Strategic Planning Final 2

11. Management's strategic vision for an organization: A. charts a strategic course for the organization ("where we are going") and provides a rationale for why this directional path makes good sense. B. describes in fairly specific terms the organization's strategic objectives, and strategy. C. spells out how the company will become a big moneymaker and boost shareholder value. D. addresses the critical issue of "why our business model needs to change and how we plan to change it." E. spells out the organization's strategic intent and the actions and moves that will be undertaken to achieve it.

A

10. The most important leadership trait in the strategy execution process is: A. a strong, confident sense of what to do and how to do it. B. strong communication skills (both written and verbal) covering motivating intent. C. strong management skills to ensure a systematic approach to administration. D. strong organizational skills so as to make actions structured toward results. E. strong empathy skills when employees run into challenging moments.

A

11. How valuable a low-cost leader's cost advantage is depends on: A. whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B. how easy it is for the low-cost leader to gain the biggest market share. C. the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D. the leader's ability to combine the cost advantage with a reputation for good quality. E. the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs.

A

11. The contention that since there are cross-country or cross-cultural differences in ethical standards, it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores should take precedence over a single set of ethical standards or what may be applicable in a company's home market: A. defines what is meant by ethical relativism. B. defines what is meant by ethical universalism. C. is the foundation of a social contract. D. is the basis for the theory of ethical variation. E. is the guiding principle for religious and moral standards across countries and cultures.

A

11. Which of the following is NOT one of the five typical sources of competitive pressures? A. The power and influence of industry driving forces B. The bargaining power of suppliers and seller-supplier collaboration C. The threat of new entrants into the market D. The attempts of companies in other industries to win customers over to their own substitute products E. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry

A

13. Acquisition of an existing business is an attractive strategy option for entering a promising new industry because it: A. is an effective way to hurdle entry barriers, is usually quicker than trying to launch a brand-new startup operation, and allows the acquirer to move directly to the task of building a strong position in the target industry. B. is less expensive than launching a new startup operation, thus passing the cost-of-entry test. C. offers a challenging opportunity to train new resources and revive a sagging business even if does not offer great prospects for growth, profitability, or return on investment. D. is more likely to result in passing the shareholder value test, the profitability test, and the better-off test. E. offers the prospect of gaining an immediate competitive advantage in the new industry and thus helps ensure that the diversification move will pass the competitive advantage test for building shareholder value.

A

13. Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less, or it's free!" With it what has the pizza maker achieved? A. Built a unique customer value proposition B. Created a new delivery system C. Given a sense of exclusivity to its customers D. Coordinated with suppliers to better address customer needs E. Emphasized human resource management activities

A

13. The two approaches that can make the process of uncovering and identifying a firm's capabilities more systematic are: A. resources assessment and the functional approach. B. strengths valuations and weaknesses estimations. C. sustainability resource allocation and resource bundling. D. cross-functional analysis and collaborative resource methodology. E. financial statement analysis and management support analysis.

A

13. Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves: A. building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry. B. building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits. C. evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors. D. assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures. E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

A

13. Which of the following is NOT a purpose of a defensive strategy? A. To increase the risk of having to defend an attack B. To weaken the impact of any attack that occurs C. To pressure challengers to aim their efforts at other rivals D. To help protect a competitive advantage E. To decrease the risk of being attacked

A

33. A strongly implanted culture provides a huge assist in executing strategy because company managers can use the traditions, beliefs, values, common bonds, or behavioral norms: A. as levers to mobilize commitment to executing the chosen strategy. B. as reinforcement for convincing staff that the strategy is sound and molded in tradition. C. to ensure the staff will embrace the new strategy like they have in the past. D. to manipulate jobholders into thinking traditions are important. E. as disciplinary measures in making the employees perform better and achieve targets.

A

33. An economy of scope is BEST illustrated by being able to eliminate or reduce costs by: A. combining related value-chain activities of different businesses into a single operation. B. performing all of the value chain activities of related sister businesses at the same location. C. extending the firm's scope of operations over a wider geographic area. D. expanding the size of a company's manufacturing plants. E. having more value chain activities performed in-house rather than outsourcing them.

A

28. Reengineering how a firm performs a business process: A. is a tool for pulling the pieces of strategy-critical processes out of different departments and unifying their performance in a single department or cross-functional work group that is in charge of the whole process. B. is the most frequently used tool of total quality management (TQM). C. requires that a company have many strategic partnerships and alliances with outsiders. D. is typically cheaper and easier than using Six Sigma techniques to achieve the same cost savings. E. is usually a company's most important "best practice" for achieving operating excellence.

A

29. A company's mission statement typically addresses which of the following questions? A. Who are we and what do we do? B. What objectives and level of performance do we want to achieve? C. Where are we going and what should our strategy be? D. What approach should we take to achieve sustainable competitive advantage? E. What business model should we employ to achieve our objectives and our vision?

A

44. A core competence: A. is a more competitively valuable strength than a competence because of the key role the activities play in the company's strategy. B. typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company's balance sheet. C. usually is grounded in the technological expertise of a particular department or work group. D. is more difficult for rivals to copy than a distinctive competence. E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

A

44. Without a strategic framework, managers lack the context in which to: A. fix things that really matter to business-unit performance and competitive success. B. carry out company-wide goals related to the dynamics of a single business model. C. employ the company's resources in the pursuit of sustainable competitive advantage. D. communicate aspirations for the company. E. analyze the emerging market opportunities more precisely.

A

45. In which of the following circumstances are competitive pressures associated with the bargaining power of buyers NOT relatively strong? A. The supply of soccer balls increases during the World Cup season. B. Consumers can easily compare different smartphones' features over the Internet before buying them. C. Apple designs and manufactures its chip processors rather than buying them from IBM. D. Dairy products are usually standardized and therefore differentiated only by price. E. Buyers tend to delay purchases of expensive goods, such as home entertainment systems, until they are on sale.

A

57. Changing a problem culture: A. is one of the toughest managerial tasks because of the heavy anchor of ingrained behaviors and ways of doing things. B. is best done by instituting an aggressive program to train employees in the ways and beliefs of the new culture to be implanted. C. is best done by selecting a team of key employees to lead the culture change effort. D. requires writing a new statement of core values, having a series of lengthy meetings with employees to explain the new culture and the reasons why cultural change is needed, and then having both employees and shareholders vote to ratify and adopt the new culture. E. can be done quickly only if managers tie incentive compensation to exhibiting the desired new cultural behaviors and if managers visibly praise people who exhibit the desired new cultural traits.

A

48. Which of the following is true of a company's business model? A. It zeroes in on the customer value proposition and its related profit formula. B. It explains why the customer value proposition takes precedence over the related profit formula to generate optimum revenues. C. It details the ethical and socially responsible nature of the company's strategy. D. It explains how it intends to achieve the same market position as a rival. E. It is termed a winning model if it passes any one of the three strategy tests.

A

49. When are capabilities-motivated acquisitions essential? A. When industry conditions, like technology advances are central to growth and rivalry is intense B. When first-mover advantages for products or services can be added to the portfolio lineup C. When the acquired firm can be purchased at a discount due to underperformance D. When a market opportunity can slip by faster than a needed capability can be created internally E. When the capabilities involve tacit knowledge and complex routines

A

50. Which of the following makes use of Six Sigma programs to improve quality and strategy execution? A. Memphis & Company applies advanced statistical methods to identify and remove the causes of defects. B. Milwaukee Hospital relocates its pathological lab to reach out to consumers in suburbs. C. LG Electronics reengineers its value chain activities by creating cross-functional teams. D. La Tagliata Boutiques offers a different range of products at different outlets across London. E. Duke Energy replaces work depots by mobile repair vans reducing operational costs by 40 percent.

A

51. Which of the following is NOT something a company should usually consider in crafting a strategy of social responsibility? A. Actions to benefit shareholders such as raising the dividend or boosting the stock price B. Making charitable contributions and supporting community service endeavors and reaching out to make a difference in the lives of the disadvantaged C. Actions to ensure the company has an ethical strategy and operates honorably and ethically D. Actions that promote good stewardardship (by protecting and enhancing) the environment E. Actions to enhance workforce diversity

A

53. When calculating the weighted industry attractiveness scores, we find the more intensely competitive an industry is: A. the lower the attractiveness weighting for that industry. B. the higher the attractiveness weighting for that industry. C. suggests the resources are beyond the parent company's reach. D. suggests the industry attractiveness measures have been incorrectly weighted. E. the more likely the company's profit and revenues will be intensive.

A

55. How do good corporate citizens function? A. They pursue discretionary activities that contribute to the betterment of society, especially in areas where government has chosen not to focus its efforts or has fallen short. B. They are active participants in the political processes. C. They identify up-and-coming managers who have a future in local- or state-level politics. D. They create a democratic workplace where the voices of lower-level employees are heard through representation on the board of directors. E. They seek to replace government functions with more efficient, market-driven solutions.

A

55. What is the rule for organizing the work effort to support good strategy execution? A. Match the firm's organizational structure to its unique strategy. B. Decide on how much to spend on training managers and employees. C. Choose an organization structure that is a tight fit with the corporate culture. D. Ensure the firm hires a capable management team. E. Learn how the collaborative partner does things.

A

56. The "triple bottom line" refers to what three performance metrics a company should simultaneously succeed in? A. Economic, social, and environmental B. Pay, power, and performance C. Planning, execution, and results D. Legal, social, and economical E. Legal, social, and environmental

A

70. To create a strategy-supportive system of rewards and incentives, a company must: A. reward people for accomplishing results, not just for dutifully performing assigned tasks. B. focus jobholders' attention and energy on what to do as opposed to what to achieve. C. demand jobholders' 100 percent attendance since it guarantees results. D. hold jobholders' responsible for their function and not burden them with being accountable. E. incorporate negative motivational elements to assure results.

A

What is it called when a company sells its goods in foreign markets at prices that are below the prices at which it normally sells in its home market or well below its full costs per unit? A. Dumping practices B. Price-clearing system C. Clearance sale D. Discounting practices E. Competitive advantage

A. Dumping practices

Using domestic plants as a production base for exporting goods to selected foreign country markets: A. can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets. B. can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country and does not have to compete head-to-head against strong host country competitors. C. can be a powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities. D. can be a weak strategy when competitors are pursuing multi-country strategies. E. can be a powerful strategy because a company is not vulnerable to fluctuating exchange rates.

A. can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.

22. Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel: A. base their standards of what is ethical and what is unethical in the company's home market. B. may quickly find themselves on a slippery slope with no higher order moral compass if they operate in countries where ethical standards vary considerably from country to country. C. have no fair way to judge the ethical correctness of the conduct of company personnel. D. have a one-size-fits-all set of ethical standards. E. end up allowing each company employee to determine what set of ethical standards to observe.

B

36. Vertical integration strategies: A. extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. B. are one of the best strategic options for helping companies win the race for global market leadership. C. offer good potential to expand a company's lineup of products and services. D. are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E. area good strategy option for helping a company revamp its value chain and bypass low value-added activities.

A

37. A dynamic capability is the: A. ongoing capacity to modify existing resources and capabilities to create new ones. B. improvement evaluation process for eliminating waste in the firm. C. functional and operating resources management process. D. ongoing capability to understand and establish a rival commitment to resource alignment. E. most compelling product or service a firm .

A

37. Identifying and assessing a company's resource strengths and weaknesses and its external opportunities and threats is called: A. a SWOT analysis. B. a competitive asset/liability analysis. C. a competitive positioning analysis. D. a strategic resource assessment. E. a company resource mapping.

A

37. Well-stated objectives are: A. quantifiable or measurable, and contain deadlines for achievement. B. succinct and concise so as to identify the company's risk and return options. C. broad and take into account views of all the stakeholders. D. directly related to the dividend payout ratio for stockholder returns. E. representative of customers' aspirations for company performance.

A

38. An umbrella brand: A. is a generalized resource that can be leveraged in unrelated diversification. B. is a brand name that can steer a narrow assortment of business types. C. represents a public disclosure spotlighting the corporate image. D. represents an overall corporate marker covering its overriding image of sustainability and responsibility. E. is a specialized resource designed to influence profit growth.

A

22. Frequently, a significant part of a company's culture is captured in: A. the company's strategic vision and strategic intent. B. the stories that get told over and over again to illustrate the importance of certain values and the depth of commitment that various company personnel have displayed. C. how much stretch is built into the company's financial and strategic performance targets. D. the vigor and enthusiasm with which it engages in benchmarking and seeks out best practices. E. the company's track record in taking market share away from rivals.

B

22. How are a company's organizational capabilities developed and enabled? A. By strengthening the traditions that company executives are committed to maintaining B. Through deployment of a company's resources or some combination of its resources C. By talking openly about the problems of the present company and determining how new behaviors will improve performance D. By shifting from decentralized to centralized decision-making E. By urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing

B

Which of the following strategies identifies a multidomestic approach? A. Texas Instruments strongly encourages its trading partners to use the UN/EDIFACT standard. B. Hard Rock Cafes in Hawaii offer fish tacos and ahi tuna sandwich. C. Coca Cola's general market approach is controlled from Atlanta. D. Nestle established its own distribution network in China. E. Air Asia adapts its price to industry pressures.

B. Hard Rock Cafes in Hawaii offer fish tacos and ahi tuna sandwich.

During the 1980s, the YKK Group developed and manufactured all its fastening products within Japan. Which of the following aspects of the global strategy was YKK trying to achieve? A. YKK catered to homogenous buyer needs across countries and regions. B. YKK centralized its value chain thereby facilitating centralized control. C. YKK engaged in higher levels of R&D by spreading risks over higher-volume output. D. YKK sold the same products under the same brand name everywhere. E. YKK established a single plant to produce different versions of the same product.

B. YKK centralized its value chain thereby facilitating centralized control.

Sharing and transferring resources and capabilities across borders may also contribute to the development of broader or deeper competencies and capabilities, thereby helping a company achieve: A. control over its resource capabilities. B. dominating depth in some competitively valuable area C. intensity of resource diversification. D. precision and compliance in resource agility and responsiveness E. direct investments in foreign countries.

B. dominating depth in some competitively valuable area

20. The best quantitative evidence of whether a company's present strategy is working well is: A. whether the company has more competitive assets than it does competitive liabilities. B. whether the company is in the industry's best strategic group. C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. whether the company has a shorter value chain than close rivals. E. whether the company is in the Fortune 500.

C

20. The culture of a company can be a cost-efficient value chain activity because it can: A. allow for safeguarding internalized operating benefits. B. distinguish a company's capacity integration efforts. C. spur worker pride in productivity and continuous improvement. D. foster quality technological enhancements. E. increase a company's bargaining power with suppliers.

C

21. Which of the following ARE common shortcomings of company vision statements? A. Too specific and too flexible B. Unrealistic, unconventional, and un-businesslike C. Too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on superlatives D. Too graphic, too narrow, and too risky E. Not customer-driven, out of step with emerging technological trends, and too ambitious

C

21. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage? A. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage B. Outcompeting rivals on the basis of differentiating features such as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money C. Focusing on a broad buyer segment and offering buyers a very low cost and highly customized attributes that meet their specialized needs better than rivals' products D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche E. Developing a cost advantage based on offering more value for the money

C

21. Which of the following is NOT one of the ways that a company that a non-capital-intensive can achieve a cost advantage by revamping its value chain? A. Creating a direct sales force and bypassing activities and costs of distributors and dealers B. Conducting sales operations at the company's website C. Increasing production capacity and then striving hard to operate at full capacity D. Relocating facilities so as to curb the cost for shipping and handling activities E. Streamlining operations by eliminating low value-added or unnecessary work steps and activities

C

38. What does a company specifically exhibit when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective? A. Competitive edge. B. Sustainable advantage. C. Strategic intent. D. Financial strength. E. Strategic vision.

C

38. Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether: A. many buyers view the product's differentiating features as having value. B. most buyers have similar needs and use the product in the same ways. C. most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation. D. buyer switching costs are low and customer loyalty to any one brand is low. E. buyers are prone to shop the market for sellers offering the best price.

C

43. Which of the following is the best example of a well-stated strategic objective? A. Increase revenues by more than the industry average. B. Be among the top five companies in the industry in customer service. C. Overtake key competitors on product performance or quality within three years. D. Improve manufacturing performance by 5 percent within 12 months. E. Obtain 150 new customers during the current fiscal year.

C

44. Backward vertical integration can produce a: A. full integration when activities remain the domain of key suppliers. B. tapered integration if the firm consolidates all activities in-house. C. differentiation-based competitive advantage when activities enhance the performance of the final product. D. focused differentiation strategy when the market is broad and the product is a commodity. E. lower degree of flexibility in accommodating shifting buyer preferences.

C

44. Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when: A. virtually all buyers have strong brand attachments and are highly brand loyal. B. demand for the product is growing rapidly. C. sales are made to buyer groups with either strong bargaining power or high sensitivity. D. sellers are racing to add the latest and greatest performance features so as to attract the patronage of important or prestigious buyers. E. buyers are very quality conscious.

C

44. What is the hallmark of an adaptive corporate culture? A. A shared willingness to adapt core values to fit the changing requirements of an evolving strategy B. A conservative strategy, prudent risk-taking, and strong peer pressures to observe cultural norms C. A clear willingness on the part of organizational members to accept change and take on the challenge of introducing and executing new strategies D. A commitment to the types of core values and ethical standards that make a company a great place to work E. A strong preference for performance-based compensation systems—especially the payment of bonuses and stock options

C

45. When a company performs a particular competitively important activity truly well in comparison to its rivals, it is said to have: A. a company competence. B. a strategic resource. C. a distinctive competence. D. a core competence. E. a key success factor.

C

46. Competitive pressures stemming from buyer bargaining power tend to be weaker in which of the following circumstances? A. Most consumers vary the brands they choose for their cookware and kitchen gadgets. B. There is a global decline in the demand for CD players. C. The investment banking industry offers highly differentiated products. D. The Internet offers a huge amount of information on a variety of products. E. Heinz owns a metal-can manufacturing subsidiary to cut back on supplier costs.

C

46. Which of the following is NOT an advantage of setting "stretch" objectives? A. Helping to avoid mediocre results B. Pushing company personnel to be more inventive and innovative C. Helping clarify the company's strategic vision and strategic intent D. Helping a company be more focused and intentional in its actions E. Spurring exceptional performance and helping build a firewall against contentment with modest performance gains

C

46. Which of the following is typically the strategic impetus for forward vertical integration? A. Being able to control the wholesale/retail portion of the industry value chain B. Experiencing fewer disruptions in the delivery of the company's products to end users C. Gaining better access to end users and better market visibility D. Broadening the company's product line E. Allowing the firm access to greater economies of scale

C

1. Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT: A. focusing relentlessly on building a competitive advantage. B. applying resources where rivals are least able to defend themselves. C. using a strategic offense to allow the company to leverage its weaknesses to strengthen operating vulnerabilities. D. employing the elements of surprise as opposed to doing what rivals expect and are prepared for. E. displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

C

15. Achieving a sure cost advantage over rivals entails: A. concentrating on the primary activities portion of the value chain and outsourcing all support activities. B. being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C. selling a mostly standard product and increasing the scale of operation. D. minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E. producing a standard product, redesigning the product infrequently, and having minimal advertising.

C

15. What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack? A. To alleviate their fears by committing to reduce the costs of value chain activities B. To cause the challenger to begin the attack instead of waiting C. To dissuade challengers from attacking or diverting them into using less threatening options D. To create collaborative relationships with challengers E. To insulate other firms from adverse impacts resulting from the challenge

C

1. Which one of the following is NOT one of the five basic tasks of the strategy-making, strategy-executing process? A. Developing a strategic vision of where the company needs to head and what its future business makeup will be B. Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve C. Crafting a strategy to achieve the objectives and get the company where it wants to go D. Developing a profitable business model E. Executing the chosen strategy efficiently and effectively

D

55. When are multiple subcultures MOST problematic? A. When they are compatible with the overarching corporate culture and are supportive of strategy-execution B. When they don't clash and coordinating efforts to craft and execute strategy within each subculture is relatively easy C. When they foster teamwork and support a collaborative approach to strategy execution D. When they embrace conflicting business philosophies that are inconsistent with superior strategy execution E. When they guide management in coming up with consistent approaches to executing company strategies

D

29. In which of the following circumstances is a strategy to be the industry's overall low-cost provider NOT particularly well-matched to the market situation? A. When the offerings of rival firms are essentially identical and readily available from many eager sellers B. When there are few ways to achieve differentiation that have value to buyers C. When price competition among rival sellers is especially vigorous D. When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high E. When the majority of industry sales are made to a few, large-volume buyers

D

5. The objectives of a well-crafted strategy require management to strive to: A. match rival businesses' products and quality dimensions in the marketplace. B. build profits for short-term success. C. realign the market to provoke change in rival companies. D. develop lasting success that can support growth and secure the company's future over the long term. E. re-create their business models regularly.

D

55. Information systems provide managers with a means for monitoring all of the following EXCEPT: A. the results that flow from the actions of subordinates. B. the performance of empowered workers. C. weekly operating statistics. D. employees with over-the-shoulder supervision. E. daily operating statistics.

D

56. When should a culture be changed as rapidly as it can be managed? A. Never, because the actions and behaviors needed to execute the new strategy successfully are well entrenched, and thus are not changeable B. Only rarely, because it is natural for company personnel to cling to existing practices and to be wary of new approaches C. When a company decides on any innovations to its products or services D. When a strong culture is unhealthy or otherwise out of sync with the actions and behaviors needed to execute the strategy successfully E. When the case for cultural reform is not credible, symbolic, nor substantive

D

57. Which of the following is NOT a recommended way for managers to monitor the operating performance of employees to ensure superior strategy execution? A. Scrutinizing daily and weekly operating statistics without resorting to constant over-the-shoulder supervision B. Utilizing self-managed work groups in peer-based control environments C. Removing some layer of management hierarchy and relying on strong peer pressure to keep team members operating between the white lines D. Leaving employees to their own devices in meeting performance standards E. Using information systems capability to monitor team performance in real time

D

57. Which of the following is NOT part of organizing the work effort in ways that promote successful strategy execution? A. Facilitating collaboration with external partners and strategic allies B. Providing for cross-unit coordination and deciding which value chain activities to perform in-house and which ones to outsource C. Determining how much authority to centralize at the top and how much to delegate to down-the-line managers and employees D. Determining which functions and organizational units require superior intellectual capital E. Maintaining expertise and resource depth in performing those internally strategy-critical value chain activities that underpin its long-term competitive success and provide for the main building blocks in the organization structure

D

59. The value of determining the relative competitive strength of each business a company has diversified into is to have a quantitative basis for: A. identifying which businesses have large/small competitive advantages or competitive disadvantages vis-à-vis the rivals in their respective industries. B. rating them from strongest to weakest in terms of contributing to the corporate parent's revenue growth. C. comparing resource strengths and weaknesses, business by business. D. rating them from strongest to weakest in contending for market leadership in their respective industries. E. rating them from strongest to weakest in terms of contributing to the corporate parent's profitability.

D

6. A company's strategic vision describes: A. "who we are and what we do." B. why the company does certain things in trying to please its customers. C. management's storyline of how it intends to make a profit with the chosen strategy. D. management's aspirations for the future and the company's strategic course and long-term direction. E. what future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage.

D

6. An automotive manufacturer sells a limited number of high-end, custom-built cars, using technologically advanced power systems. What strategy is the manufacturer using to gain competitive advantage? A. A low-cost provider strategy B. A broad differentiation strategy C. A focused low-cost strategy D. A focused differentiation strategy E. A best-cost provider strategy

D

6. Establishing investment priorities and steering corporate resources into the most attractive business units typically requires the company to decide on all of the following options, EXCEPT: A. the pursuit of rapid growth strategies in its most promising businesses. B. initiating profit improvement or turnaround strategies in weak-performing businesses with potential. C. the divestiture of unattractive businesses. D. the pursuit of debt reduction opportunities that can lower the debt/equity ratio while maintaining asset levels. E. the divestiture of businesses that do not fit into the company's longer term plans.

