccer balls increases during the World Cup season.

e

Corporate strategy a) Determines balanced scorecard financial and strategic objectives. b) Should be based on a flexible strategic vision and mission. c) Is subject to being changed much less frequently than either a company's objectives or its mission statement. d) Is primarily concerned with strengthening a company's market position and building competitive advantage. e) Ensures consistency in strategic approach among businesses of a diversified, multibusiness corporation.

e

Examples of uniqueness drivers do not include: a) Product features, design, and performance b) Production R&D c) Customer service d) Continuous quality improvement e) Eliminating low value-added activities and work steps

e

Which of the following is generally not considered to be a market opportunity for a company? a) Expanding into new geographic markets b) Expanding the company's product line to meet a broader range of customer needs c) Expanding into areas that are most suited to the company's collection of capabilities and resource strengths d) Sharply rising buyer demand for the industry's product e) Increased trade barriers in attractive foreign markets

e

Accounting scandals that led to investigations of such well-known companies as AOL Time Warner, Global Crossing, Enron, Qwest Communications, and WorldCom resulted in the conviction of a number of corporate executives and the passage of the Sarbanes-Oxley Act of 2002. In these cases, the board of directors did not fulfill which of the following important obligations? a) Overseeing the company's financial accounting and financial reporting practices b) Instituting a compensation plan for top executives that rewards them for actions that serve stakeholder interests c) Critically appraising the company's direction, strategy, and business approaches d) Creating meeting agendas to deal with regulatory compliance issues

a

Company objectives a) Need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. b) Are needed only in those areas directly related to a company's short-term and long-term profitability. c) Help answer the question of "Where do we want to go" d) Determine the geographic and business scope of the company's operations.

a

Every corporation should have a strong, independent board of directors that does all of the following except a) Be intensely involved with and responsible for leading the strategy-making, strategy-executing process. b) Guide and judge the CEO and other top executives. c) Certify to shareholders that the CEO is doing what the board expects. d) Be intensely involved in debating the pros and cons of key decisions and actions.

a

Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to a) Decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. b) Determine whether the company has a balanced scorecard for judging its performance. c) Determine what changes should be made to its strategy map. d) Determine whether the company's business model is well matched to changing market and competitive circumstances.

a

SWOT analysis a) Is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being. b) Is a tool for benchmarking whether a firm's strategy is closely matched to industry key success factors. c) Reveals whether a company is competitively stronger than its closest rivals. d) Examines the company's cost position activity by activity.

a

Striving to be the low-cost provider is a particularly attractive competitive strategy when: a) Managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain, for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs. b) Most rivals are trying to differentiate their product offering from those of rivals. c) There are many ways to achieve higher product quality that have value to buyers. d) Buyers are not swayed by advertising and are not very brand loyal.

a

When trade-offs have to be made between achieving long-term and achieving short-term objectives, a) Long-term objectives should take precedence unless the short-term performance targets have unique importance. b) Long-term objectives should never take precedence until the short-term objective is achieved. c) Short-term objectives should take precedence unless the long-term performance targets are not achievable. d) Short-term objectives should take precedence because they focus attention on delivering performance improvement.

a

Which of the following conditions determines whether buyer bargaining power in an industry is weak? a) There is a surge in buyer demand that creates a "seller's market." b) Buyer demand is weak or declining. c) Buyer switching costs to competing brands is low. d) Buyers who make large-volume purchases are important to sellers.

a

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures? a) Coca-Cola as a substitute for Pepsi. Correct b) Video-on-demand services from Amazon Prime as a substitute for going to a movie theatre. c) Smartphones as a substitute for digital cameras. d) A salad as a substitute for French fries.

a

Which of the following is not an option to improve the efficiency and effectiveness of internally performed value chain activities? a) Insist on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors-dealers. b) Adopt best practices for quality, marketing, and customer service. c) Reallocate resources to activities that address buyers' most important purchase criteria, which will have the biggest impact on the value delivered to the customer. d) Adopt new technologies that spur innovation, improve design, and enhance creativity.