D

9. The managerial task of developing a strategic vision for a company: A. concerns deciding what approach the company should take to implement and execute its business model. B. entails coming up with a fairly specific answer to "who are we, what do we do, and why are we here?" C. is chiefly concerned with addressing what a company needs to do to successfully outcompete rivals in the marketplace. D. involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense. E. entails coming up with a concrete plan for how the company intends to make money.

D

9. The three tests for judging whether a particular diversification move can create value for shareholders are: A. the attractiveness test, the profitability test, and the shareholder value test. B. the strategic fit test, the competitive advantage test, and the return-on-investment test. C. the resource fit test, the profitability test, and the shareholder value test. D. the attractiveness test, the cost-of-entry test, and the better-off test. E. the shareholder value test, the cost-of-entry test, and the profitability test.

D

Which of the following is an example of a cross-border alliance? A. Facebook took over WhatsApp for $19 billion in February 2014. B. Hyundai Motor Company plans to open a new manufacturing plant in the Czech Republic. C. The insurance company Geicois a wholly owned subsidiary of Berkshire Hathaway. D. Renault-Nissan sells more than one in ten cars worldwide. E. Carrefour, a French grocery chain, established a new wholly-owned venture in Poland.

D. Renault-Nissan sells more than one in ten cars worldwide.

2. Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, EXCEPT whether to: A. focus on building competitive advantages. B. employ the element of surprise as opposed to doing what rivals expect and are prepared for. C. display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. D. create and deploy company resources to cause rivals to defend themselves. E. pay special attention to buyer segments that a rival is already serving.

E

24. Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask? A. Does market takeoff depend on the new development of complementary products? B. Is a new infrastructure required before buyer demand can surge? C. Will buyers encounter high switching costs to move? D. Are there influential competitors in a position to delay or derail the efforts? E. Did the company pour too many resources into getting ahead of the market opportunity?

E

24. Competing companies deploy whatever means necessary to strengthen market position, including all of the following EXCEPT: A. marketing tactics including special sales promotions such as introducing new or improved features or increasing the number of styles to provide greater product selection. B. differentiating their products by offering better performance features than rivals. C. improving innovation to increase product performance and quality. D. making efforts to expand dealer networks. E. reducing distribution capabilities and market presence.

E

24. Which of the following is NOT a method that company managers can use to promote operating excellence in performing value chain activities? A. Utilize benchmarking. B. Adapt best practices. C. Install TQM and/or Six Sigma quality control techniques. D. Undertake business process reengineering. E. Adopt standard industry techniques.

E

25. Which of the following is generally NOT considered a barrier to entry? A. Restrictive regulatory policies B. High capital requirements C. Strong brand preferences D. Many industry patents in place E. Weak "network effects" in customer demand

E

32. A strongly implanted corporate culture has a powerful influence on behavior because of all of the following EXCEPT: A. most corporate personnel have acknowledged and accepted the cultural traditions. B. management expectations and co-worker peer pressure cause employees to conform. C. over time people who do not like the culture tend to leave. D. over time achieving low-workforce-turnover is a catalyst for conformity and acceptance. E. a strong leader can use coercion and the threat of punishment to enforce norms.

E

33. Managers must be prepared to modify their strategy in response to all of the following EXCEPT: A. changing circumstances that affect performance and the desire to improve the current strategy. B. competitor moves in the market and shifting needs of buyers. C. stagnating market and restrictive industrial opportunities. D. mounting evidence that the strategy is less effective. E. public pronouncements from rivals about monthly profit margins.

E

33. The essence of a broad differentiation strategy is to: A. appeal to the high-end part of the market and concentrate on providing a top-of-the-line product to consumers. B. incorporate a greater number of differentiating features into its product/service than rivals. C. lower buyer switching costs. D. outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

E

33. Which of the following is NOT among the intended outcomes of horizontal merger and acquisition strategies? A. Expanding a company's geographic coverage B. Gaining quick access to new technologies or complementary resources and capabilities C. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities D. Extending the company's business into new product categories E. Suppressing a rival's breakthroughs in management or technology

E

34. Which of the following factors does NOT necessarily drive unethical managerial behavior? A. The pervasiveness of immoral and amoral businesspeople B. Overzealous pursuit of personal gain, wealth, and other selfish interests C. A company culture that puts the profitability and good business performance ahead of ethical behavior D. Heavy pressures on company managers to meet or beat earnings targets E. Executive compensation independent of company performance

E

35. Which of the following is NOT an example of a company's dynamic capability? A. A capacity to improve existing resources and capabilities B. Upgrades to R&D resources to drive product innovation C. A capacity to add new resources and capabilities to the competitive asset portfolio D. An ability to replace degraded resources with acquired capabilities E. An ability to keep antiquated resources by disregarding innovative capabilities

E

36. The managerial purpose of setting objectives includes all of the following EXCEPT: A. converting the strategic vision into specific performance targets—results and outcomes the organization wants to achieve. B. using the objectives as yardsticks for tracking the company's progress and performance. C. challenging and helping stretch the organization to perform at its full potential and deliver the best possible results. D. pushing company personnel to be more inventive and to exhibit more urgency in improving the company's financial performance and business position. E. delineating management's aspirations for the business and providing a panoramic view of "where we are going."

E

36. Which of the following is NOT true of a company that succeeds in differentiating its product offering from those of its rivals? A. It can avoid having to compete on the basis of simply a low price. B. It commands a premium price for its product. C. It usually increases unit sales. D. It gains buyer loyalty to its brand. E. It attracts mainly price-conscious buyers.

E

37. Corporate parenting refers to all of the following EXCEPT: A. the role that a diversified corporation plays in nurturing its component businesses through the provision of top management expertise, disciplined control, financial resources, and capabilities. B. the help subsidiaries receive in performing better when they utilize astute high-level guidance from corporate executives. C. the corporation's ability to provide generalized support resources so as to create value by lowering companywide overhead costs by eliminating duplication of efforts. D. efforts to capitalize on the umbrella brands and enhance value proposition across businesses. E. efforts to judiciously segregate funds for each business in such a way that keeps the money safe and discourages shifting funds across business units.

E

38. The most common approaches to capability building include all of the following, EXCEPT: A. developing capabilities internally. B. acquiring capabilities through mergers and acquisitions. C. accessing capabilities via collaborative partnerships. D. renewing capabilities to align with customer expectations. E. coaching average performers to improve their skills.

E

39. When high ethical principles are deeply ingrained in the corporate culture of a company, culture can function as a powerful mechanism for all of the following EXCEPT: A. communicating ethical behavioral norms. B. gaining employee buy-in to the company's moral standards. C. gaining employee buy-in to the company's business principles. D. gaining employee buy-in to the company's corporate values. E. boosting short-termism.

E

44. Which of the following rationales for pursuing unrelated diversification is likely to increase shareholder value? A. To reduce risk by way of spreading the company's investments over a set of truly diverse industries B. To enable a company to achieve rapid or continuous growth C. To chance that market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses D. To provide benefits to managers such as high compensation and reduced unemployment risk E. To restructure an underperforming business

E

45. Adopting a set of "stretch" financial and "stretch" strategic objectives: A. pushes the company to strive for lesser but adequate profitability levels, because the stretch objectives are considered unattainable. B. is a widely held method for creating a "scorecard" for monitoring company performance. C. helps convert the mission statement into meaningful company values. D. challenges company personnel to execute the strategy with greater enthusiasm, proficiency, and understanding. E. is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.

E

45. Visible costs that are incurred by companies and imposed for ethical wrongdoing include all of the following EXCEPT: A. government fines and penalties. B. civil penalties arising from class-action lawsuits or other litigation. C. lower dividends for shareholders. D. lower stock prices. E. legal and investigative costs.

E

45. Which of the following is a diversified business with one major "core" business and a collection of small related or unrelated businesses? A. A broadly diversified enterprise B. A narrowly diversified enterprise C. A multi-business enterprise D. A high compensation/low risk enterprise E. A dominant business enterprise

E

5. The principal offensive strategy options include all of the following EXCEPT: A. using a cost advantage to attack competitors on the basis of lower price or better product value. B. using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent or distracted rivals. C. launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating. D. pursuing continuous product innovation to draw sales and market share away from less innovative rivals. E. initiating a market threat and counterattack simultaneously to effect a distraction.

E

56. Which of the following is NOT integral to superior strategy execution and operating excellence? A. Having real-time information systems that permit company managers to stay on top of implementation initiatives and daily operations and to intervene if things seem to be drifting off course B. Having state-of-the-art operating systems, information systems, and real-time data C. Having access to online systems that provide statistical information about operating activities D. Having the systems capability to identify and diagnose problems, so as to take corrective actions E. Having access to employee data of competitors

E

57. The three dimensions of performance are often referred to in terms of the "three pillars" and include all of the following EXCEPT: A. a company's efforts to improve the lives of its internal and external stakeholders. B. the various social initiatives that make up the CSR strategies. C. a firm's ecological impact and environmental practices. D. the economic impact (value and costs) that the company has on society. E. a company's efforts to reduce research and development funding to boost profits.

E

59. A company's environmental sustainability strategy consists of its deliberate actions to: A. shelter the environmental impacts from the company's resources and competitive capabilities. B. provide for the defense of natural resources usage within cross-border commitments. C. moderate assurance for ecological support systems for future generations. D. guard against ultimate endangerment of the business. E. operate the business in a manner that promotes the longevity of sustainability effects.

E

6. Which of the following is NOT a principal offensive strategy option? A. Leapfrogging competitors by being first to market with next-generation products B. Using hit-and-run or guerrilla warfare tactics to grab sales and market share C. Launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating D. Pursuing continuous product innovation to draw sales and market share away from rivals E. Being the final competitor to market a next-generation product so as to guarantee the product is operationally sound

E

62. In moving to alter a problem culture, management should do all of the following EXCEPT: A. identify which aspects of the present culture are supportive of good strategy execution and which ones are not. B. specify what new actions, behaviors, and work practices should be prominent in the "new" culture. C. talk openly about the problems of the present culture and how new behaviors will improve performance. D. employ visible, forceful actions—both substantive and symbolic—to ingrain a new set of behaviors, practices, and cultural norms. E. avoid cross-unit cooperation.

E

A sustainable competitive advantage is gained: A. when a company has durable competitive assets that are central to its strategy and superior to those of rival firms. B. when a company has sufficient resources to expedite its strategy. C. when a company realizes its inherent weaknesses are transformable to advantages. D. when a company can stand out relative to rivals because of resource utilization. E. All of these.

a

A useful way to identify a company's resources is to view them as: A. divided into two main categories, tangible and intangible. B. every productive input or competitive asset except human assets and intellectual capital, which are considered capabilities or competencies. C. physical resources, such as the company's brand, image, and reputation assets. D. an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats. E. All of these.

a

A vertical integration strategy can expand the firm's range of activities: A. backward into sources of supply and/or forward toward end users. B. backward into other industry business-lines and/or forward to suppliers of raw materials. C. to enable the supply chain the opportunity for expansion. D. to complement the industry's horizontal value chain line of profitability. E. to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

a

A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States. A. This is a true statement. B. No, the U.S. dollar must be stronger. C. Yes, because it provides for a weakened foreign demand for U.S.-made goods. D. Yes, because it makes such plants less cost competitive with foreign plants. E. Yes, because it provides incentives of foreign companies to locate manufacturing facilities in the U.S. to make goods for U.S. consumers.

a

Resource and capability analysis is achieved by: A. probing the caliber of a firm's competitive assets relative to those of rival firms. B. achieving price stability. C. analyzing only internal strengths and weaknesses through a matrix comparison model. D. cost-benefit analysis of the company's core product sales. E. performing resource-specific activities within the organization to allocate available capital.

a

Sizing up a company's complement of resource strengths and weaknesses: A. is akin to constructing a "strategic balance sheet" where strengths represent competitive assets and weaknesses represent competitive liabilities. B. is called benchmarking. C. is called competitive strength assessment. D. is focused squarely on ascertaining whether the company has more/less resource strengths than weaknesses. E. is called company resource mapping.

a

Strategic offensives should, as a general rule, be based on: A. exploiting a company's strongest competitive assets—its most valuable resources and capabilities. B. instigating and executing the chosen strategy efficiently and effectively. C. scoping and scaling an organization's internal and external situation. D. molding an organization's character and identity. E. satisfying the buyer's needs that the company seeks to meet.

a

Success with a best-cost provider strategy designed to outcompete high-end differentiators requires: A. achieving significantly lower costs in providing the upscale features B. providing significantly better product attributes in order to justify a price above what low-cost leaders are charging. C. matching the company's resources and capabilities to a low-cost provider status. D. motivating buyers to purchase upscale features that match rivals. E. All of these.

a

The advantages of using a franchising strategy to pursue opportunities in foreign markets include: A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees. B. being particularly well-suited to the global expansion efforts of companies with multidomestic strategies. C. allowing a company to achieve scale economies. D. being well suited to companies who employ cross-border transfer strategies. E. being well suited to the global expansion efforts of manufacturers.

a

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include: A. having a high level of control and speed as an entry strategy to overcome trade barriers. B. allowing a company to achieve scalable economies. C. eliminating the costs and risks associated with establishing a foreign business location. D. being able to achieve variable product quality and competitive product performance. E. being able to export goods at higher costs than rivals in those locations.

a

The best strategic alliances: A. are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit, thereby enabling the firm to build on its strengths and to learn. B. are those whose purpose is to create an industry key success factor. C. are those which help a company move quickly from one strategic group to another. D. involve joining forces in R&D to develop new technologies cheaper than a company could develop the technology on its own. E. aim at raising an industry's barriers to entry.

a

The primary lesson stemming from a SWOT analysis is that a company's strategy should: A. leverage resource strengths, capitalize on market opportunities, overcome important weaknesses, and defend against external threats. B. be aimed at opportunities that offer the best potential for improved profitability. C. seek aggressively to defend against those threats to the company's immediate profitability. D. be designed to place heavy demands on areas where the company has proven competencies to meet the threats head-on. E. concentrate on making the SWOT's four lists relevant for strategic discussion and planning.

a

The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions is defined best by: A. resource pooling and risk sharing, more adaptive response capabilities, and the speed of deployment wherewithal. B. the potential profitability of the alliance and related experience curve economics. C. facilitating best practices, more production capacity, and relevant synergistic savings. D. embracing the transactional and relational concept of operating practices and competencies. E. All of these.

a

The range of product and service segments that the firm serves within its market is known as the firm's: A. horizontal scope. B. vertical integration. C. vertical scope. D. product outsourcing. E. joint venture partnership.

a

The road to competitive advantage begins with management's efforts: A. to build organizational expertise in performing certain competitively important value chain activities. B. to understand the value chain activities providing opportunity for growth. C. to build value-creating activities all along the value chain. D. to give superiority over rivals in performing tasks and activities extremely well. E. All of these.

a

What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets? A. Deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country. B. Deciding on the appropriate level of sustainable profitability. C. Deciding on local responsiveness to product sales in each country. D. Deciding on the degree of globalization to maintain expansion capabilities. E. All of these.

a

Which of the following is NOT one of the ways that a company can achieve cost-efficient management of its value chain activities? A. Striving to ensure a corporate diversity policy is introduced with effective controls B. Using the company's bargaining power vis-à-vis suppliers or others in the value chain C. Being alert to the cost advantages of outsourcing or vertical integration D. Striving to capture all available economies of scale E. Motivating employees through incentives and company culture

a

A competitively valuable resource or capability is a company's: A. enabling foundation of its business model. B. equally valuable substitute resource providing a competitive advantage. C. assessment of the availability of superior substitutes. D. unsurpassed worker productivity and product quality. E. unique piecework incentive system, providing a competitive advantage.

a

A core competence: A. is a more competitively valuable strength than a competence because of the key role the activities play in the company's strategy. B. typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company's balance sheet. C. usually is grounded in the technological expertise of a particular department or work group. D. is more difficult for rivals to copy than a distinctive competence. E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

a

A dynamic capability: A. is the ongoing capacity to modify existing resources and capabilities to create new ones. B. is the improvement evaluation process for eliminating waste in the firm. C. is the functional and operating resources management process. D. is the ongoing capability to understand and establish rival commitment to resource alignment. E. All of these.

a

A factor that has a strong influence on a company's costs is termed: A. a cost driver. B. economies of scale. C. an expense reduction program. D. operating margin shortfalls. E. All of these.

a

A key approach for a company to grow sales and profits in several country markets is to A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities. B. employ a multidomestic strategy rather than a global strategy. C. locate technical after-sale services close to buyers. D. minimize transportation costs among these markets. E. take advantage of less restrictive restrictions and requirements of host governments.

a

A multidomestic strategy represents: A. a think-local, act-local approach to international strategy. B. a sound approach when decision-making is centralized. C. a focused strategy on a global scale with decision making centralized. D. a decision-based approach whereby senior managerial positions are occupied by home-country staff. E. All of these.

a

A pitfall to avoid in pursuing a differentiation strategy is: A. trying to differentiate on the basis of attributes or features that are easily and quickly copied. B. choosing a product offering that supports buyer's indifference to rival brands' offerings. C. charging a premium price for the differentiating features. D. meeting and exceeding the meaningful gaps in quality, performance, service, and other attractive differentiating attributes offered by rivals. E. spending on activities to differentiate the company's product offering to enhance profitability.

a

A primary reason for why mergers and acquisitions sometimes fail is due to the: A. misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes. B. execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue. C. development of effective integration plans conducive to employee satisfaction. D. advertising message detailing the merger announcement. E. All of these.

a

A strategy that incorporates elements of both multidomestic and global strategies is termed a "transnational" strategy, but sometimes it is referred to as what? A. A glocalization strategy. B. An international strategy. C. A think-local, act-global strategy. D. A cross-border integrated strategy. E. A standardized integrated strategy.

a

Which of the following most accurately reflect a company's resource strengths? A. Its human, physical and/or organization assets; its skills and competitive capabilities; and its achievements or attributes that enhance the company's ability to compete effectively B. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals D. Whether it has more primary activities in its value chain than close rivals and a better overall value chain than these rivals E. Whether it has more core competencies than close rivals

a

Which of the following rivals make the best targets for an offensive attack? A. Firms with weaknesses in areas where the challenger is strong. B. Companies that are financially strong and possess favorable competitive market positioning. C. Large national firms with vast capabilities and intermittent trivial resource deficiencies. D. Strong and financially secure market leaders. E. Small local and regional firms with unrestrained capabilities.

a

The competitive power of a company's core competence or distinctive competence depends on: A. whether it helps differentiate a company's product offering from the product offerings of rival firms. B. how hard it is to copy and how easily it can be trumped by substitute resource strengths and competitive capabilities of rivals. C. whether customers are aware of the competence and view the competence positively enough to boost the company's brand-name reputation. D. whether the competence is one of the industry's key success factors. E. whether the competence is technology-based or based on superior marketing know-how.

b

A route to take in developing a differentiation advantage includes: A. incorporating product attributes and user features that raise the buyer's overall costs. B. incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling. C. incorporating specific signals of differentiation. D. incorporating intangible features that enhance buyer satisfaction in economic ways. E. All of these.

b

At the heart of a production-based emphasis toward a low-cost provider strategy usually requires a company to: A. strive for product superiority. B. strive for continuous cost reductions without sacrificing acceptable quality and essential features. C. strive for small-scale production or custom-made products that match the tastes and requirements of niche members. D. strive to build in appealing features and better quality at lower costs than rivals. E. All of these.

b

Companies that compete internationally are able to benefit from coordinating activities across different countries domains by: A. coordinating production schedules worldwide to take advantage of exchange rate fluctuations, component shortages, and changing wage rates or energy costs. B. redirecting shipments to higher sales demand areas. C. shifting workloads to plants with underutilized capacity. D. transferring resource-based advantages at low cost. E. All of these.

b

Companies that compete on an international basis have a competitive advantage over their purely domestic rivals A. to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success. B. to benefit from coordinating activities across different countries' domains. C. solely for the benefit of their shareholders. D. that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid. E. None of these.

b

Cross-country variations in government policies and economic conditions affect: A. the formation of investment priorities and the steering of corporate resources. B. the opportunities available to foreign entrants and the risks of operating within that country. C. the ability of foreign markets to remain competitive. D. the ability of weak-performing businesses to stage a narrow base for business operations. E. cross-business opportunities such as transferring skills or technology to the new market.

b

The competitive power of a company's resource strength is NOT measured by which one of the following tests? A. Is the resource rare and something rivals lack? B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders? C. Is the resource strength easily trumped by the substitute resources/capabilities of rivals? D. Is the resource strength hard to copy? E. Is the resource strength competitively valuable, having the potential to contribute to a competitive advantage?

b

The diamond framework can be used to reveal the answers to all of the following that are important for competing on an international basis EXCEPT: A. where foreign entrants into an industry are most likely to come from. B. how to formulate an exit strategy to push foreign competitors out of the market on the basis of competing strengths. C. which countries' foreign rivals are likely to be the weakest. D. how managers can decide which foreign markets to enter first. E. where to locate different value chain activities so they are the most beneficial.

b

The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is: A. that partners will not fully cooperate or share all they know, preferring instead to guard their most valuable information and protect their more valuable know-how. B. becoming dependent on other companies for essential expertise and capabilities. C. the added time and extra expenses associated with engaging in collaborative efforts. D. having to compromise the company's own priorities and strategies in reaching agreements with partners. E. the collaborative arrangements will not live up to expectations.

b

The advantages of using an export strategy to build a customer base in foreign markets include: A. being able to minimize shipping costs, avoiding tariffs, and curbing the effects of fluctuating exchange rates. B. minimizing its risk and direct investments requirements. C. being cheaper and more cost effective than licensing and franchising. D. being cheaper and more cost effective than a multicountry strategy. E. being more suited to accommodating local buyer tastes and host government regulations than a global strategy.

b

The big problem a franchisor faces is: A. allowing franchisees to achieve scale economies. B. maintaining quality control due to a lack of commitment to consistency and standardization C. eliminating the costs and risks associated with establishing a foreign business location. D. one where foreign facilities and marketing strategies are shared with local businesses. E. being able to achieve higher product quality and better product performance than with an export strategy.

b

The big risk of employing an outsourcing strategy is: A. causing the company to become partially integrated instead of being fully integrated. B. hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success. C. hurting a company's R&D capability. D. putting the company in the position of being a late mover instead of an early mover. E. increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

b

What is the best way to achieving the efficiency potential of a global strategy? A. It demands managerial attention to be focused on objective-setting specifically oriented toward production practices. B. It requires that resources and best practices be shared, value chain activities be integrated, and capabilities be transferred from one location to another as they are developed. C. It requires that the best identified resources and capabilities be centralized at headquarters. D. It requires value chain activities to be dispersed across many countries to elevate cost control management as a primary focus in all countries. E. All of these.

b

What is the framework that comprises a set of major factors (that vary from country to country) that describe the nature of each country's business environment? A. Porter's five forces model. B. Porter's Diamond of National Competitive Advantage. C. Ricardo's economic rule of comparative advantage. D. International Business Agenda for Global Environment (IBAGE). E. All of these.

b

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is: A. the extra attention paid to top-notch product performance and product quality. B. their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C. greater opportunity for competitive advantage. D. their suitability for market situations where most industry rivals have weakly differentiated products. E. their objective of delivering more value for the money.

b

62. The chief difference between a low-cost provider strategy and a focused low-cost strategy is: A. whether the product is strongly differentiated or weakly differentiated from rivals. B. the degree of bargaining power that buyers have. C. the size of the buyer group that a company is trying to appeal to. D. the type of value chain being used to achieve a low-cost competitive advantage. E. the number of upscale attributes incorporated into the product offering.