a

Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? a) Directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy b) Overseeing the company's financial accounting and financial reporting practices c) Evaluating the caliber of senior executives' strategy-making/strategy-executing skills d) Being inquiring critics and exercising strong oversight over the company's direction, strategy, and business approaches

a

Which one of the following is not related to actions and approaches that comprise a company's strategy? a) Proving to shareholders that the company's business model is viable b) Achieving a low-cost provider strategy c) Seeking a broad differentiation strategy d) Concentrating on a focused low-cost strategy

a

Based on an analysis of the five competitive forces, in which of the following industries is profitability likely to be lowest? a) Delivery services using drones Incorrect b) Wireless lighting systems c) Pizza restaurants d) Patented pharmaceuticals e) Wearable fitness and health monitors

c

A company's cost competitiveness is largely a function of: a) Whether it does a good enough job of benchmarking its value chain activities against the value chains of competitors so that it knows exactly how low to drive its costs to be cost-competitive. b) How efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies. c) Whether it possesses a better job of building its resource strengths more cost effectively than rivals. d) Whether it possesses more core competencies and competitive capabilities than its rivals.

b

A company's strategic plan consists of a) Actions and market maneuvers the company plans to use to achieve a sustainable competitive advantage. b) Management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path. c) A company's strategic vision, strategic objectives, strategic intent, and strategy. d) An organization's strategy and management's specific, detailed plans for implementing it.

b

A company's value chain consists of a) The activities a company performs in converting its resource weaknesses into resource strengths. b) The collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service. c) Those activities a company performs that represent "best practices." d) The activities that a company performs in developing a distinctive competence.

b

Which of the following is not one of the hazards of pursuing a differentiation strategy? a) Charging too high a price premium for the differentiating features b) Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements c) Striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) d) Using features or attributes that rivals can easily copy

c

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because: a) 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. b) 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. c) A competitive advantage is what enables a company to achieve its strategic objectives. d) Without a competitive advantage a company cannot become the industry leader.

b

An industry's key success factors a) Are best determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. b) Concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry. c) Are mainly a function of an industry's macro-environment and dominant economic features. d) Involve identifying the similarities in the strategies of rival companies; those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors.

b

As Figure 2.2 shows, the strategy-making hierarchy in a single business company consists of a) Business strategy, divisional strategies, and departmental strategies. b) Business strategy, functional area strategies, and operating strategies. c) Business strategy and operating strategy. d) Managerial strategy, business strategy, and divisional strategies.

b

Every organization has many resources, capabilities, and routines; however, those few things the company does really well and are performed with a very high proficiency are termed a) Core competencies b) Distinct capabilities c) Sustainable activities d) Socially complex activities

b

Identifying the strategic issues and challenges that company managers need to address does not involve: a) Developing a "worry list" of "how to ...," "whether to ...," and "what to do about ..." b) Assessing the diversification moves of corporations competing in similar industries. c) Assessing what challenges the company has to overcome in order to be financially and competitively successful in the short-run. d) Drawing on what was learned from having analyzed the company's industry and competitive environment.

b

Resource and capability analysis is a powerful tool for: a) Justifying the expenditures on state-of-the-art manufacturing plants and equipment, efficient distribution facilities, attractive real estate locations, or ownership of valuable natural resource deposits. b) Sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace. c) Insulating a company against the combined impact of the industry's driving forces and industry key success factors. d) Assessing the value of a company's primary competitor's core competencies and R&D investments.

b

Strategies that yield sustainable competitive advantage are important because: a) A competitive advantage is what enables a company to achieve its strategic objectives. b) These enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. c) Competitive advantage forms the underpinnings of a company's strategic vision. d) Increases in shareholder value are contingent on a sustainable competitive advantage.

b

Successful differentiation allows a firm to: a) Gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). b) Gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). c) Attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. d) Command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features).