c

68. Which of the following is NOT one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits? A. Picking a good partner. B. Recognizing that the alliance must benefit both sides. C. Minimizing the amount of resources that the partners commit to the alliance. D. Ensuring that both parties live up to their commitments. E. Structuring the decision-making process so actions can be taken swiftly when needed.

c

Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense EXCEPT when: A. an activity can be performed better or more cheaply by outside specialists. B. it allows a company to focus its entire energies on its core business, leverage its key resources, and do even better what it already does best. C. it restricts a company's ability to assemble diverse kinds of expertise speedily and efficiently. D. it reduces the company's risk exposure to changing technology and/or changing buyer preferences. E. All of these.

c

A strategic alliance: A. is a collaborative arrangement where companies join forces to defeat mutual competitive rivals. B. involves two or more companies joining forces to pursue vertical integration. C. is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, the joint contribution of resources, shared risk, shared control, and mutual dependence. D. is a partnership between two companies that is typically intended to eliminate the need to engage in outsourcing. E. is usually a cheaper and more effective way for companies to join forces than a merger.

c

Profit sanctuaries are country markets or geographic regions where: A. a company can rank the competitive advantage opportunities in each industry. B. a company possesses good strategic fit with other businesses and identifies the value chain where this fit occurs. C. a company derives substantial profits because of its protected market position or unassailable competitive advantage. D. a company creates substantial investment strategies because it is losing competitive advantage over competitors. E. a company invests its dividends in expanding its foreign market presence.

c

Pursuing continuous quality improvement as a uniqueness factor is sound because: A. it can be perceived to add differentiation features for new buyers. B. it can acknowledge the firm's strategic intent to compete aggressively. C. it can often reduce product defects, improve economy of use, and result in more end-user convenience. D. it always provides a competitive advantage. E. it is a sound approach to drive profit enhancement.

c

Relying on outsiders to perform certain value chain activities offers such strategic advantages as: A. ensuring more costly components or services. B. improving the company's inability to innovate by allying with "best-in-class" suppliers. C. reducing the company's risk exposure to changing technology and/or changing buyer preferences. D. increasing the firm's inability to assemble diverse kinds of expertise speedily and efficiently. E. reducing its information technology and operational costs so that organizational flexibility is maintained.

c

Competitive strength can be determined by assigning measures based on perceived importance because: A. it provides a more accurate assessment of the strength of competitive forces. B. it eliminates the bias introduced for those firms having large market shares. C. the different measures of competitive strength are unlikely to be equally important. D. the results provide a more reliable measure of what competitive moves rivals are likely to make next. E. weighting each company's overall competitive strength by the size of its market share produces a more accurate measure of its true competitive strength.

c

Cross-border alliances between domestic and foreign firms are more effective in: A. building multiple profit sanctuaries than in forging a mutually supportive global strategy. B. reducing supply chain costs than in reducing distribution costs. C. helping establish a new beachhead of opportunity rather than in achieving and sustaining global market leadership. D. helping the partners pursue a multidomestic strategy as compared to a global strategy. E. helping the partners pursue a global strategy as compared to a multidomestic strategy.

c

Each of the five generic strategies positions the company differently, except when it concerns: A. its market and competitive environment. B. establishing a central theme for how the company will endeavor to outcompete rivals. C. creating differentiation barriers within economies of scope. D. defining differences in terms of product line, production emphasis, marketing emphasis and the means of maintaining strategy. E. its required resources and capabilities.

c

Identifying the primary activities and support activities that comprise a company's value chain: A. indicates whether a company's resource strengths will ultimately translate into greater value for shareholders. B. reveals whether a company's resource strengths are well-matched to the industry's key success factors. C. is the first step in understanding a company's internal cost structure since each activity in the value chain gives rise to costs. D. is called benchmarking. E. is called resource value analysis.

c

If a company doesn't possess standalone resource strengths capable of contributing to competitive advantage: A. all potential for competitive advantage is lost. B. it is unlikely to survive in the marketplace and should exit the industry. C. it may have a bundle of resources that can be leveraged to develop a distinctive competence. D. it is virtually blocked from using offensive strategies and must rely on defensive strategies. E. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities.

c

In a weighted competitive strength analysis, each strength measure is assigned a weight based on: A. its percentage share of total industry revenues. B. the importance of each competitive strength measure in building a sustainable competitive advantage. C. its perceived importance in determining a company's competitive success in the marketplace. D. its percentage share of total industry profits. E. what it takes to provide better analytical balance between the companies with high ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.0.

c

In order to gain value from the SWOT analysis, it is important that the company address the two most important parts of a SWOT analysis, which are: A. identifying the resource strengths and resource weaknesses. B. understanding the relationship between the strengths, weaknesses, opportunities, and threats and establishing criteria for remedying the company's shortfalls. C. drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions. D. clarifying the firm's current position and ensuring the SWOT listings are complete. E. establishing a game plan to capitalize on the company's strengths and leverage the weaknesses in light of the available opportunities.

c

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 the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart D. When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E. When technological change is fast-paced and competition revolves around rapidly evolving product features

c

One important concern a company has in trying to compete successfully in foreign markets is: A. convincing shippers to keep cross-country transportation costs low enough that the company can export its goods to foreign countries cheaply. B. whether it will have to integrate forward into wholesale and/or retail activities in order to gain visibility for its products in foreign countries. C. how it can gain location-based competitive advantage in locating its various value chain activities. D. how to convince local government officials to reduce tariffs on the imports of its goods into their country. E. developing the expertise to avoid the impact of fluctuating exchange rates.

c

One important indicator of how well a company's present strategy is working is whether: A. it has more core competencies than close rivals. B. its strategy is built around at least two of the industry's key success factors. C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. it is customarily a first-mover in introducing new or improved products (a good sign) or a late -mover (a bad sign). E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

c

One important indicator of how well a company's present strategy is working is whether: A. it has more core competencies than close rivals. B. its strategy is built around at least two of the industry's key success factors. C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign). E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

c

Opportunities to differentiate a company's product offering: A. are most reliably found in the R&D portion of the value chain. B. are typically located in the sales and marketing portion of the value chain. C. can exist in activities all along an industry's value chain. D. usually are tied to product quality and customer service. E. are most frequently attached to a company's manufacturing expertise and to its ability to achieve scale economies in production.

c

A primary disadvantage of a licensing strategy is the need to: A. monitor the licensing agreement. B. safeguard the company's proprietary know-how. C. work with reputable firms. D. lose some degree of control over their competitive offering. E. All of these.

d

One of the biggest strategic challenges to competing in the international arena includes: A. ways to avoid the risks of shifting exchange rates. B. ways to charge the same price in all country markets. C. defining how many foreign firms to license to produce and distribute the company's products. D. whether to offer a standardized product worldwide or a customized product offering in each different country market. E. whether to pursue a global strategy or an intercontinental strategy.

d

SWOT analysis: A. provides a measure of the relative strength of resources in the company's value chain in relation to rivals positioning. 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. provides a good overview and conclusions about the company's overall situation. E. identifies the reasons why a company's strategy is or is not working very well.

d

Successful differentiation allows a firm to: A. be the industry's best-cost provider. B. set the industry ceiling on price. C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D. command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E. take sales and market share away from rivals by undercutting them on price.

d

Tangible resources include: A. human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel. B. reputational assets, which can include the company's reputation for quality, service, and reliability as well as their reputation for fair dealings with suppliers. C. relationships with alliances that provide access to technologies, specialized know-how, or geographic markets. D. technological assets such as patents, copyrights, and trade secrets.

d

The reason the world economy is globalizing at an accelerated pace is because: A. countries previously open to foreign companies have opened up their markets. B. countries that previously had market or mixed economies now embrace planned economies. C. information technology expands the importance of geographic distance. D. growth-minded companies are racing to build stronger competitive positions in the markets of more countries. E. All of these.

d

What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities? A. Social ambiguity and causal uncertainty B. Social simplicity and causal complexity C. Collective complexity and causal ambiguity D. Social complexity and causal ambiguity E. Social simplicity and causal uncertainty

d

Whatever strategic approach is adopted by a company to deliver value, it nearly always: A. requires that management undertake formal planning sessions with functional departments to ensure productivity improvement. B. requires the identification of strengths and weaknesses within the company. C. requires matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D. requires performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match or trump. E. All of these.

d

When companies engage in value-creating activities, they do so by: A. focusing on exploiting a company's best-executed operating strategy. B. concentrating on efficient performance of the company's primary value chain activities. C. concentrating on minimizing the costs associated with the design of a product or service. D. drawing on specific company resources and capabilities that underlie and enable the activity. E. focusing on working with forward-channel allies to develop capabilities to outmatch the capabilities of rivals.

d

A company is less competitively vulnerable when: A. the company has well-known profit levels. B. the company's stock price is the highest. C. the company's management is recognized as being strategic thinkers. D. the company can offer a greater amount of customer value profitability relative to close rivals. E. the company has less financial risk than rivals.

e

A company resource weakness or competitive deficiency: A. represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace. B. causes the company to fall into a lower strategic group than it otherwise could compete in. C. prevents a company from having a distinctive competence. D. usually stems from having a missing link or links in the industry value chain. E. are shortcomings that constitute competitive liabilities.

e

A company that fails in managing their strategic alliance probably has not: A. incorporated contractual safeguards. B. made opportunities for learning a routine management process. C. created a system to manage alliances in a systematic fashion. D. established strong interpersonal relationships and established trust. E. All of these.

e

A company that has greater success in managing their strategic alliance can credit all of the following, EXCEPT: A. establishing strong interpersonal relationships to facilitate communication. B. incorporating contractual safeguards. C. making opportunities for learning a routine management process. D. establishing a system to manage alliances in a systematic fashion. E. creating organizational learning barriers across boundaries.

e

A company that succeeds in differentiating its product offering from those of its rivals can usually: A. avoid having to compete on the basis of simply a low price. B. command a premium price for its product. C. increase unit sales. D. gain buyer loyalty to its brand. E. All of these.

e

A company's resource weaknesses can relate to: A. inferior or unproven skills, expertise, or intellectual capital in competitively important parts of the business. B. something that it lacks or does poorly in comparison to rivals. C. deficiencies in competitively important physical, organizational, or intangible assets. D. missing or competitively inferior capabilities in key areas. E. All of these.

e

A company's resources can include: A. a skill, specialized expertise, or competitively important capability. B. valuable human assets and intellectual capital. C. an achievement or attribute that puts the company in a position of market advantage. D. competitively valuable alliances or cooperative ventures. E. All of these.

e

A company's strategy is likely to succeed if: A. it is predicated on leveraging a competitively valuable collection of resources and capabilities that match the strategy. B. the company has the resources and capabilities needed to keep its costs competitive. C. it has the expertise to cost-effectively manage value chain activities over rivals. D. it has the innovative capabilities to bypass certain value chain activities of rivals. E. All of these.

e

Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask? A. Does market take-off depend on the new development of complementary products? B. Is a new infrastructure required before buyer demand can surge? C. Will buyers encounter high switching costs to move? D. Are there influential competitors in a position to delay or derail the efforts? E. Did the company pour too many resources into getting ahead of the market opportunity?

e

Approaches to enhancing differentiation through changes in the value chain include: A. coordinating with channel allies to enhance customer perception of value. B. coordinating with suppliers to better address customer needs. C. working closely on those activities performed by upstream suppliers and downstream by distributors and retailers to enhance customer value proposition. D. collaborating with suppliers to improve many dimensions affecting product features and quality. E. All of these.

e

Assigning a weight to each measure of competitive strength assessment is generally analytically superior because: A. a weighted ranking identifies which competitive advantages are most powerful. B. an unweighted ranking doesn't discriminate between companies with high and low market shares. C. it singles out which competitor has the most competitively potent core competencies. D. weighting each company's overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength. E. all of the various measures of competitive strength are not equally important.

e

For a company to have competitively potent resources and capabilities, they must: A. be in sync with changes in the company's own strategy. B. be in sync with its efforts to achieve a resource-based competitive advantage. C. fully support company efforts to attract customers. D. combat competitors' newly launched offensives to win bigger sales and market shares. E. All of these.

e

The competitive power of a company resource strength or competitive capability hinges on: A. how hard it is for competitors to copy. B. whether it is rare and something rivals lack. C. whether it is really competitively valuable and has the potential to contribute to a competitive advantage. D. how easily it can be trumped by the substitute resources/capabilities of rivals. E. All of these.

e

The diamond framework is an aid in deciding/revealing: A. the appropriate level of competition one can expect. B. the basis of the new rival's strengths. C. the countries where rivals will be weakest. D. the advantages of conducting particular business activities in that country. E. All of these.

e

The difference between a merger and an acquisition relates to: A. strategy and competitive advantage. B. the presence of available resources and competitive capabilities. C. whether the end result is related to horizontal or vertical scope. D. creating a more cost-efficient operation out of the combined companies. E. the details of ownership, management control, and the financial arrangements.

e

The essence of a broad differentiation strategy is to: A. appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers. B. incorporate a greater number of differentiating features into its product/service than rivals. C. lower buyer switching costs. D. outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes. E. offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for.

e

The main reason that listing or categorizing company resources matters is: A. to ensure all resources are categorized correctly. B. that the important resources are reported against strategically subjective activities. C. that the resources are prioritized in terms of value propositions. D. that the strategically placed resources are manageable. E. that all the different types of resources are included.

e

The means to enhance differentiation through activities at the forward end of the value chain system include: A. Engaging in cooperative advertising and promotions B. Creating exclusive arrangements with downstream sellers or other mechanisms that increase their incentives for enhanced-delivery customer value C. Creating and enforcing standards for downstream activities D. Assisting in training channel partners in business practices E. Enhancing cost-reducing activities with defensive functionality designed to create incentives

e

The primary strategic options for entering foreign markets, depends on the firm's wherewithal to: A. rely on strategic alliances or joint ventures with foreign companies. B. maintain a national (one-country) production base and exporting goods to foreign markets. C. adopt a licensing approach with foreign firms to produce and distribute one's products or to use the company's technology. D. employ a franchising strategy. E. All of these.

e

Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT: A. focusing relentlessly on building a competitive advantage. B. applying resources where rivals are least able to defend themselves. C. using a strategic offense to allow the company to leverage its weaknesses to strengthen operating vulnerabilities. D. employing the elements of surprise as opposed to doing what rivals expect and are prepared for. E. displaying a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

c

Tangible resources do not include: A. physical resources. B. financial resources. C. human assets. D. technological assets. E. organizational assets.

c

The BEST example of a company resource is: A. having higher earnings per share and a higher return on shareholders' equity investment than key rivals. B. being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders, or strategic alliances. C. having proven technological expertise and an ability to churn out new and improved products on a regular basis. D. having a larger number of competitive assets than competitive liabilities. E. having more built-in key success factors than rivals.

c

Which of the following is NOT an option for remedying a supplier-related cost disadvantage? A. Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchased. B. Negotiate more favorable prices with suppliers. C. Collaborate closely with suppliers to identify mutual cost-saving opportunities. D. Switch to lower-priced substitute inputs. E. Persuade forward channel allies to implement best practices.

e

Which of the following is NOT one of the five generic types of competitive strategy? A. A low-cost provider strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. A market share dominator strategy

e

Which of the following is NOT one of the ways managers can enhance differentiation based on uniqueness drivers? A. Striving to create superior product features, design, and performance B. Striving for innovation and technological advances C. Pursuing continuous quality improvement D. Increasing the intensity of marketing, brand building. and sales activities E. Seeking out low-quality inputs

e

Which of the following is an option for tailoring a company's strategy to fit unusual circumstances presented in developing-country markets? A. Prepare to compete on the basis of low price. B. Modify aspects of a company's business model and/or strategy to accommodate local customs. C. Attempt to modify the local market to do business in the manner that the company uses elsewhere. D. Avoid markets where it is impractical or uneconomic to do business in such a way as to accommodate local circumstances. E. All of these.

e

Which of the following is not a generic strategy option for entering into foreign markets? A. Maintaining a national (one-country) production base and exporting goods to foreign markets. B. Establishing a subsidiary via acquisition or opt for a de nova approach. C. Franchising and licensing strategies. D. Alliances or joint ventures strategies. E. An enterprise-wide strategy to take over local competition.

e

The principal offensive strategy options include all of the following EXCEPT: A. using a cost advantage to attack competitors on the basis of lower price or better product value. B. using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent or distracted rivals. C. launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating. D. pursuing continuous product innovation to draw sales and market share away from less innovative rivals. E. initiating a market threat and counterattack simultaneously to effect a distraction.

e

The reasons why a company opts to expand outside its home market include all of the following EXCEPT: A. gaining access to new customers for the company's products/services. B. spreading its business risk across a wider market base. C. achieving lower costs through economies of scale, experience, and increased purchasing power. D. exploiting its core competencies and capabilities. E. identifying resources and capabilities in the company's home market.

e

The risks of strategic alliances often include partners discovering they have: A. conflicting objectives and strategies. B. deep differences of opinion about how to proceed operationally and strategically. C. important differences in corporate values. D. misunderstandings about appropriate ethical standards. E. All of these.

e

The value chains of company distribution channel partners are relevant because: A. their costs and margins are part of the price the ultimate consumer pays. B. the activities they perform affect sales volumes and customer satisfaction. C. they have a competitive interest in promoting higher sales volumes and customer satisfaction. D. they perform primary and support activities that are related to the entire value chain system. E. All of these apply.

e

To improve the effectiveness of its value proposition and enhance differentiation, firms must adopt certain approaches except: A. implement the use of best practices for quality improvement, especially high-value activities important to the customer B. adopt best practices and technologies that spur innovation C. reallocate resources to activities that address buyers' most important purchase criteria D. adopt best practices for marketing, brand management, and enhancing customer perceptions E. adopt outsourcing capabilities to add value to the high-cost activities

e

What does the World trade Organization (WTO) do primarily? A. Promotes fair trade practices. B. Actively polices dumping. C. Deals with the rules of trade between nations. D. Helps producers, exporters, and importers conduct business. E. All of these.

e

What outcomes do horizontal merger and acquisition strategies intend? A. Expanding a company's geographic coverage. B. Gaining quick access to new technologies or complementary resources and capabilities. C. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities. D. Extending the company's business into new product categories. E. All of these.

e

When a company is good at performing a particular internal activity, it is said to have: A. a competitive advantage over rivals. B. a competitive capability. C. a distinctive competence. D. a core competence. E. a company competence.

e

When challenging a struggling rival, it can: A. sap the rival's financial strength and competitive position. B. weaken the rival's resolve. C. accelerate the rival's exit from the market. D. threaten the rival's overall survival in the market. E. All of these.

e

Which of the following factors is NOT a factor analyzed and relied on by firms when developing competitive strength in a foreign market? A. The relative size of the market, its growth potential, and the nature of domestic buyers' needs and wants. B. The availability, quality, and cost of raw materials and other inputs that firms will require to produce their products and services. C. The development of different styles of management, organization, and strategy. D. The degree of collaboration with key suppliers and the greater the knowledge sharing throughout the related-industry cluster. E. The level of industry-related support activities to foster customization of products and services.

e

Which of the following is NOT a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement? A. The alliance is critical to the company's achievement of an important objective. B. The alliance helps block a competitive threat. C. The alliance helps open up important new market opportunities. D. The alliance helps build, enhance, or sustain a core competence or competitive advantage. E. The alliance helps the company obtain additional financing on better credit terms.

e

Which of the following is NOT a prime example of a blue-ocean market strategy? A. The eBay online auction industry. B. Starbucks coffee shops. C. The weather Channel on cable TV. D. FedEx overnight package delivery. E. Walmart's logistics and distribution.

e

Which of the following is NOT a principal offensive strategy option? A. Leapfrogging competitors by being first to market with next-generation products. B. Using hit-and-run or guerrilla warfare tactics to grab sales and market share. C. Launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating. D. Pursuing continuous product innovation to draw sales and market share away from rivals. E. Being the final competitor to market a next-generation product so as to guarantee the product is operationally sound.

e

Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex? A. Because factors that affect industry competitiveness vary from country to country. B. Because of the potential for location-based advantages to conducting value chain activities in certain countries. C. Because different government policies and economic conditions make the business climate more favorable in some countries than others. D. Because of the risks for shifts in currency exchange rates. E. Because similarities in buyer tastes and preferences creates challenges in standardizing products and services.

e

Which of the following is NOT an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively? A. Striving to capture all available economies of scale and taking advantage of experience and learning-curve effects B. Trying to operate facilities at full capacity C. Adopting labor-saving operating methods D. Improving supply chain efficiency E. Eliminate product features that might have market appeal, but excessively increase production costs

e

Which of the following is NOT an example of a company's dynamic capability? A. A capacity to improve existing resources and capabilities B. Upgrades to R&D resources to drive product innovation C. A capacity to add new resources and capabilities to the competitive asset portfolio D. An ability to replace degraded resources with acquired capabilities E. An ability to keep antiquated resources by disregarding innovative capabilities

e

Which of the following is the most unlikely element of a localized multidomestic strategy? A. Granting country managers fairly wide strategy-making latitude. B. Plants scattered across many host countries, each producing product versions for local area markets. C. Marketing and distribution adapted to the buying habits, customs, and culture of each host country. D. Preference for local suppliers (use of some local suppliers may be mandated by host governments). E. Selling direct to buyers (perhaps via the company's website) to avoid having to establish networks of wholesale/retail dealers in each country market.

e

Which of the following is the role played by local managers within experienced multinational companies? A. To contribute needed understanding of local market conditions, local buying habits, and local ways of doing business. B. To run the local operations for the company. C. To understand how "the system" works to detour the hazards of collaborative alliances with local companies. D. To serve as conduits for the flow of information between the corporate office and local operations. E. All of these.

e

Which of the following signals would NOT warn challengers that strong retaliation is likely? A. Publicly announcing management's commitment to maintain market share. B. Publicly committing to a company policy of matching competitors' terms or pricing. C. Maintaining a war chest of cash and marketable securities. D. Making a strong counter-response to the moves of weak competitors. E. Announcing strong quarterly earnings potential to financial analysts.

e

Which of the following statements regarding multidomestic and global competition is false? A. In global competition, rivals vie for worldwide market leadership and the leading competitors compete head to head in the markets of many different countries. B. In globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries. C. One of the features of multidomestic competition is there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets. D. With multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries. E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

e

Which one of the following generic types of competitive strategy is typically the "best" strategy for a company to employ? A. A low-cost leadership strategy B. A broad and narrow differentiation strategy C. A best-cost provider strategy D. A focused low-cost differentiation leadership provider strategy E. One that is customized to fit the macro-environment, industry and competitive conditions, and the company's own resources and competitive capabilities

e

Which two tests of a resource's competitive power determine whether a company's competitive advantage can be sustained in the face of active competition? A. Whether the resource or capability is competitively valuable and/or is something that rivals lack B. Whether the resource or capability is rare and/or is hard to copy C. Whether the resource or capability is easy to copy D. Whether the resource or capability is competitively valuable and/or there are good substitutes available for the resource E. Whether the resource or capability is hard to copy and/or can be trumped by different types of resources and capabilities

e

broad differentiation strategy works best in situations where: A. technological change is slow-paced and new or improved products are infrequent. B. buyer needs and uses of the product are very similar. C. buyers incur low costs in switching their purchases to rival brands. D. buyers have a low degree of bargaining power and purchase the product frequently. E. technological change is fast-paced and competition revolves around rapidly evolving product features.

e

1. A company's ability to marshal adequate resources in support of new strategic initiatives and steer them to the appropriate organizational units is important to the strategy execution process because: A. changes in strategy often require resource reallocation, and organizational units need the proper funding to carry out their part of the strategic plan effectively and efficiently. B. accurate budgets are the key to exercising tight financial controls over what organization units can and cannot do in carrying out management's directives to execute the chosen strategy proficiently. C. tight budget control is management's most powerful tool for first-rate strategy execution. D. lean, carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash. E. lean, strictly enforced budgets are management's best and most used means of getting organizational units to exercise the fiscal discipline needed to execute the chosen strategy in a cost-efficient manner.

A

1. In terms of strategy making, what is the difference between a one-business company and a diversified company? A. The first uses a business-level strategy, while the second uses a set of business strategies and a corporate strategy. B. The first uses a business-level strategy, while the second uses a corporate-wide strategy. C. The first uses an operating strategy, while the second uses a business-line strategy. D. The first uses a functional strategy, while the second uses a business-line strategy. E. The first uses a single-line strategy, while the second uses a multi-line strategy.

A

1. The managerial approach to implementing and executing a strategy should always: A. be customized to fit the particulars of a company's situation. B. involve only minor changes to the existing strategy. C. require radical strategy changes for successful execution. D. rely on the active support of frontline employees. E. focus on market conditions and the company's resources and capabilities.

A

1. Which of the following is NOT one of the six questions that comprise the task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working? C. How do a company's value chain activities impact its cost structure and customer value proposition? D. Is the company competitively stronger or weaker than key rivals? E. What strategic issues and problems merit front-burner managerial attention?

A

10. Low-cost leaders who have the lowest industry costs are likely to: A. have out managed rivals in finding ways to perform value chain activities more cost-effectively. B. be considering exiting the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. C. be favorites to win the game of strategy in the long run. D. understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers. E. understand that they have lower bargaining power with suppliers than rivals who employ a different strategy.

A

14. A useful guideline in designing strategy-facilitating policies and operating procedures is: A. to prescribe enough policies to give organizational members clear direction in implementing strategy and to place reasonable boundaries on their actions. This then empowers them to act within these boundaries in pursuit of company goals. B. that strictly enforced policies work better than loosely enforced policies. C. that more policies/procedures work better than fewer policies/procedures, and that strict enforcement always beats lax enforcement. D. to let individuals act in an empowered and self-directed way, subject only to the constraint that their actions and behavior be ethical and in step with the corporate culture. E. to prescribe enough policies and procedures that little is left to chance in performing value chain activities, and employees should have no leeway to do things in a manner that deviates from the company's best-practices standard.

A

14. Organizational capabilities are virtually always: A. knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. B. more complex than resources and are exercised only through key personnel. C. require constant evaluation to ensure cooperative support from management. D. are easier and less challenging to categorize than resources because there are fewer to be concerned about. E. reflective of the industry's driving forces.

A

14. The major avenues for achieving a cost advantage over rivals include: A. performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities. B. having a management team that is highly skilled in cutting costs. C. being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. D. outsourcing high-cost activities to cost-efficient vendors. E. paying lower wages and salaries than rivals.

A

15. The defining characteristic of a well-conceived strategic vision is: A. what it says about the company's future strategic course—"the direction we are headed and what our future product-market-customer focus will be." B. that it not stretch the company's resources too thin across different products, technologies, and geographic markets. C. clarity and specificity about "who we are, what we do, and why we are here." D. that it be flexible and operate in the mainstream. E. that it be within the realm of what the company can reasonably expect to achieve within four years.

A

15. Ultimate responsibility for seeing that a strategy is executed successfully primarily falls upon the shoulders of: A. a company's chief executive officer, its chief operating officer, and the heads of major units (business divisions, functional departments, and key operating units). B. first-line supervisors who have the day-to-day responsibility of seeing that key value chain activities are done properly. C. the company's board of directors because board members are the final authority in overseeing and conducting daily operations. D. a company's whole management team—each manager is responsible for attending to what needs to be done in his/her respective area of authority and thus should be held accountable for the strategy's success or failure. E. all company personnel because all employees are active participants in the strategy execution process and the caliber of their actions have a huge impact on the ultimate outcome.

A

15. What is the name of the process for developing new businesses as an outgrowth of a company's established business operations? A. Corporate venturing B. Value chain integration C. Resource capability process D. Diversification activity capabilities E. Business launch

A

16. A company achieves a competitive advantage when it: A. provides buyers with superior value compared to rival sellers or offers the same value at a lower cost. B. has a profitable business model. C. is able to maximize shareholder wealth. D. is consistently able to achieve both its strategic and financial objectives. E. has a strategy well-matched to its business model.

A

16. A fast-food restaurant stocks bread, meat, sauces, and other main ingredients, but does not assemble and cook its burgers and sandwiches until a customer places an order. Which cost driver is the restaurant efficiently using to cut costs? A. Supply chain efficiencies B. Economies of scale C. Incentive systems and culture D. Bargaining power E. Capacity utilization

A

16. A sustainable competitive advantage is gained: A. when a company has durable competitive assets that are central to its strategy and superior to those of rival firms. B. when a company has sufficient resources to expedite its strategy. C. when a company realizes its inherent weaknesses are transformable to advantages. D. when a company can stand out relative to rivals because of resource utilization. E. when a company has resources in well-populated geographical locations

A

16. According to the advocates of ethical relativism: A. if the use of underage labor and/or the payment of bribes/kickbacks are acceptable in a particular culture/society/country, then a case can be made that it is morally correct and ethical for a company to use these practices in conducting its business activities in that culture/society/country. B. each company should have the flexibility to set its own standards for deciding whether the use of underage labor and/or the payment of bribes/kickbacks are ethically acceptable or not. C. if the use of underage labor and/or the payment of bribes/kickbacks are not legal but locally acceptable in a particular country, then it is morally correct and ethical for a company to use these practices in that country. D. each industry should go by standards established by competitors for deciding whether the use of underage labor and/or the payment of bribes/kickbacks are ethically acceptable or not. E. it is very clear that the use of underage labor or the payment of bribes and kickbacks are ethically impermissible—local customs, behavioral norms, and traditions absolutely cannot be taken into account.

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16. Rivalry among competing sellers increases: A. when buyer demand is growing slowly. B. as it becomes more costly for buyers to switch brands. C. as the products of rival sellers become more strongly differentiated. D. when there is underproduction relative to demand.. E. as the number of competitors decreases.

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48. What is the advantage of acquiring capabilities through merger and acquisition? A. Speed, since developing new capabilities internally can take many years of effort B. Empowerment, since you can capture the essence of the capability and refocus the firm C. Price, as it is always cheaper to buy a whole company and pull out the capabilities individually D. Assets, as it the basis of the sale E. Investment, since resources and capabilities are considerable stronger

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16. While ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives: A. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units. B. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly. C. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail. D. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution. E. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.

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17. Which of the following exemplifies good strategy execution? A. The policy document of Dominos ensures consistency in service behavior patterns across outlets. B. The policy document of Pizza Today allows for differences in product range and quality across outlets. C. The policy document of Boston Pizza leaves ample scope for each member of the staff to act independently. D. The policy document of Little Caesars discusses strategy but not the routines for running the outlets. E. The policy document of Pizza Inn is averse to standardization of the way activities are performed.

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18. Cost-efficient management of a company's overall value chain activities requires that management: A. ferret out cost-saving opportunities in every part of the value chain. B. undertake an operations functionality redesign. C. establish sales productivity and operating practices guidelines. D. re-create rivals' assembly plant structuration savings. E. pursue a differentiation strategy that can be easily copied.

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19. The essential requirement for different businesses to be "related" is that: A. their value chains exhibit competitively valuable cross-business commonalities. B. the products of the different businesses are bought by many of the same types of buyers. C. the products of the different businesses are sold in the same types of retail stores. D. the businesses have several key suppliers in common. E. the production methods they employ both entail economies of scale.

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19. Which of the following is NOT one of the ways that a company can achieve cost-efficient management of its value chain activities? A. Striving to ensure a corporate diversity policy is introduced with effective controls B. Using the company's strong bargaining power vis-à-vis suppliers or others in the value chain C. Being alert to the cost advantages of outsourcing or vertical integration D. Striving to capture all available economies of scale E. Motivating employees through incentives and company culture

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2. A pharmaceutical company functioning in France for the last 10 years has moderate sales in a crowded market with competitors offering drugs with similar efficacy and safety precautions, but with better sales. The greatest challenge is to increase the prescription of their drugs. What would be the MOST effective strategy to improve sales performance in the existing market? A. Modifying marketing communication to increase brand familiarity within key physician segments B. Relocating all the existing drug manufacturing facilities to developing countries to reduce operational costs C. Employing hiring plans that aim at acquiring drug designers from rival companies D. Exiting the market and entering a new unexplored geographical location E. Engaging in new contract talks with suppliers about price breaks

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20. According to the ethical relativism school of thinking: A. there can be no one-size-fits-all template (set of authentic ethical norms) against which to gauge the conduct of company personnel, due to cross-cultural differences in ethical standards. B. a company should have a different set of ethical standards for each country in which it operates. C. only respected religious experts can provide companies with a higher order moral compass. D. the best source of ethical standards in each country where the company operates is that country's adopted Code of Required Ethical Conduct. E. since there can be no one-size-fits-all set of authentic ethical norms, it is appropriate for each company to hold company personnel to observing the company's code of ethical conduct.

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20. Building an organization capable of good strategy execution entails: A. staffing the organization, acquiring, developing, and strengthening key resources and competitive capabilities, and structuring the organization and work effort. B. decentralizing authority for performing strategy-critical value chain activities, establishing at least two distinctive competencies, and hiring talented employees. C. investing heavily in employee training, using an empowered organization design and organization structure in order to maximize labor productivity, and employing effective incentive compensation systems. D. centralizing authority in the hands of a chief strategy implementer so as to create the leadership authority for driving implementation forward at a rapid pace. E. empowering employees, maximizing internal operating efficiency, and optimizing core competencies.

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21. A "best practice" refers to: A. a method of performing an activity or business process that at least one company has demonstrated works particularly well in terms of delivering some highly positive operating outcome. B. the best-known procedure for performing a specific task or activity so as to achieve the lowest possible costs. C. performing activities in a manner that conforms to established industry standards. D. a company's core competence. E. performing a particular value chain activity in "world-class" fashion (one unmatched by any other company in the world).

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21. A related diversification strategy involves building the company around businesses: A. with strategic fit with respect to key value chain activities and competitive assets. B. that are highly independent, proficient, and efficient operating firms. C. with strategic fit across separate value chain activities that drive each business. D. that can also include unrelated businesses with dissimilar resource requirements. E. that have dissimilar value chain activities with no cross-business commonalities.

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22. An example of how companies can revamp their value chain to reduce costs is to: A. have suppliers locate their plants close to companies' own facilities. B. continue to utilize traditional methods of distribution and sales. C. not make any changes in product manufacturing but change end distribution methods. D. increase extra services to increase staffing requirements. E. facilitate the learning curve by providing superior training to new employees.

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22. The intensity of rivalry among competing sellers does NOT depend on whether: A. the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups. B. competitors are diverse in terms of long-term directions, objectives, strategies, and countries of origin. C. strong companies outside the industry have acquired weak firms in the industry and are launching aggressive moves to transform the acquired companies into strong market contenders. D. one or two rivals have particularly powerful and successful strategies to grow the business, attract and retain buyers, and develop a sustained competitive advantage. E. industry conditions attract industry members to use price cuts or other competitive weapons to boost total sales volume and market share.

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23. For every emerging opportunity there exists: A. a market penetration curve, and this typically has an inflection point where the business model falls into place. B. an opportunity to achieve first-mover status, which depends on analyzing the competitive status curve where all the potential rivals are encoded. C. an emerging pitfall that is a counterpoint to the intended growth. D. a normal curve scenario which signifies the average growth curve will be opportunistic. E. an intense competition that constrains the company's prospects for rapid growth and superior profitability.

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23. Once established, company cultures can be perpetuated by: A. relying on word-of-mouth indoctrination and the power of tradition to instill the culture's fundamentals, as well as frequent reiteration of core values by senior managers and group members, and regular ceremonies honoring members who display desired cultural behaviors. B. avoiding frequent or dramatic reorganizations that could disturb existing relationships and networking among departments and company personnel. C. making adherence to cultural beliefs and cultural norms the defining features of the company's strategic vision. D. rewarding departments that observe cultural norms with above-average budget increases and penalizing those who don't with budget cuts. E. making cultural values and beliefs the centerpiece of the company's competitive strategy.

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24. A potato chip manufacturer purchases a potato farm. Which of the following regarding its strategy is true? A. The manufacturer has effectively used vertical integration to increase its bargaining position and reduce transaction costs. B. The manufacturer has efficiently capitalized on the experience and learning-curve effects within the company. C. The manufacturer has enhanced utilization by allowing depreciation and other fixed costs to be spread over a larger unit volume. D. The manufacturer has sacrificed quality by using a lower-cost input. E. The manufacturer has effectively reduced its operating costs by outsourcing its activities.

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24. One strategic fit based approach to related diversification would be to: A. diversify into new industries that present opportunities to transfer specialized expertise, technological know-how, or other valuable resources and capabilities from one business's value chain to another's. B. diversify into foreign markets where the firm has unrelated businesses. C. acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups. D. acquire companies in forward distribution channels (wholesalers and/or retailers). E. expand into foreign markets where the firm currently does no business.

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25. Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of: A. inspiring company personnel to unite behind managerial efforts to get the company moving in the intended direction. B. helping company personnel understand why "making a profit" is so important. C. making it easier for top executives to set stretch objectives. D. helping lower-level managers and employees better understand the company's business model. E. helping the management in formulating a balanced scorecard.

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26. Potential entrants are more likely to be deterred from actually entering an industry when: A. incumbent firms are willing and able to be aggressive in defending their market positions against entry. B. incumbent firms are complacent. C. buyers are not particularly price-sensitive and the industry already contains a dozen or more rivals. D. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage. E. buyer switching costs are moderately low because of strong product differentiation among incumbent firms.

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26. The range of product and service segments that the firm serves within its market is known as the firm's: A. horizontal scope. B. vertical integration. C. vertical scope. D. product outsourcing. E. joint venture partnership.

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27. In a strong-culture company: A. values and behavioral norms are like crabgrass—deeply rooted and hard to weed out. B. there is wide support for high ethical standards among both managers and employees. C. a company has more strategy flexibility because it can change its strategy and be confident that the culture will welcome the strategy changes and be an ally in implementing whatever changes are called for. D. there is little room for employee empowerment, because independent-thinking empowered employees may well make decisions or engage in actions that weaken the culture. E. management insists that official policies and procedures be followed religiously.

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27. Resource and capability analysis is achieved by: A. probing the caliber of a firm's competitive assets relative to those of rival firms. B. attaining price stability. C. analyzing only internal strengths and weaknesses through a matrix comparison model. D. cost-benefit analysis of the company's core product sales. E. performing resource-specific activities within the organization to allocate available capital.

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27. Which of the following is NOT a contributing reason for businesses with strategic fit in R&D or technology activities to perform better together? A. The ability to continue using existing processes B. Cost savings in research and development areas C. Shorter times in getting new products to market D. Increased sales in both the parent company and the diversified businesses E. A greater number of innovative products or processes

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28. Giving customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations is a: A. best-cost provider strategy. B. focused low-cost strategy. C. focused differentiation strategy. D. broad differentiation strategy. E. low-cost provider strategy.

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29. Total quality management (TQM): A. entails creating a total quality culture that strives for continuously improving the performance of every value chain activity and is driven by a philosophy of managing a set of business practices: 100 percent accuracy in performing tasks (zero defects), involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction. B. is a valuable tool for helping company managers identify what the best practice is for performing a particular activity at a high level of quality. C. works best when used in conjunction with Six Sigma quality control techniques. D. is an excellent tool for reengineering business processes and making quantum gains in the efficiency and effectiveness with which the processes are performed. E. is a philosophy of doing things that aims at mistake-free management of a company's entire business.

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3. A company's strategy consists of the action plan management is taking to: A. stake out a unique market position and achieve superior profitability. B. compete against rivals and establish a transitory competitive advantage. C. concentrate on improving the existing product offering irrespective of the changing and turbulent markets. D. develop a more appealing business model than rivals. E. identify its strategic vision, its strategic objectives, and its strategic intent.

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3. What does a good strategy execution require? A. A team effort with all managers having strategy executing responsibility in their areas of authority, and making all employees active participants in the strategy execution process B. Incremental changes to current operating practices be implemented to ensure existing resource capabilities are not impacted too severely C. Little consensus building, despite the magnitude of the proposed changes, because employees know the benefits gained from the planning process D. The strategy-critical value chain activities to be simplified so that all company personnel can be cognizant of the benefits of the execution parameters E. Additional investments in capital projects rather than adding to a company's talent base and building intellectual capital

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30. The competitive pressures from substitute products tend to be stronger when: A. good substitutes are readily available. B. there are fewer number of substitute products. C. substitutes have lower performance features. D. buyers incur high costs in switching to substitutes. E. substitutes are priced above the market.

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31. A competitively valuable resource or capability is a company's: A. enabling foundation of its business model. B. equally valuable substitute resource providing a competitive advantage. C. assessment of the availability of superior substitutes. D. unsurpassed worker productivity and product quality. E. unique piecework incentive system, providing a competitive advantage.

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31. Changing circumstances and ongoing managerial efforts to improve the strategy: A. account for Why a Companys Strategy Evolves over Time. B. explain why a company's strategic vision undergoes almost constant change. C. make it very difficult for a company to have concrete strategic objectives. D. make it very hard to know what a company's strategy really is. E. result in abandoned strategic visions.

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31. Economies of scope: A. are cost reductions that flow from operating in multiple related businesses. B. arise only from strategic fit relationships in the production portions of the value chains of sister businesses. C. are more associated with unrelated diversification than related diversification. D. are present whenever diversification satisfies the attractiveness test and the cost-of-entry test. E. arise mainly from strategic fit relationships in the distribution portions of the value chains of unrelated businesses.

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31. Mergers and acquisitions are often driven by such strategic objectives as: A. expanding a company's geographic coverage or extending its business into new product categories. B. reducing the number of industry key success factors. C. reducing the number of strategic groups in the industry. D. facilitating a company's shift from a low-cost leadership strategy to a focused low-cost strategy. E. lengthening a company's value chain and thereby putting it in a better position to deliver superior value to buyers.

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31. Which of the following is NOT a key question that senior executives must ask whenever a new strategic initiative is under review? A. Would the potential outcome of the proposed action pose a risk of embarrassment? B. Is what we are proposing to do fully compliant with our code of ethical conduct? C. Is there anything in the proposed action that could be considered ethically objectionable? D. Is it apparent that this proposed action is in harmony with our core values? E. Are any conflicts or concerns evident between the proposed action and our core values?

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32. Determining how strong the threat of substitutes will be entails: A. identifying the relative price/performance relationship of the substitutes, the switching costs, and the overall buyer demand for the substitute. B. identifying the attractiveness of other industries. C. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques. D. adopting a substitute product concentration factor to the buyer volume. E. judging whether industry members are capable of self-manufacturing their products.

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32. For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should: A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals. B. be something that a company does internally rather than in collaborative arrangements with outsiders. C. be patentable. D. bean industry key success factor and occupy a prime position in the company's value chain. E. have the potential for lowering the firm's unit costs.

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32. Senior executives can ensure compliance with the ethical code of conduct by considering: A. whether the proposed action is fully compliant and in harmony with the code of ethical conduct and whether stakeholders would consider anything ethically objectionable. B. whether the code of conduct is rejected by the market and accepted by employees. C. whether the code of conduct was accepted by rivals. D. whether the creation of the code of conduct should be handled by executives or employees. E. whether to eliminate the need to execute a code of conduct at all.

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33. Six Sigma programs: A. utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes. B. consist of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process. C. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process allows variability; and (3) defect-free work requires tight statistical controls. D. suggest that all activities can be controlled, employee empowerment is the best control tool, and 100 percent control is possible. E. radically redesign and streamline how an activity is performed.

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33. The implementation process is likely to be hampered by missed deadlines, misdirected efforts, and managerial ineptness, if: A. a capable results-oriented management team is not in place. B. the personnel have different management styles. C. top managers start asking tough, incisive questions. D. important details require attention. E. an additional investment in capital projects is required.

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34. A big advantage of related diversification is that it: A. offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships. B. is less capital intensive and usually more profitable than unrelated diversification. C. involves diversifying into industries having the same kinds of key success factors. D. is less risky than either vertical integration or unrelated diversification due to lower capital requirements. E. passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits.

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34. A company attempting to be successful with a broad differentiation strategy has to: A. study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B. incorporate more differentiating features into its product/service than rivals. C. concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D. over-differentiate so that product quality, features, or service levels exceed the needs of most buyers E. concentrate on offering advanced features, whether or not they have value to the customers, to create unique products

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34. Who is most likely to have strong strategy implementation capabilities? A. Michael has a talent for asking tough, incisive questions. B. Samantha is often sympathetic to her team members' failures. C. Carl can complete a job in half the time as his colleagues. D. Lily prefers completing a task by herself. E. Rodrigo advocates promoting qualified people from within the firm.

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35. A primary reason for why mergers and acquisitions sometimes fail is due to the: A. misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes. B. execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue. C. development of effective integration plans conducive to employee satisfaction. D. advertising message detailing the merger announcement. E. creation of management-employee programs in order to foster better communication.

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35. It is ideal for key management slots to be filled from outside: A. in turnaround and rapid-growth situations. B. when problems with the old strategy are obvious. C. in a worst-case scenario. D. when the managerial whole is greater than the sum of individual efforts. E. in a centralized structure.

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35. The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of: A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. B. whether suppliers self-manufacture what they supply or source their items from other manufacturers. C. whether the industry's position in the growth cycle is favorable. D. whether technological change in the businesses of suppliers is rapid or slow. E. whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.

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35. Which of the following would increase the likelihood of ethical lapses as well as poor long-term company performance? A. Dramatic cuts in research and development expenditures in years when low earnings are reported by the company B. Increases in research and development expenditures in years when low earnings are reported by the company C. Executive commitment to implementing strategic suggestions from the board of directors D. Attracting investors who think the company's industry will grow E. Hiring and maintaining a skilled and diverse workforce

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36. A dynamic capability is the: A. ongoing capacity to modify existing resources and capabilities to create new ones. B. improvement evaluation process for eliminating waste in the firm. C. functional and operating resources management process. D. ongoing capability to understand and establish a commitment to resource alignment. E. improvement evaluation process for repurposing waste in the firm.

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36. Good strategy execution requires which of the following? A. Putting those resources and capabilities into place, strengthening them as needed, and then modifying them as market conditions evolve B. A universal business model to raise profits and lower costs C. Strengthening the competitive environment arena outside the company's operating territory D. A planned budget to protect the company's financial condition and eliminate wasteful use of cash E. Passive pressures stemming from the dominance of outside market buyers

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36. The Six Sigma process of define, measure, analyze, improve, and control (DMAIC) is: A. an improvement system for existing processes falling below specification and needing incremental improvement. B. an improvement system used to develop new processes or products at 100 percent defect-free levels. C. a system of statistical procedures for achieving 100 percent control over how a task is performed. D. an improvement system used to develop new processes or products at Six Sigma levels. E. a system of statistical procedures for eliminating 100 percent of the variability in how a task is performed.

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36. The bargaining leverage of suppliers is greater when: A. the suppliers' products/services account for a small percentage of industry members' costs. B. industry members incur low costs in switching their purchases from one supplier to another. C. industry members account for a big fraction of supplier's sales. D. there is extensive seller-supplier collaboration. E. the supplier industry is composed of a large number of relatively small suppliers.