b

The five generic types of competitive strategies include: a) Offensive strategies, best-cost provider, defensive strategies, differentiation strategies, and low-cost strategies. b) Low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider. c) Offensive strategies, defensive strategies, low-price strategies, technological leadership strategies, and product innovation strategies. d) Low-price strategies, premium price strategies, middle-of-the-road strategies, best-cost provider, and market share leadership strategies.

b

The heart and soul of any strategy: a) Is its ability to increase shareholder value. b) Is the actions and moves to gain a competitive edge over rivals in the marketplace. c) Deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner. d) Is the day-to-day demands of delivering a service or producing goods to be sold.

b

The most appealing approaches to broad differentiation: a) Are those that hinge upon first-rate R&D and frequent product innovation. b) Involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate. c) Are those that either lower buyer switching costs or enhance the differentiator's brand image. d) Generally relate to product superiority or clever merchandising.

b

What are two of the three best indicators as to how well a company's strategy is working? a) Whether the company is achieving its stated financial and strategic objectives and whether customer and employee satisfaction is high b) Whether the company is achieving its stated financial and strategic objectives and whether it is gaining customers and increasing its market share Correct c) Whether it is subject to weaker competitive forces and pressures than close rivals (a good sign) or whether it is disadvantaged by stronger competitive forces and pressures (a bad sign) d) Whether the company has more competitive assets than it does competitive liabilities and whether its strategy is built around at least two of the industry's key success factors

b

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is: a) Extra attention paid to establishing a distinctive competence. b) Concentrated attention on serving the needs of buyers in a narrow piece of the overall market. c) Greater opportunity for brand loyalty. d) Suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor.

b

When can a company achieve sustainable competitive advantage? a) Whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors b) When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors c) When it is able to produce better products for lower costs than its rivals d) When it consistently achieves both its long-term and short-term strategic and financial objectives

b

When evaluating proposed or existing strategies, managers should: a) Evaluate the firm's business model at least every three years. b) Scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. c) Ensure that core capabilities are incorporated synergistically for establishing a competitive advantage. d) Align existing strategies with new strategies to emphasize incremental gains.

b

Which of the following statements about market opportunity is correct? a) Market opportunity is a big factor in shaping a company's strategy. b) Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable. Correct c) In evaluating the attractiveness of a company's market opportunities, managers have to guard against viewing every industry opportunity as a suitable opportunity. d) A distinctive competence is a big factor in evaluating the attractiveness of a company's market opportunities because managers have to guard against viewing every industry opportunity as a suitable opportunity.

b

Which of the following steps is not a part of the SWOT analysis? a) Identify company weaknesses and competitive deficiencies. b) Identify the company's alignment of vision, mission, values, and strategy. c) Identify company strengths and competitive assets. d) Identify external threats to the company's future profitability.

b

A company's competitive strategy deals with a) Specific actions management plans to take to develop a better value chain than rivals have. b) How it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. c) The specifics of management's game plan for competing successfully. d) Its plans for underpricing rivals and achieving product superiority.

c

An example of a potential weakness or competitive deficiency is: a) A rival developing unique resources and capabilities that require a high level of capital investment. b) The growing bargaining power of customers or suppliers. c) The lack of attention to customer needs. d) Restrictive foreign trade policies or tight credit conditions.

c

Benchmarking: a) Is inherently unethical if it involves companies that are direct competitors because it involves gathering competitively sensitive information about the operations and costs of rivals. b) Is not a valid tool for measuring the cost-effectiveness of an activity unless it is restricted to companies in the same industry. c) Entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities. d) Loses much of its managerial usefulness if it is done with the aid of third-party organizations.

c

Corporate governance failures at Volkswagen included all of the following except a) A lack of understanding regarding the risks of installing "defeat devices" during emissions testing of at least 11 million VW vehicles equipped with diesel engines. b) Fraudulent executive compensation systems at Volkswagen. c) A strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions. d) Inadequate monitoring of VW's Chairman, Ferdinand Piëch, its CEO, Martin Winterkorn, and other senior executives.