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39. A diversified company has a parenting advantage when it: A. is more able than other companies to boost the combined performance of its individual businesses through its high-level guidance, general oversight, and other corporate-level contributions. B. is more able than other companies to create positive collaboration within its portfolio for different specialty groups and geographic locations. C. results in supporting short-term economic shareholder value. D. manages a set of fundamentally similar business operations inside fundamentally similar industries and environments. E. avoids acquiring undervalued companies and thus reduces risks.

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39. A vertical integration strategy can expand the firm's range of activities: A. backward into sources of supply and/or forward toward end users. B. backward into other industry business-lines and/or forward to suppliers of raw materials. C. to enable the supply chain the opportunity for expansion. D. to complement the industry's horizontal value chain line of profitability. E. to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

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39. Which of the following is TRUE of the capability building process? A. It requires two things: (1) developing the ability to do something, however imperfectly or inefficiently, and (2) molding these efforts into an organizational ability and as experience grows and personnel perform the activity consistently well and at an acceptable cost, it is transformed into a tried-and-true competence and as they continue to polish and refine their know-how into further improvements, they then create a real competitive capability. B. It entails (1) deciding which value chain activities to perform internally and which ones to outsource; and (2) deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees. C. It is essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities), and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence. D. It involves (1) staffing the organization with people capable of executing the strategy well, (2) developing the resources and building the organizational capabilities needed for successful strategy execution, and (3) creating an organizational structure supportive of the strategy execution process. E. It must (1) supplement the design with appropriate coordinating mechanisms, and (2) institute whatever networking and communications arrangements are necessary to support effective execution of the firm's strategy.

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39. Which of the following statements about Six Sigma quality programs is true? A. While Six Sigma programs often improve the efficiency of numerous operating processes, there is evidence that the approach can stifle innovative activities. B. Six Sigma is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations and 100 percent accuracy in performing tasks. C. Six Sigma's DMAIC process is a particularly good vehicle for improving performance when there are only small variations in how well an activity is performed. D. The focus of Six Sigma programs is on the development of new products or new business processes but not on improving existing products or business processes. E. Six Sigma is a system of statistical procedures for eliminating 92 percent of the variability in how a task is performed.

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39. Which one of the following does NOT account for WHY a company's strategy evolves from one version to another? A. A need to promote stability and retain the status quo B. The need to abandon some strategy elements that are no longer working well C. A need to respond to changing customer requirements and expectations D. A need to react to fresh strategic maneuvers on the part of rival firms E. The proactive efforts of company managers to improve obsolete aspects of the strategy

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4. A company's culture is in part defined and identified by: A. its internal work climate and personality—as shaped by its shared values, work practices, traditions, and ingrained attitudes and behaviors that define "how we do things around here." B. whether it employs a low-cost provider, best-cost provider, differentiation, or focused strategy. C. whether decision making is centralized or decentralized and whether it is a single-business company or a diversified company. D. how strongly its strategic vision is linked to its core values. E. whether it is a well-known industry leader, an up-and-coming company that is gaining market share, a middle-of-the-pack company unlikely to move up in the industry ranks, or an industry also-ran that may or may not survive.

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4. Strategic offensives should, as a general rule, be based on: A. exploiting a company's strongest competitive assets—its most valuable resources and capabilities. B. instigating and executing the chosen strategy efficiently and effectively. C. scoping and scaling an organization's internal and external situation. D. molding an organization's character and identity. E. satisfying the buyer's needs that the company seeks to meet.

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4. The competitive moves and business approaches a company's management is using to grow the business, stake out a market position, attract and please customers, compete successfully, conduct operations, and achieve organizational objectives is referred to as its: A. strategy. B. mission statement. C. strategic intent. D. cost-price framework. E. market vision.

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4. The decision to pursue diversification requires management to resolve which industries to enter and whether to enter, and includes such decisions as the following, EXCEPT: A. selecting the appropriate value chain operating practices to improve the financial outlook. B. starting a business from the ground up. C. acquiring a company already established in the target industry. D. forming a joint venture or partnership with another company. E. structuring a strategic alliance with another company to take advantage of the opportunity.

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4. Which of the following are integral parts of the managerial process of crafting and executing strategy? A. Developing a strategic vision, setting objectives, and crafting a strategy B. Developing a proven business model, deciding on the company's strategic intent, and crafting a strategy C. Setting objectives, crafting a strategy, implementing and executing the chosen strategy, and deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage D. Coming up with a statement of the company's mission and purpose, setting objectives, choosing what business approaches to employ, selecting a business model, and monitoring developments E. Deciding on the company's strategic intent, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ

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40. Managers can deliberately set challenging performance targets at levels high enough to promote outstanding company performance by establishing: A. stretch objectives which challenge the organization to deliver stretch gains in performance. B. mainstay objectives that although are easily attainable, and the company is obligated to meet, they are designed to spur motivation in the workforce. C. financial objectives that drive standardization of cost-efficiency and unify stringent operating specifications. D. a specifically detailed and integrated model of operating policies, practices, and procedures. E. why the company does certain things in trying to please its customers.

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40. What are value drivers? A. A set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect B. A firm's hidden success factor for creating over-the-top product features that will command the highest price in the industry C. A technique for easily identifying factors that validate a firm's performance D. A set of factors that verify the unique nature of a firm E. A set of guidelines for identifying the most promising upscale attributes to incorporate into a product

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40. When firms are involved in a mix of in-house and outsourced activity in any given stage of the vertical chain, it is called: A. tapered integration. B. partial integration. C. full integration. D. forward integration. E. backward integration.

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40. With an unrelated diversification strategy, the types of companies that make particularly attractive acquisition targets are: A. struggling companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital. B. companies offering the biggest potential to reduce labor costs. C. cash cow businesses with excellent financial fit. D. companies that are market leaders in their respective industries. E. companies that employ the same basic type of competitive strategy as the parent corporation's existing businesses.

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41. An ambidextrous organization is one that: A. pursues incremental improvements in operating efficiency, while R&D and other processes that allow the company to develop new ways of offering value to customers are given freer rein. B. is capable of using efficiency and effectiveness with equal skill. C. is very skillful and versatile with operating activity. D. is managed by employing continuous improvement in operating practices while managing employees as a loosely integrated network of efficiency. E. employs identical improvement methods for both operating processes and R&D.

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41. Strategy is about competing differently than rivals, thus strategy success is about: A. the sources of sustained advantages and superior profitability. B. those emergent, unplanned, reactive, and adaptive plans that are more appropriate than deliberate or intended ones that drive the realized strategy. C. matching internal resources and capabilities to the industry environment. D. keeping the firm current with the rapid pace of change in the industry. E. replacing proactive and reactive measures by modified ongoing strategic elements to preserve company values.

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41. When a company has a proficiency in performing a strategically and competitively important value chain activity better than its rivals, it is said to have: A. a company competence. B. a core competence. C. a distinctive competence. D. a key value chain proficiency. E. a competitive advantage over rivals.

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42. Brands create customer loyalty, which in turn: A. increases the perceived cost of switching to another product. B. strengthens the product's quality. C. validates the motivation for alternate products. D. provides monetary incentive for using the product. E. allows a company to operate facilities at full capacity.

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42. Which of the following firms uses a deliberate strategy? A. A popular downtown theater that has been staging plays decides to begin booking rock and roll acts. B. An airline company cuts frills in order to cope with increasing fuel prices. C. An IT firm trims jobs during a recession. D. A smartphone company divests its tablet production branch after not gaining market share. E. An online jewelry site discontinues its line of turquoise rings due to lack of demand.

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42. Which of the following is the best example of a well-stated financial objective? A. Increase earnings per share by 15 percent annually. B. Gradually boost market share from 10 percent to 15 percent over the next several years. C. Achieve lower costs than any other industry competitor. D. Boost revenues by a percentage margin greater than the industry average. E. Maximize total company profits and return on investment.

A

43. A company's strategy in toto that tends to be a combination of proactive and reactive elements is known as its: A. realized strategy. B. emergent strategy. C. deliberate strategy D. visionary strategy. E. abandoned strategy.

A

43. To obtain maximum benefits from benchmarking, best practices, reengineering, TQM, and Six Sigma programs aimed at facilitating better strategy execution, managers need to: A. start with a clear idea of what specific outcomes really matter, such as a Six Sigma defect rate or superior customer satisfaction, and then build a total quality culture that is genuinely committed to achieving these outcomes. B. have annual contests to see which part of the company is making the greatest strides in approaching operating excellence. C. strive for 100 percent control over the variability in how each and every value chain activity is performed. D. have at least 50 percent of company personnel earn "green belts" in Six Sigma techniques. E. build core competencies in TQM, Six Sigma, benchmarking, best practices adoption, and business process reengineering.

A

43. Which of the following statements about a high-performance culture is true? A. Results-oriented, high-performance cultures are permeated with a spirit of achievement and have a good track record in meeting or beating performance targets. B. High-performance cultures often have a low regard for high ethical standards (because some disregard for ethics is a normal part of meeting or beating performance targets). C. The challenge in creating a high-performance culture is to come up with a strategic vision and strategy that wins enthusiastic support from most all company personnel. D. In a high-performance culture, the clear and unyielding expectation is that all company personnel will strictly follow company policies and procedures. E. In high-performance cultures, there's strong managerial commitment to paying big bonuses and granting generous stock options.

A

45. Managerial actions to develop core competencies and competitive capabilities internally generally take one of two forms. What are they? A. Either strengthening the company's base of skills, knowledge, and experience or coordinating and integrating the efforts of various work groups and departments B. Either putting in high incentive bonuses to reward individual employees who train hard to develop the desired capability or launching an extensive training effort to develop the capability quickly with newly hired employees C. Either using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed or empowering a team of employees to develop the capability however they best see fit D. Either using developed dynamic capabilities or acquiring the capability from outside sources E. Either by enforcing close cross-business collaboration or by centralizing the performance of functions requiring close coordination at the corporate level

A

45. The objective of differentiation is to: A. offer customers something rivals can't, at least in terms of the level of satisfaction. B. develop strategies that are different from those of rivals. C. establish objectives that are measurable and meaningful when it comes to sales growth. D. offer customers a sustainable competitive advantage. E. offer a diverse range of comparable products with low switching costs.

A

45. The strategic impetus for forward vertical integration is to: A. gain better access to end users and better market visibility. B. achieve the same scale economies as wholesale distributors and/or retail dealers. C. control price at the retail level. D. bypass distributors and dealers and sell direct to consumers at the company's website. E. build a core competence in mass merchandising.

A

45. To build a total quality culture and achieve full value from the use of TQM or Six Sigma initiatives, managers can take such action steps as: A. signaling unequivocal and unyielding commitment to total quality, continuous improvement, and operating excellence; encouraging quality-supportive behaviors on the part of employees, empowering employees to make changes to improve quality; and using online systems to give employees immediate access to best practice information and experiences. B. requiring all company personnel to attend Six Sigma training programs and achieve "black belt" status. C. instituting greater centralization of decision making to help enforce strict compliance with quality control policies and procedures. D. stressing 100 percent accurate individual performance rather than group or team performance. E. dismissing employees who repeatedly fail to achieve 100percent accuracy in their work after a 12-month trial period.

A

46. Although it is relatively easy for rivals to implement process management tools, it is much more difficult and time-consuming for them to: A. instill a deeply ingrained culture of operating excellence. B. keep employees well-informed about the strides being made with continuous improvement. C. unify the managerial efforts behind improving operating practices as a commendable goal. D. combine the pursuit of financial objectives with the pursuit of its strategic objectives. E. understand the barriers to installing new operating activities.

A

46. Internal administrative costs which are incurred by companies for ethical wrongdoing include all of the following EXCEPT: A. costs attached to adverse effects on employee productivity. B. costs of remedial education and ethics training to company personnel. C. costs incurred in taking corrective actions. D. administrative costs associated with future compliance. E. legal and investigative costs.

A

46. There is ample room for companies to customize their diversification strategies and be defined as being either narrowly or broadly diversified, and when combination related-unrelated diversification strategy options are adopted, they have particular appeal to: A. those companies with a mix of valuable competitive assets, covering the spectrum from generalized to specialized resources and capabilities. B. those large multibusiness firms, sometimes called conglomerates, because they have a unique capability designed to stabilize earnings. C. companies with a portfolio of product choices for buyer-related behavior. D. corporate managers who take on risks without performing due diligence. E. corporate managers who want to play the corporate parent role without fiduciary responsibility.

A

47. An organic foods manufacturer insists on portraying the cleanliness of its farms in its advertisements, charges a higher price for its products, and sells its products only through reputable distributors. What strategy is the manufacturer using to deliver superior value to customers? A. Signaling the value of the company's product offering to buyers B. Incorporating intangible features C. Incorporating tangible features D. Lowering the buyer's overall cost E. Lowering the overall bargaining power from suppliers

A

47. Which of the following conditions acts to weaken buyer bargaining power? A. When buyers are unlikely to integrate backward into the business of sellers B. When buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs C. When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low D. When the products of rival sellers are weakly differentiated and buyers have considerable discretion over whether and when they purchase the product E. When buyers are few in number and/or often purchase in large quantities

A

48. Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it: A. reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users. B. can result in better coordination of the firm's direct sales activity to wholesalers and distributors C. can establish a retail frontal attack while efficiently managing its backward (defensive) sales orientation. D. combines the best of all sales channels and provides financial support to distribution allies. E. creates a channel conflict, thereby providing competitive improvisation.

A

48. The essence of socially responsible business behavior is that a company: A. should balance strategic actions to benefit shareholders against the duty to be a good corporate citizen. B. undertake actions that add value to shareholders. C. respect societal expectations that shareholders should be rewarded for providing risk capital. D. should work toward shareholders' expectations of maximum return. E. should provide jobs to the local community rather than outsourcing them.

A

57. Relative market share is: A. calculated by dividing a company's percentage share of total industry sales volume by the percentage share held by its largest rival. B. calculated by adjusting a company's revenue share up or down by a factor proportional to whether their quality/customer service factors are above/below industry averages. C. calculated by dividing a company's market share (based on dollar volume) by the industry-average market share. D. particularly useful in identifying cash cows, which have big relative market shares (above 1.0), and cash hogs, which have low relative market shares (below 0.5). E. calculated by subtracting the industry-average market share (based on revenue) from the company's market share to highlight relative share above/below the industry average. This amount is a better indicator of a business's competitive strength than is just looking at the firm's market share percentage.

A

58. Outsourcing value chain activities has such strategy executing advantages as: A. less internal bureaucracy, speedier decision making, and quicker responses to changing market conditions. B. facilitating the empowerment of employees (because there are fewer things to do internally). C. promoting a total quality management culture. D. reducing the need to establish a strongly implanted corporate culture. E. reducing the strategic importance of building valuable core competencies.

A

59. The place for management to begin in trying to change a problem culture is: A. identifying facets of the present culture that are obstacles to executing the company's strategy and meeting performance targets. B. spending heavily on programs to train employees in the ways and beliefs of the new culture to be implanted. C. visibly praising and rewarding people who exhibit traits and behaviors that undermine the existing culture. D. writing a new value statement and describing in highly motivating terms the kind of culture that is needed. E. instituting incentive compensation programs that generously reward employees for adopting best practices.

A

6. A company's operating budget must: A. be strategy-driven in order to amply fund the performance of key value chain activities. B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building the needed competencies and capabilities. C. be employee-driven to gain commitment to strengthening the company's core competencies and competitive capabilities. D. trim costs of key value chain activities to achieve cost efficiency in new strategic initiatives. E. follow traditional and time-tested methods of budgeting to support rapid adjustments in strategy.

A

6. Which of the following factors represents the strategically relevant political factors in the macro-environment that will influence the performance of all firms across the board? A. The strength of the federal banking system B. The exogenous forces related to the general environmental demand C. Social factors that could fuel a political agenda and create greater transparency D. Bailouts and energy policies that are industry-specific E. Tax policy, fiscal policy, and tariffs providing impetus for anti-trust matters

A

60. What does a competitive strength score above 5 tell us about a diversified company's position in the market? A. That its business units are all fairly strong market contenders in their respective industries B. That its business units are all fairly weak market contenders in their respective industries C. That the company will not likely perform well D. That a company's competitive strength score does not relate to the market position of that business E. That the company will likely fail

A

61. The nine-cell industry attractiveness competitive strength matrix: A. is useful for helping decide which businesses should have high, average, and low priorities in deploying corporate resources. B. indicates which businesses are cash hogs and which are cash cows. C. pinpoints what strategies are most appropriate for businesses positioned in the three top cells of the matrix, but is less clear about the best strategies for businesses positioned in the bottom six cells. D. identifies which sister businesses have the greatest strategic fit. E. identifies which sister businesses have the highest level of resource fit.

A

62. What is the function of the Global Reporting Initiative? A. It promotes greater transparency and facilitates benchmarking CSR efforts across firms and industries. B. It promotes and establishes mutual funds investment opportunities comprised of companies that excel on the basis of the triple bottom line. C. It promotes greater awareness of the Dow Jones World Index, which comprises companies that are engaged in environment sustainability. D. It promotes corporate governance, climate change, and labor practices. E. It is a nonprofit reporting organization that ranks companies on habitat protection.

A

62. Which of the following statements about outsourcing the performance of value chain activities to outside specialists is FALSE? A. Outsourcing support services often has the disadvantage of raising fixed and variable costs. B. Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outsider suppliers, and short of the resource strengths to be a master of its own destiny. C. Outsourcing the performance of certain value chain activities to able supplierscan add to a company's arsenal of capabilities and contribute to better strategy execution. D. The real debate surrounding outsourcing is not about whether too much outsourcing risks loss of control but about how to use outsourcing in a manner that produces greater competitiveness. E. Outsourcing can enable a company to heighten its strategic focus and concentrate its full energies and resources on even more competently performing those value chain activities that are at the core of its strategy and for which it can create unique value.

A

7. Which of the following is something to look for in identifying a company's culture? A. The atmosphere, spirit and character that pervades the work climate and the values, business principles, and ethical standards that management preaches and practices B. The track record in meeting or beating its financial and strategic performance targets C. The intensity and makeup of the company's value chain D. The strategic intent and competitive strategy inherent within the company's efforts for successful strategy execution E. The resource strengths, core competencies, and competitive capabilities that permeate the organization

A

63. Which of the following statements regarding a company's social responsibility and sustainability strategy is FALSE? A. A company is not demonstrating an adequate degree of social responsibility or endeavoring to be a model corporate citizen unless it spends 5 percent (or more) of pretax profits on social responsibility initiatives. B. Social responsibility strategies that have the effect of both providing valuable social benefits and fulfilling customer needs in a superior fashion can lead to competitive advantage. C. A few companies have integrated social responsibility and/or environmental sustainability objectives into their missions and overall performance targets. They view social performance and environmental metrics as an essential component of judging the company's overall future performance. D. Unless a company's social responsibility initiatives become part of the way it operates its business every day, the initiatives are unlikely to be fully effective. E. While the strategies and actions of all socially responsible companies have sameness in the sense of drawing on the same categories of socially responsible behavior, each company's version of being socially responsible is unique.

A

65. When a company's social responsibility initiatives become part of the way it operates its business every day, these initiatives are: A. likely to be fully effective in creating a competitive advantage. B. normally based on a corporate social agenda. C. ambiguous and rarely make a difference in the way the company does business. D. implausible to advance a positive, high-energy workplace environment. E. heavily dependent on encouraging employee morality.

A

65. Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution? A. Strictly enforcing all rules in the employee handbook with the use of fines. B. Giving awards and public recognition to high performers and showcasing company successes. C. Providing a comfortable and attractive working environment D. Providing opportunities for promotion from within wherever possible E. Providing attractive perks and fringe benefits

A

66. A motivation and incentive system that is aimed at spurring stronger employee commitment to good strategy execution: A. should focus on incorporating more positive than negative motivational elements. B. should be tied first and foremost to whether employees satisfactorily perform their assigned duties in an ethical and honorable manner. C. must involve deliberately assigning employees heavy workloads and tight deadlines. D. D. needs to put top priority on making employees happy and secure in their jobs. E. must avoid the potential for negative consequences if performance is subpar.

A

68. The business case for why companies should act in a socially responsible manner includes such reasons as: A. it generates internal operating benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs). B. it increases the risk of reputation-damaging incidents. C. it is not in the best interest of shareholders. D. it can lead to decreased buyer patronage. E. it can increase costs and reduce employee retention.

A

68. When an organization is referred to as a line and staff structure or a flat structure, it is normally considered: A. a simple structure. B. a functional structure. C. a matrix structure. D. a multidivisional structure. E. a departmental structure.

A

69. A no-pressure/no-adverse-consequences work environment does not necessarily lead to: A. superior strategy execution or operating excellence. B. satisfactory outcomes because there is always a cadre of ambitious people who relish the challenge. C. workforce morale issues. D. establishing more positive than negative motivational reward elements. E. excessive shortfall in performance.

A

69. The most important symbolic actions are those that top executives take to: A. lead by example. B. lead by influence. C. follow by example. D. follow the majority. E. lead to the contrary.

A

69. What is it called when a diversified company can add value by shifting capital from business units generating free cash flow to those needing additional capital to expand and realize their growth potential? A. Internal capital market B. Cash cow benefits C. Economic value added D. Shareholder value added E. Derived valuation

A

7. A multinational company enters a new geographical location, considered an emerging market, with its established product line: laptops and tablets. Which of the following would NOT serve as a good strategic move to enhance profits? A. Creating a sales plan that aims to enhance initial sales and market share with low prices based on high operational costs B. Devising a marketing plan that aims at different customer segments with attractive advertisements and offers on products C. Implementing a diversification plan that aims at adding smartphones to the existing line of products D. Charting an acquisition plan that aims at acquiring small-scale companies looking for funding and with a similar product lineup E. Establishing a distribution plan that aims at setting up more supply outlets than any other rivals in the location

A

7. A powerful tool for sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace is termed: A. resource and capability analysis. B. SWOT. C. competitive analysis. D. financial and asset management analysis. E. value chain analysis.

A

7. An offensive to yield good results can be short if: A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign). B. competition creates an appealing new product. C. the technology needs debugging. D. new production capacity needs to be installed. E. consumer acceptance of an innovative product takes time.

A

7. Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the industry's key factors for future competitive success? D. Is the outlook for the industry conducive to providing attractive profitability? E. What are the driving forces in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A

8. When strategies fail, it is often because of: A. poor execution of the strategy. B. shortfalls exposed with the strategic management design process. C. inadequate support for the management team responsible for the planning process. D. secondary operating practices that hinder the required changes. E. lack of sufficient information about operating systems.

A

70. Which of the following is NOT a part of the business case for why companies should act in a socially responsible manner? A. Every business has a moral duty to be a good corporate citizen. B. Acting in a socially responsible manner reduces the risk of reputation-damaging incidents. C. Acting in a socially responsible manner is in the overall best interest of shareholders. D. To the extent that a company's socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage. E. Acting in a socially responsible manner can generate internal benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs).

A

71. Changing a problem culture: A. is never a short-term exercise. B. is always a short-term exercise. C. requires a determined effort by a limited number of employees. D. is usually easier than it is to instill a strategy-supportive culture from scratch. E. can be achieved by an overnight transformation.

A

73. A well-designed reward system: A. ties rewards to performance outcomes directly linked to good strategy execution and the achievement of financial and strategic objectives. B. should be free of elements that induce stress, anxiety, tension, pressure to perform, and job insecurity. C. puts the primary emphasis on denying rewards to those who fail to perform tasks in the prescribed fashion. D. emphasizes weeding out employees who are average performers. E. strives for a 50-50 balance between positive and negative rewards and a 50-50 balance between monetary and nonmonetary rewards.

A

75. The guidelines for designing an incentive compensation system that will help drive successful strategy execution include: A. making the performance payoff a major, not minor, piece of the total compensation package. B. having incentives that apply to the management team (employees should generally not be included in incentive pay plans but should have attractive wages and salaries). C. having an outside wage and salary expert administer the system so there is no doubt as to its fairness and impartiality. D. basing the incentives on group performance rather than individual performance. E. making minimal use of nonmonetary incentives and rewarding people for diligently performing their assigned duties.

A

76. Which of the following is a disadvantage of a centralized organizational structure? A. Lengthening response times and discouraging lower-level managers and rank-and-file employees from exercising initiative B. Losing top-level management control C. Putting too much decision-making authority in the hands of lower-level company personnel D. Making it hard to fix accountability when things do not go well and putting the organization at risk when bad decisions are made E. Impeding cross-unit coordination and the capture of strategic fits

A

76. Which of the following techniques abbreviated as MBWA is utilized by leaders to stay informed on how well the strategy execution process is progressing? A. Managing by walking around B. Managing business with action C. Multi-business warning actions D. Managers being well-advised E. Multi-business walking ahead

A

78. Which of the following is an advantage of a decentralized organizational structure? A. Reducing the layers of management and encouraging lower-level managers and rank-and-file employees to exercise initiative and act responsibly B. Making it easy to fix accountability when company performance targets are not met C. Generating higher productivity on the part of the workforce and a greater ability to become an industry low-cost leader D. Enhancing cross-unit coordination and the capture of strategic fits E. Establishing the emergence of a collegial, collaborative culture where teamwork is a core value and decisions are made on the basis of consensus

A

79. Delegating greater authority to subordinate managers and employees: A. creates a more horizontal or flatter organizational structure with fewer management layers and usually acts to shorten organizational response times. B. usually slows down decision making because so many more people are involved and it takes longer to reach a consensus on what to do and when to do it. C. can be a de-motivating factor because it requires people to take responsibility for their decisions and actions. D. is very risky because it usually results in lots of "bad" decisions on the part of employees, as well as lower levels of financial performance. E. enhances greater cross-unit coordination and aids the capture of strategic fit benefits across related businesses.

A

79. The managing director of a paper products company, wanted to introduce nonmonetary incentives to enhance employee motivation and spur strategy execution. When presented with some ideas, he chose all of the following EXCEPT: A. rewarding employees even for subpar performance. B. giving awards and public recognition to high performers and showcasing company successes. C. providing a comfortable and attractive working environment. D. providing opportunities for promotion from within wherever possible. E. providing attractive perks and fringe benefits.

A

8. A strategic vision constitutes management's view and conclusions about the company's: A. long-term direction and what product-market-customer mix seems optimal. B. business model and the kind of value that it is trying to deliver to customers. C. justification of why the business will be a moneymaker. D. past and present scope of work. E. long-term plan for outcompeting rivals and achieving a competitive advantage.

A

8. Every strategy needs: A. a distinctive element that attracts customers and produces a competitive edge. B. to include similar characteristics to rival company strategies. C. to pursue conservative growth built on historical strengths. D. to employ diverse and sundry operating practices for producing greater control over sales growth targets. E. to mimic the plans of the industry's most successful companies.

A

8. The difference between a resource and a capability is: A. a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently. B. a resource is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function. C. a resource is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource D. a resource represents the firm's fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets. E. a resource represents the firm's human assets, whereas a capability defines the skills and knowledge of these human resources.

A

8. Which of the following is true of the school of ethical universalism? A. There are ethical principles that set forth the traits and behaviors considered virtuous and that a good person is supposed to believe in and display. B. They are ethical principles embodied in international law that all societies and countries are obliged practice. C. All societies and countries apply essentially the very same set of universally defined ethical principles of right and wrong in judging the ethical correctness of business behavior. D. It is mandatory that the standards of what's ethical and what's unethical be applied universally to all businesses in all countries irrespective of local business traditions and local business norms. E. The standards of what constitutes ethical and unethical behavior in business situations are partly universal, but in the main are governed by local business norms.

A

8. Which of the following rivals make the best targets for an offensive attack? A. Firms with weaknesses in areas where the challenger is strong B. Companies that are financially strong and possess favorable competitive market positioning C. Large national firms with vast capabilities and intermittent trivial resource deficiencies D. Strong and financially secure market leaders E. Small local and regional firms with unrestrained capabilities

A

80. All of the following are examples of leadership actions or managerial practices taken to foster a results-oriented, high-performance culture EXCEPT: A. treating employees as individuals with no regard for their rank or contributions. B. building morale and fostering pride. C. setting stretch objectives and clearly communicating expectations for reaching targets. D. using motivational techniques and compensation incentives to inspire employees. E. using the tools of benchmarking, best practices, business process reengineering, TQM, and Six Sigma to focus attention on continuous improvement.

A

82. When a corporate parent creates an independent company and divests it by distributing to its stockholders new shares in the business, it is called: A. a spinoff. B. a wholly-owned subsidiary. C. a functional divesture. D. fully-diluted stock. E. a restructure.

A

84. Building organizational bridges with external allies is aided by: A. appointing "relationship managers" and giving them responsibility for making particular strategic partnerships or alliances generate the intended benefits. B. agreeing with allies to meet frequently and make all decisions pertaining to the alliance on the basis of mutual agreement and consensus. C. getting each strategic ally to agree to appoint someone as head of the collaborative effort and to give that person the authority to enforce tight coordination of joint activities. D. forming a 50-50 joint venture with each strategic partner, and then assigning people to the joint venture that has the authority and responsibility to enforce tight coordination. E. entering into a written agreement detailing the roles and responsibilities of the company and the ally/partner, setting forth the results that are expected, establishing deadlines for achieving these results, and designating the people who are to be responsible for making the collaborative effort work successfully.

A

87. Corporate restructuring strategies: A. involve making major changes in a diversified company's business lineup, divesting some businesses and/or acquiring others, so as to put a whole new face on the company's business lineup. B. entail reducing the scope of diversification to a smaller number of businesses. C. entail selling off marginal businesses to free up resources for redeployment to the remaining businesses. D. focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. E. focus on broadening the scope of diversification to include a larger number of businesses and boosting the company's growth and profitability.

A

9. A company's value statement and code of ethics: A. help to mold the culture and communicate what kinds of actions and behaviors are expected of all company personnel. B. help prevent it from coming across to customers and the general public as greedy. C. serve the valuable purpose of making its suppliers hesitant to engage in business practices that are unethical. D. are the most important factors determining its reputation with customers, suppliers, employees, shareholders, and society at large. E. should always be made a prominent and visible part of the company's strategic intent and strategy.

A

9. A useful way to identify a company's resources is to view them as: A. divided into two main categories, tangible and intangible. B. productive inputs or competitive assets, except human assets and intellectual capital, which are considered capabilities or competencies. C. physical resources, such as the company's brand, image, and reputation assets. D. an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats. E. intangible resources such as patents, copyrights, and technological processes.

A

9. If one concurs with the school of ethical universalism, then one believes that: A. many basic moral standards travel well across cultures and countries and really do not vary significantly according to local cultural beliefs, social mores, religious convictions, and/or the circumstances of the situation. B. since ethical standards are subjectively determined, each company has a window within which it can define and implement its own ethical principles of right and wrong. C. what is deemed right or wrong, fair or unfair, moral or immoral, ethical or unethical in business situations should be judged in light of local customs and social mores and can legitimately vary from one culture or nation to another. D. each country should have some degree of latitude in setting its own ethical standards for judging the ethical correctness of business actions/behaviors within its borders. E. concepts of right and wrong as they apply to business behavior are purely based on an individual's understanding of ethics and differ from person to person.

A

9. The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is: A. the five forces framework. B. PESTEL. C. the driving forces model. D. strategic group mapping. E. competitor analysis.

A

In which of the following situations is employing a "think local, act local" multidomestic strategy highly questionable? A. When a company desires to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide. B. When there are significant country-to-country differences in customer preferences and buying habits industry is characterized by big economies of scale and strong experience curve effects. C. When the trade restrictions of host governments are diverse and complicated. D. When there are significant country-to-country differences in distribution channels and marketing methods. E. When host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.

A

50. The market opportunities most relevant to a particular company are those that: A. offer the best prospects for growth and profitability. B. provide a strong defense against threats to the company's profitability. C. embrace the most potential for product innovation. D. provide avenues for taking market share away from close rivals. E. hold the most potential to reduce costs.

A Chapter 05 Test Bank Student: ___________________________________________________________________________

Which of the following is NOT one of the strategy options for competing in the markets of foreign countries? A. A profit sanctuary strategy B. An international strategy C. A global strategy. D. A multidomestic strategy E. A transnational strategy

A. A profit sanctuary strategy

What strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders? A. A transnational strategy B. An international strategy C. A think-local, act-global strategy D. A cross-border integrated strategy E. A standardized integrated strategy

A. A transnational strategy

Which of the following factors does NOT determine whether to employ entry strategy options? A. Cross-border transfer activities and home country advantages B. The nature of the firm's objectives C. Whether the firm has a full range of resources and capabilities needed to operate abroad D. Country-specific factors such as trade barriers E. Transaction costs involved (the cost of contracting with a partner and monitoring compliance with the terms of the contract)

A. Cross-border transfer activities and home country advantages

What supports competitive offensives in one market with resources and profits diverted from operations in another market? A. Cross-market subsidization B. A foreign market strategy C. A domestic-only company D. A home market offensive E. A multidomestic company

A. Cross-market subsidization

What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets? A. Deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country B. Deciding on the appropriate level of sustainable profitability C. Deciding on the relative cost competitiveness of the home country D. Deciding on the degree of globalization to maintain expansion capabilities E. Deciding on the resources and capabilities of allies

A. Deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country

Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.

Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries? A. Localizing a global company's product offerings country-by-country leads to low-cost advantage. B. There are country-to-country differences in consumer buying habits and buyer tastes and preferences. C. A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. D. Product designs suitable for one country are often inappropriate in another. E. Market growth rates vary from country to country.

A. Localizing a global company's product offerings country-by-country leads to low-cost advantage.

A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States. A. This is a true statement. B. No, the U.S. dollar must be stronger. C. Yes, because it provides for a weakened foreign demand for U.S.-made goods. D. Yes, because it makes such plants less cost competitive with foreign plants. E. Yes, because it provides incentives of foreign companies to locate manufacturing facilities in the U.S. to make goods for U.S. consumers.

A. This is a true statement.

Why do companies decide to enter a foreign market? A. To capture economies of scale in product development, manufacturing, or marketing B. To raise input costs through greater pooled purchasing power C. To decrease the rate at which they accumulate experience and move up the learning curve D. To concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere E. To exploit the natural resources found within its home market

A. To capture economies of scale in product development, manufacturing, or marketing

Which of the following is NOT a viable strategy option for a local company in competing against global challengers? A. Using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments B. Developing business models to exploit shortcomings in local distribution networks or infrastructures C. Taking advantage of low-cost labor and other competitively important local workforce qualities D. Transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale E. Using acquisitions and rapid growth strategies to defend against expansion-minded multinationals

A. Using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments

In which of the following situations is employing a "think local, act local" multidomestic strategy highly questionable? A. When a company desires to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide B. When there are significant country-to-country differences in customer preferences and buying habits industry is characterized by big economies of scale and strong experience curve effects C. When the trade restrictions of host governments are diverse and complicated D. When there are significant country-to-country differences in distribution channels and marketing methods E. When host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards

A. When a company desires to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide

Transferring core competencies and resource strengths from one country market to another is: A. a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. B. best accomplished with a multidomestic strategy as opposed to a global strategy. C. feasible only with a global strategy; it can't be done with a multidomestic strategy. D. unlikely to result in a competitive advantage. E. nearly always the easiest and most sure-fire way to build competitive advantage in trying to compete successfully in foreign markets.

A. a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage.

Companies racing for global market leadership: A. generally have to consider establishing competitive positions in the markets of emerging countries. B. are well-advised to avoid all the risks and problems of competing in emerging country markets. C. seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D. can usually be expected to earn sizable profits quickly in emerging country markets. E. usually encounter very low barriers in entering the markets of emerging countries.

A. generally have to consider establishing competitive positions in the markets of emerging countries.

A strategy that incorporates elements of both multidomestic and global strategies is termed a "transnational" strategy, but sometimes it is referred to as a(n): A. glocalization strategy. B. international strategy. C. think-local, act-global strategy. D. cross-border integrated strategy. E. standardized integrated strategy.

A. glocalization strategy.

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include: A. having a high level of control and speed as an entry strategy to overcome trade barriers. B. allowing a company to achieve scalable economies. C. eliminating the costs and risks associated with establishing a foreign business location. D. achieving variable product quality and competitive product performance. E. exporting goods at higher costs than rivals in those locations.

A. having a high level of control and speed as an entry strategy to overcome trade barriers.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include: A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees. B. being particularly well-suited to the global expansion efforts of companies with multidomestic strategies. C. allowing a company to achieve scale economies. D. being well suited to companies who employ cross-border transfer strategies. E. being well suited to the global expansion efforts of manufacturers.

A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees.

The strength of a "think local, act local" multidomestic strategy is that: A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country. B. it employs strategies that are almost totally different from and also unrelated to its strategies in other countries. C. it operates independent plants, located in different countries, thus promoting greater achievement of scale economies. D. it avoids host country ownership requirements and import quotas. E. it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country.

The difference between political risks and economic risks is that: A. political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies. B. political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections. C. political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system. D. political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business. E. political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

A. political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.

A key approach for a company to grow sales and profits in several country markets is to: A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities. B. employ a multidomestic strategy rather than a global strategy. C. locate technical after-sale services close to buyers. D. minimize transportation costs among these markets. E. take advantage of less restrictive restrictions and requirements of host governments.

A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.

A greenfield venture in a foreign market is one: A. where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up. B. where foreign facilities and marketing strategies are shared with local businesses. C. where the company learns through training by the foreign entity on how to compete. D. that supports exports into a foreign market by marketing indirectly thru local rivals. E. that offers lower risk and a faster path to financial returns.

A. where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up.

1. A company's corporate culture is BEST defined and identified by: A. the integration of the strategy and business model that a company has adopted. B. the company's shared values, ingrained attitudes, core beliefs and company traditions that determine norms of behavior, accepted work practices of "how we do things around here," and styles of operating. C. its ingrained statement of core values and its internal code of ethics. D. its internal politics that influence the dedication to ethical conduct and accepted work practices. E. the formal traditions that company executives are committed to maintaining to ensure the company strategy-supportive culture is change resistant.

B

1. A ketchup manufacturer convinces a supplier who makes vinegar to set up a nearby plant. Which of the following benefits will the ketchup manufacturer be least assured of? A. Improved value chain system B. Improved overall quality control C. Lower incoming shipping costs D. Just-in-time deliveries E. Reduced storage needs

B

1. Which of the following is NOT one of the managerial considerations in determining how to compete successfully? A. How can a company attract, keep, and please customers? B. How can a company modify its entire product line to emphasize its internal service attributes? C. How should a company respond to changing economic and market conditions? D. How should a company be competitive against rivals? E. How should a company position itself in the marketplace?

B

10. FaberRoad, a respected courier brand, is fast losing its market share to competitors who do overnight deliveries of packages or offer lower prices. The company's research department has found that many customers care more about knowing exactly when a package will arrive than getting it the next day. Which strategy would best address the current state of FaberRoad and help it regain its market? A. Employing night delivery drivers at a high cost and maintenance charges B. Developing radio tags that could be attached to packages to allow for real-time tracking by customers' PCs and mobile phones C. Diversifying the different types of packages that can be transported and enabling booking through calls D. Acquiring small transportation companies with cheaper trucks and tempos, rebranding, and using them for deliveries E. Engaging in expensive advertising with new tag lines and famous celebrities to enhance its brand image in the market

B

10. Which of the following is NOT an accurate attribute of an organization's strategic vision? A. Providing a panoramic view of "where we are going" B. Outlining how the company intends to implement and execute its business model C. Pointing an organization in a particular direction and charting a strategic path for it to follow D. Helping mold an organization's character and identity E. Describing the company's future product-market-customer focus

B

17. Factors that cause the rivalry among competing sellers to be weaker include: A. low buyer switching costs. B. low fixed costs or storage costs. C. many industry rivals of roughly equal size and competitive strength. D. weakly differentiated products among rival sellers. E. slow growth in buyer demand.

B

12. A company can best accomplish diversification into new industries by: A. outsourcing most of the value chain activities that have to be performed in the target business/industry. B. acquiring a company already operating in the target industry, creating a new business from scratch, or forming a joint venture with one or more companies to enter the target industry. C. integrating forward or backward into the target industry. D. shifting from a strategic group comprised mostly of single-business companies to a strategic group comprised of diversified companies. E. employing an offensive strategy with new product innovation as its centerpiece.

B

12. A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by: A. underpricing rivals and attracting quality-sensitive buyers in great enough numbers. B. maintaining the present price, and using the lower-cost edge to earn a higher profit margin on each unit sold. C. going all out to use its cost advantage to capture a dominant share of the market. D. spending heavily on advertising to promote its cost advantage to build strong customer loyalty. E. out-producing rivals and thus having more available units for sale.

B

12. The most powerful of the five competitive forces is USUALLY: A. the competitive pressures that stem from the ready availability of attractively priced substitute products. B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. C. the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates. D. the competitive pressures associated with the potential entry of new competitors. E. the bargaining power and leverage that large customers are able to exercise.

B

12. The school of ethical relativism holds that: A. what constitutes ethical or unethical conduct should be determined by the religious convictions of each society or each culture within a country. B. when there are cross-country or cross-cultural differences in what is deemed ethical or unethical in business situations, it is appropriate for local moral standards to take precedence over what the ethical standards may be elsewhere. C. concepts of right and wrong are always governed by business norms in each country, culture, or society. D. concepts of right and wrong are always a function of each individual's own set of values, beliefs, and ethical convictions. E. concepts of right and wrong as they apply to business behavior are always absolute and usually more stringent than universal ethical principles.

B

13. Codes of ethics and statements of core values: A. are the single most effective measure of enforcing ethical behavior and cultural norms, provided they are written down and every employee is given a copy. B. serve as yardsticks for gauging the appropriateness of particular actions, decisions, and behaviors. C. serve as the best benchmarks for judging whether the corporate culture is deeply ingrained, planted and accepted or not. D. need to be personally written and presented by the CEO to reinforce the company values and convictions so that employees will take it seriously. E. serve to give top-priority emphasis to every employee in training programs a company conducts.

B

13. What a company's top executives are saying about where the company is headed long term and about what the company's future product-market-customer mix will be: A. indicates what kind of business model the company is going to have in the future. B. constitutes the strategic vision for the company. C. signals what the firm's financial strategy will be. D. serves to define the company's present scope of operation. E. indicates what kind of products the company will offer in the future.

B

13. What makes the managerial task of executing strategy so challenging and demanding is: A. the trial-and-error experimentation that is required to come up with a workable organizational structure. B. the people-management skills required, the resistance to change that has to be overcome, and the perseverance necessary to get a variety of initiatives launched and kept moving along. C. the time and effort it takes to build core competencies. D. the time, training, and creative effort it takes to empower employees and teach them responsible decision making. E. the supervisory requirements associated with getting company personnel to do things the right way.

B

14. An acquisition premium is the amount by which the price offered for an existing business exceeds: A. the fair market value of similar companies in the same geographic locale. B. the preacquisition market value of the target company. C. the comparable value of similar companies within the same market. D. the amount paid as a down payment to be held in escrow until closing. E. the difference between the amount that was offered and the amount that is escrowed.

B

14. One of the important benefits of a well-conceived and well-stated strategic vision is to: A. clearly delineate how the company's business model will be implemented and executed. B. clearly communicate management's aspirations for the company to stakeholders and help steer the energies of company personnel in a common direction. C. set forth the firm budgetary objectives in clear and fairly precise terms. D. help create a "balanced scorecard" approach to objective-setting and not stretch the company's resources too thin across different products, technologies, and geographic markets. E. indicate what kind of sustainable competitive advantage the company will try to create in the course of becoming the industry leader.

B

14. What makes the marketplace a competitive battlefield is: A. the race of industry members to build strong defenses against the industry's driving forces. B. the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals. C. the ongoing race among rival sellers to have the highest-quality product. D. the ongoing efforts of industry members to introduce new and improved products/services at a faster rate than their rivals. E. the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits.

B

15. A linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities is termed: A. organizational assets. B. a resource bundle. C. a resource capability. D. functional method compilation. E. an integrated asset advantage.

B

17. Acquisition is an effective way to hurdle all of the following entry barriers EXCEPT: A. building brand awareness. B. avoiding the costs of doing due diligence. C. achieving scale economies. D. establishing supplier relationships. E. acquiring technical know-how.

B

17. Implementing and executing a company's strategy: A. is primarily the job of the company's board of directors since they direct the actions and policies of the top senior executives in executing the strategy. B. is a task for every manager and the whole management team, but ultimate responsibility for success or failure falls upon the top senior executives, especially the chief executive officer of the company. C. is primarily a responsibility of all company personnel because all personnel are active participants in the strategy execution process and their actions have a huge impact on the ultimate outcome. D. should be delegated to a chief strategy implementer appointed by the chief executive officer. E. is primarily a task for middle and lower-level managers because it is they who have responsibility for pushing the needed changes all the way down to the lowest levels of the organization.

B

18. Management's handling of the strategy implementation/execution process can be considered successful: A. when the internal organization develops two or more core competencies in performing value chain activities. B. if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company. C. if the company's culture is strong and strategy-supportive. D. if management is able to marshal adequate resources to put the strategy in place within 6 to 12 months. E. if managers and employees express strong support for the company's strategy and long-term direction.

B

18. To deeply ingrain core values and ethical standards, a company must: A. provide every employee with a copy of the company's statement of core values and code of ethics. B. turn the espoused core values and ethical standards into strictly enforced cultural norms. C. encourage company personnel to observe the core values and ethical standards. D. give big pay raises and bonuses to individuals and groups who display the company's core values and observe its ethical standards. E. fire employees who do not live up to the core values or who are found guilty of violating the code of ethics.

B

19. Telsteer Mobil, a smartphone manufacturer, is working on developing its next-generation products. It has decided on a strategy of focusing on a narrow buyer segment and outcompeting rivals by offering buyers customized product features for specialized needs and tastes. What basic strategic approach has Telsteer decided upon? A. Focused differentiation B. Best-cost provider C. Low-cost provider D. Broad differentiation E. Focused low-cost

B

19. Which of the following is NOT an integral part of transforming core values and ethical standards into cultural norms? A. Instituting procedures for enforcing ethical standards B. Immediately dismissing any employee caught violating the company's code of ethics or disregarding core values C. Screening out job applicants who do not exhibit compatible character traits D. Periodically having ceremonial occasions to recognize individuals and groups who display the values and ethical principles E. Having senior executives frequently reiterate the importance and role of company values and ethical principles at company events and internal communications to employees

B

2. Managers charged with implementing and executing strategy need to be deeply involved in the budgeting and resource allocation process because of all the following reasons EXCEPT: A. too little funding deprives organizational units of the necessary resources to execute their piece of the strategic plan while too much funding wastes organizational resources and reduces financial performance. B. resource allocation involves screening of requests for people, facilities and equipment, and approving them, whether they contribute to the strategy execution effort or not. C. without major budget reallocations there is little chance that desired core competencies and organizational capabilities will emerge. D. lean, carefully managed budgets protect the company's financial condition and eliminate the wasteful use of cash. E. a change in strategy nearly always calls for budget reallocations and resource shifting.

B

20. A "best practice" refers to: A. a policy or procedure that is unusually effective. B. a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence. C. a strategy-critical activity that results in sustainable competitive advantage. D. a value chain activity that is a company's distinctive competence. E. a particular value chain activity that management has given top priority to performing in world-class fashion.