c

Establishing and achieving strategic objectives merits very high priority on management's agenda because a) Strategic outcomes provide better benefits to shareholders in both the short run and the long run. b) A company cannot have a shrewd strategic vision without having aggressive and competitively astute strategic objectives. c) Strategic outcomes are leading indicators of a company's future financial performance and business prospects. d) Well-chosen strategic objectives help managers craft a good strategy.

c

Factors that weaken rivalry among competing sellers include a) Low buyer switching costs. b) Slow growth in buyer demand. c) Rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals. d) Standardized or else weakly differentiated products among rival sellers.

c

In answering the question "How well does the strategy fit the company's situation," management must be willing and ready to address such issues as: a) Developing a sound business model and customer base. b) Emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. c) Changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. d) Determining where the company is now and where does the company want to go.

c

In which one of the following market circumstances is a broad differentiation strategy generally not well suited? a) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product b) When few rivals are pursuing a similar differentiation approach c) When most competitors are using eye-catching ads to set apart their product offerings and build a brand image that is differentiated d) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value

c

It is normal for a company's realized strategy to end up: a) A company's realized strategy is usually kept secret. b) A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. c) A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. d) A company's realized strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy.

c

Operating strategies consist of a) What a company's various operating departments plan to do to help execute the company's overall strategy. b) The strategic intent of each operating unit. c) The relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations). d) The specific actions a company's various operating departments plan to take to unify efforts to achieve a sustainable competitive.

c

The strength or weakness of the potential entry of rivals as a competitive force is a) Strongly correlated with the level of supplier power and with the number of suppliers that may seek to integrate forwards into the industry. b) Contingent upon the strength of buyer loyalty to existing brands. c) Contingent upon whether the industry's growth and profit prospects are strongly attractive to potential entry candidates. d) Contingent upon whether the strategies of industry members are well matched to the industry's key success factors.

c

Which of the following analytical tools are particularly useful for determining whether a company's prices and costs are competitive? a) SWOT analysis, strategy assessment, activity-based costing analysis, and key success factor analysis b) SWOT analysis, competitive strength assessment, best practices analysis, and value chain analysis c) Value chain analysis and benchmarking d) Competitive position assessment, competitive strength assessment, strategic group mapping, SWOT analysis, and value chain analysis

c

Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers? a) To enhance the quality of parts and components being supplied and/or to reduce defect rates b) To speed the availability of next-generation components c) To reduce the bargaining power they face from buyers of their products d) To squeeze out important cost savings for both themselves and their suppliers

c

Which of the following is not among the most common types of driving forces? a) Product innovation, marketing innovation, and increasing globalization of the industry b) Changes in the long-term industry growth rate, changes in who buys the product and how they use it, and growing buyer preferences for differentiated products c) Changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability d) Emerging new Internet applications and capabilities, technological change, and the diffusion of technical know-how across more companies and more countries

c

Which of the following statements about a company's strategy is true? a) Crafting an excellent strategy is more important than executing it well. b) A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. c) Strategy at its essence is about competing differently—doing what rival firms do not do or cannot do. d) Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers.

c

The difference between a company's mission statement and the concept of a strategic vision is that a) The mission statement lays out the desire to make a profit, whereas the strategic vision addresses what strategy the company will employ in trying to make a profit. b) A mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there." c) A mission statement deals with what a company is trying to do, and a vision concerns what a company ought to do. d) A mission statement typically concerns an enterprise's present business scope and purpose —"who we are, what we do, and why we are here"—whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be.

d

The primary role of a functional strategy is to a) Describe the mission and strategic intent of each key functional piece of the business. b) Create compatible degrees of strategic intent among a company's different business functions. c) Unify the company's various operating-level strategies. d) Determine how to support particular activities in ways that support the overall business strategy and competitive approach.

d

The rivalry among competing sellers in an industry intensifies a) When buyer demand for the product is growing rapidly. b) When customers are brand loyal and their costs of switching to competing brands or substitute products are relatively high. c) When buyer demand is strong and sellers have little or no excess capacity and only minimal inventories. d) As the number of rivals increases and as they become more equal in size and competitive capability.