B

20. Unrelated businesses: A. sell products from the different businesses to much the same types of buyers and retail outlets. B. have dissimilar value chains and resource requirements with no competitively important cross-business commonalities at the value chain level. C. perform better than just the sum of the individual businesses. D. will always have several key suppliers in common. E. employ production methods that create economies of scale.

B

20. Which of the following is NOT a common shortcoming when wording a company's vision statement? When the statement is somewhat: A. vague or incomplete—short on specifics. B. flexible—is adjusted according to changing circumstances. C. bland or uninspiring—short on inspiration. D. generic—could apply to almost any company (or at least several others in the same industry). E. reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers).

B

21. In analyzing the strength of competition among rival firms, an important consideration is: A. the potential for buyers to exercise strong bargaining power. B. the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin. C. the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies. D. the extent to which some rivals have more than two competitively valuable competencies or capabilities. E. whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.

B

21. Which of the following is NOT a reliable measure of how well a company's current strategy is working? A. Whether the company's sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product C. The firm's image and reputation with its customers D. Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals E. Evidence of improvement in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity

B

23. An engaging and convincing strategic vision: A. 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. B. should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. C. tends to be more effective when top management avoids trying to capture the essence of the strategic vision in a catchy slogan. D. is most efficiently and effectively done by posting the strategic vision prominently on the company's website and encouraging employees to read it. E. should be explained after the company's strategic intent, strategy, and business model have been conveyed to company personnel.

B

23. Which of the following companies is using cost drivers effectively to manage value chain activities cost efficiently? A. Company A orders large amounts of supplies and keeps them stocked till customer demand rises to prevent falling behind schedule in meeting customer needs. B. Company B uses just-in-time inventories and produces made-to-order products as and when customer demand rises. C. Company C collects customer requests first and starts processing them only after reaching a certain number. D. Company D routes all its supplies to a warehouse for storage and then transports them to individual factories for processing. E. Company E substitutes lower-cost inputs with high-quality, high-cost inputs to gain customer attention and loyalty.

B

24. According to integrated social contracts theory, the ethical standards a company should try to uphold: A. are governed by the school of ethical universalism. B. are governed both by a limited number of universal ethical principles and the circumstances of local cultures, traditions, and shared values. C. are governed by each country's Code of Required Ethical Conduct, which sets forth that each individual/group/business/organization has a "social contract" to observe the ethical and moral standards that the country has adopted. D. should be determined by the company's moral managers. E. should be absolute and avoid wiggle room according to the circumstances of the situation.

B

24. Which of the following airlines does NOT employ a low-cost provider strategy? A. Airline 1 offers low prices on short-distance flights and cuts down on meals during flights. B. Airline 2 offers low prices on long-distance flights and has long service times for its planes between flights. C. Airline 3 offers low prices on short-distance flights and improves flight carrier capacity through addition of seats by reducing distance between existing seats. D. Airline 4 offers low prices on short-distance flights and pays minimum wage rates to the flight crew. E. Airline 5 offers low prices on long-distance flights and charges fees for carry-on as well as checked luggage.

B

24. Which of the following is NOT true of implementing a strategy? A. It is critical to ensure strategy-supportive resources and capabilities are in place. B. The level of personnel competence is irrelevant to proficient strategy execution. C. It is important to assemble a strong management team. D. Strengthening the firm's core competencies is a top priority. E. A poorly structured organization can lead to higher bureaucratic costs.

B

26. Perhaps the most important benefit of a vivid, engaging, and convincing strategic vision is: A. helping gain managerial consensus on what resources must be developed to successfully achieve strategic objectives. B. uniting company personnel behind managerial efforts to get the company moving in the intended direction. C. helping justify the company's mission of making a profit. D. helping company personnel understand the logic of the company's business model. E. keeping company personnel well-informed.

B

26. Resource and capability analysis is designed to: A. ascertain the internal marketplace of non-distinct divisions of the company. B. ascertain which of a company's resources and capabilities are competitively valuable. C. stimulate demand for a product. D. ascertain to what extent a competitor can sustain a competitive advantage. E. stimulate economic growth for companies within the industry.

B

27. Business process reengineering is a tool for: A. expediting the redesign of existing products and shortening the design-to-market cycle. B. radically redesigning and streamlining how an activity (workflow) is performed, by pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group. C. instituting total quality management. D. making the most effective use of Six Sigma techniques. E. the rapid redesign of an organization's structure so as to quickly create organizational competencies and capabilities.

B

27. The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as: A. horizontal scale. B. vertical scope. C. outsourcing scope. D. cooperative scaled scope. E. focal scope.

B

28. The difference between a merger and an acquisition is that: A. a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. B. a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired). C. in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D. a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies. E. a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

B

28. The paramount aim in building a management team should be to: A. select people who are committed to decentralizing decision making and empowering employees. B. assemble a critical mass of talented managers who can function as agents of change, work well together as a team, and produce organizational results that are dramatically better than what one or two star managers acting individually can achieve. C. choose managers experienced in controlling costs and flattening the organization structure. D. select people who have similar management styles, leadership approaches, business philosophies, and personalities. E. choose managers who believe in having a strong corporate culture and deeply ingrained core values.

B

28. The strength of integrated social contracts theory is that it: A. correctly recognizes that all soundly reasoned ethical standards are universal. B. accommodates the best parts of ethical universalism and ethical relativism. C. puts no absolute limits on what actions and behaviors fall inside the boundaries of what is ethically or morally right and which actions/behaviors fall outside. D. recognizes the importance of allowing local ethical norms to always take precedence over universal ethical norms. E. recognizes that individuals and businesses have a basic right to "moral free space" and that it is inappropriate to specify ethically permissible and ethically impermissible actions and behaviors.

B

29. Recruiting and retaining capable employees is: A. usually much more important to good strategy execution than is assembling a capable top-management team. B. important because the quality of an organization's people is always an essential ingredient of successful strategy execution. C. more important during periods of rapid growth than during periods of crisis and attempted turnarounds. D. an important organization-building element, particularly when it comes to transforming a competence into a core competence or distinctive competence. E. easily the most critical aspect in building competitively valuable core competencies and capabilities.

B

3. Which of the following is NOT one of the elements of crafting corporate strategy for a diversified company? A. Picking new industries to enter and deciding on the means of entry B. Choosing the appropriate value chain for each business the company has entered C. Pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage D. Establishing investment priorities and steering corporate resources into the most attractive business units E. Initiating actions to boost the combined performance of the businesses the firm has entered

B

3. While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are: A. whether a company can build a brand name and an image that buyers trust. B. whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy. C. whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader's role. D. whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market. E. whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation.

B

30. The litmus test of a company's code of ethics is: A. the degree to which it is connected to a company's statement of core values. B. the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business. C. the extent to which a company's approach to ethical behavior mirrors the ethical principles for society at large. D. based on the rules a company's top management and board of directors make about "what is right" and "what is wrong." E. determined by the ethical behaviors expected of company personnel in the course of doing their jobs.

B

30. To which of the following firms is the term "repeatedly evolving strategy" MOST applicable? A. A government agency that makes plans for a set period of time and implements them phase by phase through the tenure B. A mobile company, established in a saturated market, that aims at quarterly release of new products C. A new cosmetics manufacturer in a market that replicates the products of a competitor at a moderate quality and lower price D. A nationalized bank that lends at a lower interest rate but a zero processing fee in a market crowded with privatized banks running at high cost E. A firearms regulatory agency, set up by the government, that publishes industry standards for safety, reliability, and quality of arms and ammunition

B

30. What makes related diversification an attractive strategy? A. The ability to broaden the company's product line B. The opportunity to convert cross-business strategic fit into competitive advantage over business rivals whose operations don't offer comparable strategic fit benefits C. The potential for improving the stability of the company's financial performance D. The ability to serve a broader spectrum of buyer needs E. The added capability it provides in overcoming the barriers to entering foreign markets

B

31. In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products? A. The costs to buyers of switching over to the substitutes are low. B. Buyers are dubious about using substitutes. C. The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements. D. Buyer brand loyalty is weak. E. Substitutes are readily available at competitive prices.

B

31. The primary difference between a company's mission statement and the company's strategic vision is that: A. a mission statement explains why it is essential to make a profit, whereas the strategic vision explains how the company will be a moneymaker. B. a mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why." C. a mission deals with how to please customers, whereas a strategic vision deals with how to please shareholders. D. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?" E. a mission statement addresses "how we are trying to make a profit today," while a strategic vision concerns "how will we make money in the markets of tomorrow?"

B

31. Which of the following is NOT one of the pitfalls of a low-cost provider strategy? A. Overly aggressive price-cutting B. Setting the industry's price ceiling to capture volume gains and achieve economies of scale C. Relying on an approach to reduce costs that can be easily copied D. Becoming too fixated on cost reduction E. Having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms

B

32. A low-cost provider's product does NOT have to always: A. contain enough attributes to be attractive to prospective buyers. B. suggest strong rather than weak product differentiation. C. signal value to buyers. D. provide high margins per unit sold to bring in enough unit sales. E. be valuable and appealing to a wide range of buyers.

B

32. Merger and acquisition strategies: A. are nearly always superior alternatives to forming alliances or partnerships with these same companies. B. may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C. are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy. D. seldom are superior alternatives to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. are one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

B

32. Which of the following statements about total quality management (TQM) is FALSE? A. TQM aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the organization. B. TQM produces significant results very quickly, with very little benefit emerging after the first six months. C. TQM doctrine preaches that there's no such thing as "good enough" and that everyone has a responsibility to participate in continuous improvement. D. Effective use of TQM entails creating a corporate culture bent on continuously improving the performance of every task and every value chain activity. E. Total quality management (TQM) is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.

B

33. A company should not couch its mission in terms of making a profit because a profit is more correctly an: A. obligation and a reason for what a company does. B. objective and a result of what a company does. C. outlay and a rationale for what a company does. D. obligation and a responsibility for what a company does. E. outflow and a right of what a company does.

B

33. The competitive power of a company's resource strength is NOT measured by which one of the following tests? A. Is the resource rare and something rivals lack? B. Is the resource strength something that a company has internally rather than in collaborative arrangements with outsiders? C. Is the resource strength easily trumped by the substitute resources/capabilities of rivals? D. Is the resource strength hard to copy? E. Is the resource strength competitively valuable, having the potential to contribute to a competitive advantage?

B

33. The lower the user's switching costs, the: A. harder it is for the sellers of attractive substitutes to lure buyers to their offering. B. more intense the competitive pressures posed by substitute products. C. less intense the competitive pressures posed by substitute products. D. greater the bargaining power from both suppliers and influential customers. E. lesser the bargaining power from both suppliers and influential customers.

B

33. The major drivers of unethical managerial behavior include: A. lack of self-dealing and short termism on the part of top executives of a company. B. heavy pressures on company managers to meet or beat performance targets, and overzealous pursuit of personal gain. C. widespread managerial belief in the ethical relativism school of thinking. D. widespread managerial belief in the ethical universalism school of thinking. E. adherence to a cosmetic code of ethics stemming from a desire to avoid the risk of embarrassment.

B

34. Mergers and acquisitions: A. are nearly always successful in achieving their desired purpose. B. frequently do not produce the hoped-for outcomes. C. are generally less effective than forming alliances or partnerships with these same companies. D. are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. E. are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

B

35. Six Sigma processes: A. are based on three principles: (1) all work is a statistically controllable process; (2) no well-controlled process allows variability; and (3) defect-free work requires tight statistical controls. B. can be used for both improving existing business processes and for developing new processes or products. C. can be used for improving products or business processes but not for developing new products or new processes. D. consists of a disciplined, statistics-based system aimed at producing not more than 10 defects per million iterations for a manufacturing or assembly process. E. can be used for developing new products or new business processes but not for improving existing products or business processes.

B

36. Which of the following activities does NOT reflect short termism? A. Decreasing spending on research and development B. Avoiding stock repurchases made to increase earnings-per-share of a company C. Maintaining and hiring critical employees with compensations tied to annual company earnings D. Taking into consideration all tangible future cash flows over intangible brand value appreciation E. Carrying business operations with existing technologies in all markets to cut costs and increase profits

B

37. 37.Short-termism is defined as: A. making assessments of the moral character of a company's managers. B. the tendency for managers to focus on immediate performance objectives at the expense of longer-term strategic objectives. C. assessing the costs and damages to the company's reputation as a result of ethical violations. D. weighing the short-term costs of regulatory compliance with the long-term costs of noncompliance. E. assessing the short-term costs of complying with government regulations.

B

37. A work environment where the culture is in sync with the chosen strategy and is conducive to good strategy execution is considered a valuable managerial ally because: A. there is much less risk of embarrassing ethical violations. B. it provides company personnel with clear guidance regarding "how we do things around here" and produces significant peer pressure from co-workers to conform to culturally acceptable norms. C. there is reduced need to incorporate negative motivational practices and punitive-type incentives into the reward structure and in the company's approach to people management. D. there is reduced need to employ benchmarking, best practice programs, reengineering, Six Sigma, and TQM to achieve competitive advantage. E. the culture can be readily incorporated into the company's strategic vision and facilitate the achievement of stretch objectives.

B

38. A company's realized strategy evolves from one version to the next due to: A. changing management direction because of understanding several appealing strategy alternatives. B. the proactive efforts of company managers to improve the current strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategic maneuvers on the part of rival firms. C. ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy). D. pressures from shareholders to boost profit margins and pay higher dividends. E. the importance of keeping the company's business model fresh and up-to-date.

B

38. SWOT analysis is a simple but powerful tool for: A. gauging whether a company has a cost-competitive value chain. B. sizing up a company's resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being. C. evaluating whether a company is in the most appropriate strategic group. D. determining a company's competitive strength vis-à-vis close rivals. E. identifying the market segments in which a company is strongly positioned and weakly positioned.

B

38. The higher the switching costs for industry members, the more it can: A. limit supplier bargaining power. B. enhance supplier bargaining power. C. enhance the quality of parts and components being supplied, and in effect reduce defect rates. D. provide important cost savings for the collaborative supplier-seller relationship. E. limit the supply of products and/or services.

B

38. The statistical thinking underlying Six Sigma is based on which of the following three principles? A. All activities can be controlled, employee empowerment is the best control tool, and 100 percent control is possible. B. All work is a process, all processes have variability, and all processes create data that explains variability. C. All work activities can be done accurately most of the time, empowered employees are necessary for effective control, and good statistical data is an empowered employee's best control tool. D. All work is a statistically controllable process, 100percent control is possible, and every well-controlled process is defect-free. E. Most business processes are subject to control, Six Sigma can totally remove variability in how processes are performed, and most defects can be eliminated.

B

39. A company exhibits strategic intent when: A. management crafts and adopts a strategic plan. B. it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective. C. it aggressively pursues financial objectives, establishing a priority on meeting the performance metrics and instilling a sense of urgency throughout the company. D. management establishes a comprehensive set of financial objectives that meet stockholder expectations. E. it capitalizes on its primary competitive advantage and ensures resources are allocated to maintain its strategy.

B

39. A company's strengths are important because they: A. pave the way for establishing a low-cost advantage over rivals. B. represent the quality of its competitive assets that enhance its competitiveness in the marketplace. C. provide extra muscle in helping lengthen the company's value chain. D. give it competitive protection against the industry's driving forces. E. provide extra organizational muscle in turning a core competence into a key success factor.

B

39. Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. the speed with which general economic conditions and interest rates are changing. B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members. C. how many buyers purchase all of their requirements from a single seller versus how many purchase from several sellers. D. the number of buyers versus the number of sellers. E. whether industry members are spending more or less on advertising.

B

40. A company that successfully and methodically applies Six Sigma methods to its value chain, activity by activity, can: A. clearly consider what it will take to overtake rivals with the industry's overall best strategy. B. make major strides in improving the proficiency with which its strategy is executed without sacrificing innovation. C. increase its bargaining power with suppliers and create better seller-supplier collaborations. D. assess the extent to which rivals have competitively valuable competencies or capabilities. E. construct a business model that entails a value proposition based on quality.

B

40. A company's strategy needs to be ethical because: A. of the dangers that top management will get embarrassed if the company's unethical behavior is publicly exposed. B. it is good business and in the best interest of shareholders. C. everyone is an ethics watchdog and somebody is sure to blow the whistle on the company's unethical behavior. D. of the inevitable risks of getting caught and prosecuted by governmental authorities if an unethical strategy is used. E. unethical strategies boost long-termism in corporate culture.

B

41. A company needs financial objectives to: A. spur company personnel to help the company overtake key competitors on such important measures as net profit margins and return on investment. B. communicate management's targets for financial performance and achieve strategic objectives. C. indicate to employees whether the emphasis should be on earnings per share, return on investment, return on assets, or positive cash flow. D. convince shareholders that top management is acting in their interests. E. counterbalance its pursuit of strategic objectives and have a balanced scorecard for judging the caliber of its overall performance.

B

41. For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company: A. must first be a proficient manufacturer. B. must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C. must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. D. needs to have a wide product line, so it can supply parts and components for many products. E. should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

B

41. The hallmarks of a high-performance corporate culture include: A. a deep commitment to employee training, unusually attractive fringe benefit packages for company personnel, and frequently revised and updated values and ethics statements. B. a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives. C. a strong emphasis on teamwork, strict enforcement of company policies and procedures, and incentive compensation for all employees aligned with a balanced scorecard approach to measuring performance. D. a deep commitment to pioneering new best practices, a preference for being a fast-follower as opposed to a first-mover or late-mover, and across-the-board bonuses for all personnel when the company meets or beats stretch objectives. E. a deep commitment to top-notch quality and superior customer service, dedicated use of TQM and/or Six Sigma quality control programs, and the payment of big performance bonuses and stock options.

B

41. Which of the following is NOT a factor that causes buyer bargaining power to be stronger? A. Some buyers are a threat to integrate backward into the business of sellers and become an important competitor. B. Buyers are small and numerous relative to sellers. C. Buyers have considerable discretion over whether and when they purchase the product. D. Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.

B

42. The difference between a core competence and a distinctive competence is that: A. a distinctive competence refers to a company's strongest resource or competitive capability, whereas a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity. B. a core competence usually resides in a company's base of intellectual capital, whereas a distinctive competence stems from the superiority of a company's physical and tangible assets. C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms. D. a core competence represents a resource strength, whereas a distinctive competence is achieved by having more resource strengths than rival companies. E. a core competence usually resides in a company's technology and physical assets, whereas a distinctive competence usually resides in a company's know-how, expertise, and intellectual capital.

B

42. Vertical integration can lower costs by: A. expanding supplier power. B. facilitating the coordination of production flows and avoiding bottlenecks. C. establishing the framework for operating. D. creating control factors across the value chain. E. accommodating shifting buyer preferences.

B

42. Which of the following is NOT a particularly sound or valid reason why a company's strategy should be ethical? A. An unethical strategy reflects badly on the character of the company personnel involved. B. Senior executives fear public embarrassment if caught doing something perceived as unethical. C. An ethical strategy is in the self-interest of shareholders, partly because an unethical strategy can damage a company's reputation and partly because unethical behavior can be very costly in terms of fines and penalties. D. Customers shun companies known for their shady behavior and ethically upstanding company personnel are repulsed by a work environment where unethical behavior is condoned. E. A strategy that is unethical in whole or in part is morally wrong.

B

42. Which of the following statements about a high-performance culture is NOT true? A. Results-oriented, high-performance cultures are permeated with a spirit of achievement and have a good track record in meeting or beating performance targets. B. High-performance cultures often have a low regard for high ethical standards, a strong preference for high-risk strategies, and a slow and methodical approach to responding to changes in the marketplace. C. The challenge in creating a high-performance culture is to inspire high loyalty and dedication on the part of employees, such that they are both energized and preoccupied with putting forth their very best efforts to do things right and be unusually productive. D. In a high-performance culture, the clear and unyielding expectation is that all company personnel, from senior executives to front-line employees, will display high-performance behaviors and a passion for making the company successful. E. In high-performance cultures, there's a strong sense of involvement on the part of company personnel and emphasis on individual initiative and creativity.

B

43. Which of the following factors is NOT a relevant consideration in determining the strength of buyer bargaining power? A. The relationship between the buyer market and seller market B. The degree to which the seller is a manufacturer of goods and services in substantial quantities C. The degree to which buyers pose a credible threat to integrate backward into the product market of sellers D. The degree to which buyers are well-informed about a seller's products, prices, and costs E. The degree to which industry goods are standardized and undifferentiated

B

44. Consider the following three companies and their strategies. · Company A is an established database management company that acquires a well-reputed but small publishing house to enter the booming publishing industry. · Company B, a sports management house, declared bankruptcy during a recent recession but now has created a television network that airs regional sports events. · Company C, a package delivery business, is a startup based on delivery efficiency models created by a few students, and delivers almost all kinds of packages. Which of the following describes the use of strategies by these companies accurately? A. Company B employs an emergent strategy, whereas Companies A and C employ deliberate strategies. B. All three companies employ deliberate strategies. C. All three companies employ emergent strategies. D. Company C employs a deliberate strategy, Companies A and B employ emergent strategy. E. Companies A and C employ emergent strategies, Company B employs a deliberate strategy.

B

44. Strategic objectives: A. are more essential in achieving a company's strategic vision than are financial objectives. B. relate to strengthening a company's overall market standing and competitive position. C. are more difficult to achieve and harder to measure than financial objectives. D. are generally less important than financial objectives. E. help managers track an organization's true progress better than financial objectives.

B

44. The business case for an ethical strategy: A. focuses primarily on costs that are difficult to quantify (for example, customer defections and adverse effects on employee productivity) but can often be the most devastating. B. emphasizes that pursuing unethical strategies not only damages a company's reputation but can also have costly consequences that are wide-ranging. C. starts with numerous ethical rules and guidelines and an environment where employees rely on these rules for moral guidance. D. starts with managers who understand there is a big difference between adopting values statements and codes of ethics that serve merely as window dressing and those that truly paint the white lines for a company's actual strategy and business conduct. E. begins with ethical guidelines that help send the message that management takes the observance of ethical norms seriously and that behavior falling outside ethical boundaries will have negative consequences.

B

45. A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons as a gimmick when their bathtubs did not sell. Their bubble foam became famous among some women and led to a line of exclusive bath products for women. They established shops in various regional locations and roped in celebrities to market their products to enhance sales. Now its products are sold through retail outlets and online sites throughout the world. Which of the following is accurate? A. Offering scented bubble bath foams and massage coupons was an emergent strategy. B. Creating a sub-brand that offered exclusive bath products for women was an emergent strategy. C. Establishing shops in regional locations was an emergent strategy. D. Roping in celebrities to market their products was an emergent strategy. E. Creating a worldwide presence through retail outlets and online sites was an emergent strategy.

B

46. Which of the following statements about adaptive corporate cultures is NOT true? A. The hallmark of adaptive corporate cultures is willingness on the part of organizational members to accept change and take on the challenge of introducing and executing new strategies. B. The standout cultural traits are a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives. C. Company personnel share a feeling of confidence that the organization can deal with whatever threats and opportunities come down the pike; they are receptive to risk taking, experimentation, innovation, and changing strategies and practices. D. Adaptive cultures are exceptionally well-suited to companies with fast-changing strategies and market environments. E. For an adaptive culture to remain intact over time, top management must orchestrate organizational changes in a manner that (1) demonstrates genuine care for the well-being of all key constituencies and (2) tries to satisfy all their legitimate interests simultaneously.

B

47. A company's business model: A. concerns the actions and business approaches that will be used to grow the business, conduct operations, and stake a competitor's market position. B. is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit. C. concerns what combination of moves in the marketplace it plans to make to outcompete rivals. D. deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible. E. concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets.