d

The task of crafting a strategy is a) The function and responsibility of a few high-level executives. b) More of a collaborative group effort that involves all managers and sometimes key employees striving to arrive at a consensus on what the overall best strategy should be. c) The function and responsibility of a company's strategic planning staff. d) A job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in Figure 2.2).

d

Which of the following conditions generally raise the barriers to entering an industry? a) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry b) Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty c) Product offerings that are pretty much standardized from rival to rival d) High capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold

d

Which of the following is not a distinguishing feature of a low-cost provider strategy? a) The product line consists of a few basic models having minimal frills and acceptable quality. b) The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features. c) The marketing emphasis is on making virtues out of product features that lead to low cost. d) The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations.

d

Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures? a) Whether certain needed inputs are in short supply b) Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs c) Whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price d) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers

d

Which of the following is not among the principal managerial tasks associated with managing the strategy execution process? a) Ensuring that policies and procedures facilitate rather than impede effective execution b) Installing information and operating systems that enable company personnel to perform essential activities c) Exerting the internal leadership needed to drive implementation forward d) Engaging the services of staffing firms to maintain the company's personnel data

d

Which of the following is not an important factor for company managers to consider in drawing conclusions about whether the industry presents an attractive opportunity? a) Whether powerful competitive forces are squeezing industry profitability to subpar levels and whether competition appears destined to grow stronger or weaker b) The industry's growth potential c) Whether industry profitability will be affected favorably or unfavorably by the prevailing driving forces d) How many of the industry's key success factors do companies in the industry typically incorporate into their strategies

d

Which of the following is not one of the questions that must be answered in thinking strategically about a company's external environment? a) What kinds of competitive forces are industry members facing, and how strong is each force? b) What market positions do industry rivals occupy—who is strongly or weakly positioned, and who is not? c) What are the strategically relevant factors in the company's macro-environment? d) What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach?

d

Which of the following is not typically a trigger to an evolving strategy? a) The need to respond to the newly initiated actions and competitive moves of rival firms b) The need to abandon some strategy features that are no longer working well c) The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy as conditions warrant d) The need to respond to short-term swings in the stock market

d

Which of the following questions ought to be used to distinguish a winning strategy from a so-so or flawed strategy? a) Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction? b) Do a sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability? c) Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? d) Is the strategy well-matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance?

d

A broad differentiation strategy works best in which of the following market circumstances? a) When buyers have a low degree of bargaining power and purchase the product frequently b) When new and improved products are introduced frequently c) When buyers incur low costs in switching to rival brands d) When most competitors are resorting to clever advertising and promotions in an attempt to set apart their product offerings e) When there are many ways to differentiate the product or service that have value to buyers

e

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals: a) Should adopt a new competitive strategy that might better match the circumstances of the marketplace. b) Should abandon strategy elements that have caused its weakness in the marketplace. c) Should undertake efforts to develop a distinctive competence. d) Is virtually blocked from using offensive strategies and must rely on defensive strategies. e) Nearly always is relegated to a trailing position in the industry.

e

Excellent execution of a successful strategy is: a) The best test of whether a company is a "true" industry leader. b) The best evidence that the company has a sustainable competitive advantage. c) The best evidence that managers have an emerging business model. d) A solid indication that managers are maximizing profits and looking out for the best interests of shareholders. e) The best test of managerial excellence and the best recipe for making a company a standout performer.

e

It is normal for a company's realized strategy to end up: a) Left unchanged from management's original planned set of actions and business approaches since making on-the-spot changes is too risky. b) Entailing a combination of defensive moves to protect the company's market share and offensive initiatives to set the company's product offering apart from that of its rivals. c) Mimicking the strategies of other industry members since all companies are confronting much the same market conditions and competitive pressures. d) Becoming a mirror image of its business model, so as to avoid impairing company profitability. e) Lending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions.

e

Options for attacking the high costs of items purchased from suppliers do not include a) Switching to lower-priced substitute inputs. b) Collaborating closely with suppliers to identify mutual cost-saving opportunities. c) Integrating backward into the business of high-cost suppliers and making the item in-house so as to better control the cost. d) Pressuring suppliers for more favorable prices. e) Raising prices to customers (in order to cover the high costs).

e

The procedure for creating a strategic group map involves identifying a) How many rivals are pursuing each type of strategy and determining competitive "gray spaces" where rivals can collaborate or form strategic partnerships or alliances. b) Which companies have the biggest market share and which rival is the industry leader. c) Which companies have the highest levels of capital expenditures and which rival has the best or worst financial health. d) Which companies have the highest degrees of brand loyalty and which rival has the best or worst advertising and promotion to support that position. e) Which different market or competitive positions rival firms occupy in an industry and each rival's closest competitors in that industry.

e

The task of driving forces analysis is to: a) Identify all the underlying factors that can cause industry profitability to rise or fall in the years ahead. b) Predict what new forces of competitive and market change will emerge next. c) Determine which of the five competitive forces is the biggest driver of industry change. d) Identify which companies are being driven to move from one strategic group to another strategic group. e) Collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces.

e

The two pivotal factors that distinguish one competitive strategy from another boil down to: a) Whether the company has a customer value proposition, profit formula, and collection of valuable resources, and whether the company's market target is broad or narrow. b) Whether the company focuses on low cost, and whether the company chooses offensive or defensive moves to counter its rivals. c) Whether the company chooses offensive or defensive moves to counter its rivals, and whether the company's market target is broad or narrow. d) Whether the company has to deal with strong competitive forces, and whether the company chooses offensive or defensive moves to counter its rivals. e) Whether the company's market target is broad or narrow, and whether the company is pursuing a competitive advantage linked to lower costs or differentiation.

e

Trying to determine what strategic moves rivals are likely to make next a) Usually has little bearing on a company's own best strategic moves. b) Requires evaluating the industry's key success factors as well as determining how many driving forces are present. c) Is best done by monitoring each rival's market share, earnings per share, and stock price. Adverse changes in these measures signal the coming of a fresh move, but as long as a company's performance on these measures is satisfactory, the chance of fresh moves is slim. d) Cannot be done effectively without first drawing a strategic group map. e) Entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

e

What are the two ways a company can translate its low-cost advantage over rivals into attractive profit performance? a) Eliminating or curbing nonessential activities and aggressive use of activity-based costing b) Having a smaller labor force than rivals and outsourcing many value chain activities to suppliers with world-class technological capabilities c) Doing a better job than its rivals in performing essential activities and utilizing more best practices than its rivals use d) Pursuing the aggressive use of activity-based costing, utilizing more best practices than its rivals use, and having a narrower product line than its rivals offer e) Eliminating or curbing nonessential activities and doing a better job than its rivals in performing essential activities

e

Which of the following is not an element of a company's realized business strategy? a) Actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities b) Actions to strengthen competitiveness via strategic alliances and collaborative partnerships c) Actions to capture emerging market opportunities and defend against external threats to the company's business prospects d) Actions to enter new geographic or product markets e) Adhering to abandoned strategy elements

e

Which of the following scenarios does not exemplify the impact of the macro-environment on a company's strategic opportunities? a) After Whole Foods introduces stores that are comprised solely of generic products, traffic increases. b) FitBit introduces a new feature that monitors users' blood pressure and their sales surge. c) Because of Volkswagen's falsified emissions data, consumer confidence in Volkswagen drops precipitously. d) Sales of Stolichnaya Vodka in the United States dwindle as a result of a boycott of Russian products. e) Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry.

e

Which of the following statements is false? a) A dynamic capability is the ability to modify, deepen, or reconfigure the company's existing resources and capabilities in response to changes in the environment or market. b) A company's internal strengths should always serve as the basis for its strategy. c) Managers must look toward correcting competitive weaknesses that make the company vulnerable, dampen profitability, or disqualify it from pursuing an attractive opportunity. d) Managers need to keep close track of how cost effectively the company can deliver value to customers relative to its competitors. e) Resources are harder to categorize than capabilities and more challenging to search for as a result.

e