B

47. How does a company's unethical behavior risk doing direct damage to a company's creditors? A. It could result in diminished business reputation. B. It could lead to default on loans due to potential business fallout. C. It could result in lower stock prices and lower returns. D. It could lead to shunning by customers E. It could make recruiting and retaining talented employees difficult.

B

47. Which of the following is NOT accurate as concerns a distinctive competence? A. A distinctive competence is a competitively important activity that a company performs better than its rivals. B. A distinctive competence is typically less restrictive for rivals to copy than a core competence. C. A distinctive competence can be a basis for sustainable competitive advantage. D. A distinctive competence qualifies as a superior internal strength. E. A distinctive competence enables delivering stand-out value to customers (in the form of lower prices, better product performance, or superior service).

B

47. Which one of the following is NOT an important aspect of evaluating the merits of a diversified company's strategy? A. Assessing the competitive strength of each business the company has diversified into B. Determining which business units are cash cows and which ones are cash hogs, and then evaluating how soon the company's cash hogs can be transformed into cash cows C. Evaluating the strategic fits and resource fits among the various sister businesses D. Assessing the attractiveness of the industries the company has diversified into, both individually and as a group E. Ranking the performance prospects of the businesses from best to worst and deciding what priority to give each of the company's business units in allocating resources

B

5. The contentions that (1) many of the same standards of what's ethical and what's unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances, are defining beliefs of which of the following? A. The school of ethical relativism but not the school of ethical universalism B. The school of ethical universalism but not the school of ethical relativism C. Integrative social contracts theory but not the school of ethical universalism D. The school of ethical relativism and the school of ethical universalism E. The school of ethical relativismbut not integrative social contracts theory

B

5. The principal managerial components of the strategy execution process include: A. deciding how much to spend on employee training. B. instituting policies and procedures that facilitate strategy execution and tying rewards and incentives to the achievement of strategic and financial targets. C. doing an effective job of empowering employees. D. revamping the value chain in a manner calculated to maximize operating efficiency. E. selecting a capable top management team.

B

69. The business case for CSR and environmentally sustainable business practices suggests such actions could lead to all of the following EXCEPT: A. increased buyer patronage. B. shorter supply chain. C. lower costs and enhanced employee recruiting and workforce retention. D. opportunities for revenue enhancement and best long-term profits for shareholders. E. reduced risk of reputation-damaging incidents.

B

5. Visible actions to reallocate operating funds and move people into different and new organizational units: A. can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes in budgets cause among company personnel. B. signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process. C. run the risk of inadvertently creating barriers to building the needed competencies and capabilities. D. tend to impede the task of empowering employees and shifting to a new, more strategy-supportive culture. E. are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set of value chain activities.

B

50. Management's blueprint for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment: A. best describes what is meant by a company's strategy. B. best describes what is meant by a company's business model. C. accounts for why a company's financial objectives are at the stated level. D. portrays the essence of a company's business purpose or mission.

B

50. Perhaps the most reliable way for a company to improve its financial performance over time is to: A. put 100 percent emphasis on the achievement of its short-term and long-term financial objectives. B. recognize that the achievement of strategic objectives signals that the company is well positioned to sustain or improve its performance. C. substitute financial intent for strategic intent and judiciously concentrate on the mission of making a profit. D. not allocate any resources to the achievement of strategic objectives until it is very clear that the company can meet or beat its stretch financial performance targets. E. avoid use of the balanced-scorecard philosophy since achievement of financial performance targets is obviously more important than the achievement of strategic performance targets.

B

51. Companies with change-resistant cultures are: A. typically opposed to performance-based incentive compensation and employee empowerment. B. prone to be preoccupied with avoiding risks and are unlikely to pursue actions to capture emerging opportunities. C. often overly gung ho about looking outside the company for best practices, new managerial approaches, and innovative ideas. D. often preoccupied with making sure the company has an aggressive strategic vision that embraces risky business strategies. E. typically run by amoral managers who have little regard for high ethical standards.

B

51. Installing well-conceived, state-of-the-art support systems is an important managerial component of implementing and executing strategy because: A. such systems are essential to being able to engage in effective benchmarking and continuous improvement. B. such support systems not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). C. they help managers run a tight ship and preserve strong, centralized control over internal activities. D. they are the basis for revamping value chains, boosting labor productivity, and reducing operating costs. E. decentralized decision making and employee empowerment cannot work well without having well-conceived information and operating systems to accurately benchmark internally performed value chain activities against best-in-industry and best-in-class performers.

B

51. The strategic importance of deliberately trying to develop organizational competencies and capabilities is: A. lower costs for employee training. B. improved strategy execution and a potential for competitive advantage. C. an increased ability to reduce total operating costs. D. the added ease with which strategic fit and resource fit benefits can be captured. E. the enhanced ability to avoid the perils of outsourcing.

B

52. Well-conceived, state-of-the-art information and operating systems: A. are essential because business process reengineering efforts, TQM, Six Sigma, and benchmarking programs can't be carried out effectively without them. B. not only enable better strategy execution but also strengthen organizational capabilities (perhaps enough to provide a competitive edge over rivals). C. make it simple and easy to spot cost overruns and inefficiencies. D. are valuable tools for shortening a company's value chain, boosting workforce morale and productivity, and simplifying the task of adopting best practices. E. help managers run a tight ship and preserve strong, centralized control over internal activities

B

52. Which of the following activities by a company does NOT conform to the norms of corporate social responsibility? A. Conducting vocational programs inside the company's premises for the underprivileged B. Encouraging employees to use all means possible to exceed targets and providing heavy compensation to employees who generate profits C. Providing work-from-home options to working mothers residing in distant locations D. Involving company personnel in cleaning and restoring state parks E. Manufacturing energy-saving bulbs

B

53. What defines an insular, inwardly focused culture? A. The firm never underestimates rivals because of their proven track record in defending challenges. B. The firm believes they have all the answers because of their past great market success and is thus overconfident. C. The firm's unflinching belief in the company's superiority breeds a champion's attitude and thus they thrive on doing better by adapting to fresh thinking from outside the company. D. The firm values their customers' opinions and fully understands their needs and expectations. E. The firm has a commitment to hiring young people who can offer fresh thinking and new perspectives.

B

54. The broad areas that internal information business systems need to cover include all of the following EXCEPT: A. financial performance data. B. corporate culture data. C. customer data. D. operations data. E. employee data.

B

55. For a diversified company to be a strong performer: A. a substantial portion of its revenues and expenses must come from business units with relatively low attractiveness scores. B. its principal business must be in industries with a good outlook for growth and above-average profitability. C. its business units in high attractiveness score industries should be candidates for divesture. D. its business units must operate within the favorable aspects of their industry environment. E. its business units must have a popular image, even if the performance of their products does not greatly satisfy buyer expectations.

B

56. Assessments of how a diversified company's subsidiaries compare in competitive strength should be based on such factors as: A. vulnerability to seasonal and cyclical downturns, vulnerability to driving forces, and vulnerability to fluctuating interest rates and exchange rates. B. relative market share, the ability to match or beat rivals on key product attributes, brand image and reputation, costs relative to competitors, and the ability to benefit from strategic fits with sister businesses. C. the appeal of its strategy, the relative number of competitive capabilities, the number of products in each business's product line, which businesses have the highest/lowest market shares, and which businesses earn the highest/lowest profits before taxes. D. the ability to hurdle barriers to entry, value chain attractiveness, and business risk. E. cost reduction potential, customer satisfaction potential, and comparisons of annual cash flows from operations.

B

56. Organizing a company's work effort to promote successful strategy execution involves: A. deciding how much to spend on training managers and employees. B. deciding which value chain activities to perform in-house and which to outsource, and making internally performed strategy-critical value chain activities the main building blocks in the organization structure. C. choosing an organization structure that is a tight fit with the corporate culture. D. hiring an inexpensive yet capable management team. E. instituting a compensation structure that reduces employee turnover and thus stabilizes the makeup of work teams.

B

58. A company wants to plan a state-of-the-art information and operating system to enable better strategy execution. Which of the following is the most likely reason for the company's move? A. It wants to embrace modern technology. B. It wants to gain a competitive edge over rivals. C. It wants to spot cost overruns and inefficiencies. D. It wants to increase workforce productivity and retention. E. It wants to boost management morale.

B

58. The single most visible factor that distinguishes successful culture-change efforts from failed attempts is: A. forceful management actions to empower employees to adopt new operating practices. B. competent leadership at the top. C. de-layering the management hierarchy. D. developing a new value statement that inspires company personnel to put forth their best efforts to achieve performance targets. E. convincing employees that top management is genuinely committed to high ethical standards and the exercise of corporate social responsibility.

B

58. Triple-bottom-line (TBL) reporting is emerging as an important way for companies to: A. conceal their initiatives and accomplishments in the areas of diversity, environment, community, and ethics to increase profitability. B. make the results of their CSR strategies apparent to stakeholders and for stakeholders to hold companies accountable for their impact on society. C. minimize transparency and facilitate benchmarking CSR efforts across firms and industries. D. minimize the use of standard reporting frameworks and metrics. E. attract profit-oriented investors.

B

59. Management's most powerful tool for mobilizing organizational commitment to competent strategy execution and operating excellence is the: A. diligent and persistent use of benchmarking and best practices. B. proper use of a reward structure with motivational incentives. C. implementation of TQM and/or Six Sigma programs. D. periodic giving of inspirational speeches aimed at arousing employees' emotional energy. E. process of providing employees with a high degree of job security (ideally, via a no-layoff policy).

B

59. When a company uses outsourcing to zero in on even better performance of those truly strategy-critical activities where its expertise is most needed, then it may also be able to: A. create a values-based corporate culture that excels in product innovation. B. decrease internal bureaucracies, flatten its organizational structure, and shorten the time it takes to respond to changing market conditions. C. devote more resources to its social responsibility strategy, better empower employees, and reduce employee turnover. D. better police compliance with ethical standards, lower overall operating costs, and create two or more distinctive competencies. E. reduce the potential for information overload and improve the quality of decision making in each domain.

B

6. A company's resources and capabilities represent: A. the firm's net working capital and related determinants for measuring operating performance and capabilities. B. the firm's competitive assets, which are considered determinants of its competitiveness and ability to succeed in the marketplace. C. whether the firm has the industry's most efficient value chain. D. the management's source of funding of new strategic initiatives. E. positive trends with relevant cultural factors related to buyers' choices and product modifications

B

6. Which of the following is NOT something to look for in identifying a company's culture? A. The company's defined spirit and character that pervades the work climate B. The company's resource strengths, core competencies, and competitive capabilities C. The company's revered traditions and oft-repeated stories about "heroic acts" and "how we do things around here" D. The company's approach to people management and the official policies, procedures, and operating practices that paint the white lines for the behavior of company personnel E. The company's shared values, business principles, and ethical standards that management preaches and practices

B

60. An environmental sustainability strategy consists of a company's deliberate actions to: A. operate in an honorable manner, provide good working conditions for employees, and to actively work to enhance the quality of life in the local communities where it operates and in society at large. B. meet the current needs of customers, suppliers, shareholders, employees, and other stakeholders in a manner that protects the environment, provides for the longevity of natural resources, maintains ecological support systems for future generations, and guards against ultimate endangerment of the planet. C. protect and enhance natural resources and ecological support systems, taking into account the current consumption for the current generation. D. apply universal norms regarding the protection of the environment to its everyday operations and to function below the levels required by prevailing environmental regulations. E. balance commonly held views about what constitutes environmentally appropriate actions against its ability to make a profit.

B

60. Companies with multinational operations and/or newly acquired businesses typically have: A. strong cultures. B. multiple cultures (or subcultures) rather than a single culture. C. weak cultures. D. adaptive cultures. E. low-performance cultures.

B

60. Which of the following is NOT a reason why companies might use outsourcing to improve performance of strategy-critical activities? A. Improving a company's chances for outclassing rivals in the performance of strategy-critical activities and turning a core competence into a distinctive competence B. Promoting quick establishment of a total quality culture C. Speeding internal decision making and shortening the time it takes to respond to changing market conditions D. Capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities and thus contribute to better strategy execution E. Helping decrease internal bureaucracies and flatten the organizational structure

B

61. Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists: A. has the disadvantage of raising fixed costs and reducing variable costs and makes it harder to develop distinctive competencies. B. can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outsider suppliers, and short of the resource strengths to be a master of its own destiny. C. results in less organizational flexibility and leads to sometimes exorbitant costs in collaborating with outside suppliers and strategic partners. D. slows down decision making on key strategic issues because outside suppliers have to be consulted first. E. lowers the morale of company employees, dampens a company's ability to implement best practices, and results in greater bureaucracy and slower decision making.

B

61. When trying to change a problem culture, management should undertake such steps as: A. selecting a team of key employees to lead the culture change effort and design a plan for cultural change. B. identifying facets of the present culture that are supportive of good strategy execution and which ones are not and then specifying what new actions, behaviors, and work practices are needed in the new culture to improve performance. C. drawing up an action plan to change the present culture and then persuading company personnel why this plan of action is good and will be successful. D. conducting an employee survey to determine the organization's cultural norms and what company personnel like and dislike about the current culture. E. employing a consultant with expertise in culture change and following his or her advice on how to proceed.

B

62. One of the most significant contributions to strategy making in diversified companies that the nine-cell industry attractiveness competitive strength matrix provides is: A. identifying which businesses have strategies that should be continued, which businesses have strategies that need fine-tuning, and which businesses have strategies that need a major overhaul. B. that businesses having the greatest competitive strength and that are positioned in the most attractive industries should have the highest priority for corporate resource allocation and that competitively weak businesses in relatively unattractive industries should have the lowest priority and perhaps even be considered for divestiture. C. pinpointing which strategies are most appropriate for businesses positioned in the four corners of the matrix (although the matrix reveals little about the best strategies for businesses positioned in the remainder of the matrix). D. its ability to pinpoint what kind of competitive advantage or disadvantage each business has. E. pinpointing which businesses to keep and which ones to divest.

B

63. A firm's organizational structure is comprised of: A. resource strengths and competitive capabilities that allow it to incorporate attributes at lower costs than rivals whose products have similar attributes. B. the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered. C. excellent marketing and sales skills to convince buyers to pay a premium price for the attributes/features incorporated in its product. D. sustainable distinctive competencies to ensure cost reduction and competitiveness. E. a number of independent functional units involved in some common undertaking, with one unit typically in a more central role.

B

64. In order to coordinate and control the complex set of activities, managers must ensure: A. the organizational structure enables bureaucratic waste and strives for eliminating imposed capacity limitations of the strategy. B. the various parts of the organizational structure are aligned with one another and also matched to the requirements of the strategy. C. they have enough employees dedicated to the various functions to attain economies of scale benefits. D. they can orchestrate the process with forceful administration and political maneuvering. E. they accommodate situational idiosyncrasies to build a competitively capable organization.

B

65. Which of the following is a substantive culture-changing action that a company's managers can undertake to alter a problem culture? A. Identify aspects of the present culture that pose problems. B. Revise policies and procedures in ways that will help drive cultural change and replace senior executives who are resisting and obstructing needed organizational and cultural changes. C. Empower employees to adopt whatever new work practices they believe will be an improvement. D. Make a concerted effort to turn the company's core competencies into distinctive competencies. E. Shift from decentralized to centralized decision-making so as to give senior executives more authority and control in driving cultural change.

B

67. A diversified company's business units exhibit good resource fit when: A. each business is a cash cow. B. its businesses add to a company's overall resource strengths and have matching resource requirements and/or when the parent has adequate corporate resources to support its business needs and add value. C. each business is sufficiently profitable to generate an attractive return on invested capital. D. each business unit produces large internal cash flows over and above what is needed to build and maintain the business. E. the resource requirements of each business exactly match the company's available resources.

B

68. The businesses in a diversified company's lineup exhibit good resource fit when: A. the resource requirements of each business exactly match the resources the company has available. B. individual businesses have matching resource requirements at points along their value chain and add to a company's overall resource strengths and when solid parenting capabilities exist without spreading itself too thin. C. each business generates just enough cash flow annually to fund its own capital requirements and thus does not require cash infusions from the corporate parent. D. each business unit produces sufficient cash flows over and above what is needed to build and maintain the business, thereby providing the parent company with enough cash to pay shareholders a generous and steadily increasing dividend. E. there are enough cash cow businesses to support the capital requirements of the cash hog businesses.

B

70. A multidivisional structure consists of a: A. centralized structure combining corporate overhead with support functions. B. decentralized structure with of a set of operating divisions organized along business, product, customer groups or geographic lines, and a central corporate headquarters that allocates resources, provides support functions, and monitors divisional activities. C. decentralized structure or divisional structure that monitors performance and allocates funding to those divisions wanting to grow. D. decentralized format of senior executives with large overhead staff to manage and control all the business lines. E. centralized structure that controls the coordination across the more diversified and complex functions within the organization.

B

71. Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically: A. use only positive rewards and never involve the use of tension, fear, job insecurity, stress, or anxiety. B. entail decidedly positive rewards for meeting or beating performance targets, but also impose sufficiently negative consequences when actual performance falls short of the target. C. aim at creating a no-pressure/no-adverse-consequences work environment. D. entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing nonmonetary rewards, like cash bonuses for high-performing employees. E. put top priority on making employees happy and secure in their jobs.

B

71. What is the business term given for a company that generates cash flows over and above its internal requirements and can provide the corporate parent with funds for reinvestment? A. Cash hog B. Cash cow C. Cash chest D. Free cash flow E. Cash generator

B

71. Which of the following is FALSE as it concerns the merits of why acting in a socially responsible manner is good business? A. The higher the public profile of a company or brand, the greater the scrutiny of its activities and the higher the potential for it to become a target for pressure group action. B. Acting in a socially responsible manner nearly always results in higher profits and a higher stock price for shareholders. C. To the extent that a company's socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage. D. Some employees feel better about working for a company committed to improving society—a condition that can contribute to lower turnover and better worker productivity. E. Companies with deservedly good reputations for contributing time and money to the betterment of society are better able to attract and retain employees compared to companies with tarnished reputations.

B

71. Which structure combines two or more organizational forms, with multiple reporting relationships, and is used to foster cross-unit collaboration? A. Matrix structure B. Composite structure C. Divisional structure D. Network structure E. Functional structure

B

72. Larger firms with more complex organizational structures are: A. less decentralized in their decision making than smaller firms. B. more decentralized in their decision making than smaller firms. C. less decentralized in their decision making than larger firms with simpler structures. D. more centralized in their decision making than smaller firms. E. not decentralized due to their operating size.

B

72. Leading the drive for good strategy execution and operating excellence calls upon senior executives to: A. be very personable, effective communicators, and skilled in the empowerment of company personnel. B. personally lead the implementation process and drive the pace of progress. C. delegate little to subordinates and, instead, personally exert a strong, highly visible influence on the company's approaches to strategy execution. D. be creative in establishing policies and procedures that will instill high standards of operating excellence. E. be charismatic, decisive decision-makers, and make inspiring speeches at company events.

B

72. Studies done on the correlation of between good corporate behavior and good financial performance have generally found: A. no correlation B. a small positive correlation C. a small negative correlation D. a large positive correlation E. a large negative correlation

B

74. Which of the following is the BEST guideline for deciding what the priorities should be for allocating resources to the various businesses of a diversified company? A. Businesses with high industry attractiveness ratings should be given top priority and those with low industry attractiveness ratings should be given low priority. B. Business subsidiaries with the brightest profit and growth prospects, attractive positions on the nine-cell matrix, and solid strategic and resource fits generally should head the list for corporate resource support. C. The positions of each business in the nine-cell attractiveness-strength matrix should govern resource allocation. D. Businesses with the most strategic and resource fits should be given top priority and those with the fewest strategic and resource fits should be given low priority. E. Businesses with high competitive strength ratings should be given top priority and those with low competitive strength ratings should be given low priority.

B

75. 64. A company that sets aside 2 percent of its pre-tax profits to build and then fund a cancer-recovery facility for teens is an example of a corporate social responsibility action to: A. enhance employee well-being. B. support philanthropy. C. protect and sustain the environment. D. ensure honorable and ethical action. E. promote workforce diversity.

B

76. Which of the following is NOT a reasonable option for deploying a diversified company's financial resources? A. Making acquisitions to establish positions in new businesses or to complement existing businesses B. Investing financial resources in cash cow businesses until they show enough strength to generate positive cash flows C. Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses D. Paying down existing debt, increasing dividends, or repurchasing shares of the company's stock E. Investing in ways to strengthen or grow existing businesses

B

77. Which of the following is an activity a company engages in to enhance the quality of life for its employees in an attempt to fulfill its corporate social responsibility? A. It fires suppliers that use child labor. B. It provides work-at-home opportunities. C. It donates a percentage of its profits to a national charity. D. It pays to have litter removed from a state highway. E. It sells its products at a discounted price in underdeveloped countries.

B

78. The strategic options to improve a diversified company's overall performance do NOT include which of the following categories of actions? A. Broadening the company's business scope by making new acquisitions in new industries B. Increasing dividend payments to shareholders and/or repurchasing shares of the company's stock C. Restructuring the company's business lineup with a combination of divestitures and acquisitions to put a whole new face on the company's business makeup D. Pursuing multinational diversification and striving to globalize the operations of several of the company's business units E. Divesting weak-performing businesses and retrenching to a narrower base of business operations

B

8. Apple decides to reallocate resources by curtailing online ad budgets and investing heavily in scratch-resistant Sapphire, the material that differentiates iPhone from competitive brands. What is MOST LIKELY the reason for reallocation of resources? A. Making critical value chain activities less effective B. Supporting the new strategic initiative of the brand C. Signalling commitment to online sales of the brand D. Signalling commitment to offline sales of the brand E. Impeding the efforts of rivals to hoard Sapphire

B

80. The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees. What would be their best approach? A. Make the performance bonus at least 3 to 4 percent of base salary to have some impact. B. Make the performance bonus at least 10 to 12 percent of base salary to have some impact. C. Make the performance payoff equal for average and below-average performers. D. Set unrealistic performance standards, but with an equally high compensation. E. Reward people who work very hard, even if they fall short of achieving performance targets.

B

81. Retrenching to a narrower diversification base is: A. usually the most attractive long-run strategy for a broadly diversified company confronted with recession, high interest rates, mounting competitive pressures in several of its businesses, and sluggish growth. B. a strategy that allows a diversified firm's energies to be concentrated on building strong positions in a smaller number of businesses rather the stretching its resources and managerial attention too thinly across many businesses. C. an attractive strategy option for revamping a diverse business lineup that lacks strong cross-business financial fit. D. sometimes an attractive option for deepening a diversified company's technological expertise and supporting a faster rate of product innovation. E. a strategy best reserved for companies in poor financial shape.

B

81. The classic way to coordinate the work efforts of internal organization units is to: A. establish a corporate culture where teamwork is a core value and decisions are made by general consensus among team leaders in the affected work units. B. have closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision. C. have the heads of support activities report to the heads of primary, strategy-critical activities. D. establish monetary incentives that reward people for being cooperative team players. E. have frequent meetings among the heads of closely related activities and work units to establish mutually agreeable deadlines.

B

84. In which of the following instances is retrenching to a narrower diversification base NOT likely to be an attractive or advisable strategy for a diversified company? A. When a diversified company has struggled to make certain businesses attractively profitable B. When a diversified company has too many cash cows C. When one or more businesses are cash hogs with questionable long-term potential D. When businesses in once-attractive industries have badly deteriorated E. When a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on

B

85. When should a business NOT be divested? A. When the business is worth more to another company than to the parent company B. When the business is a cash cow C. When the business provides valuable strategic or resource fits for another company D. When shareholders would be better served if the company sells the business for a generous premium E. When the business lacks the cross-boundary presence of shared values and cultural compatibility

B

9. A company's strategy is NOT concerned with management's choices about how to: A. attract and please customers. B. stake out the same market position as successful rival companies. C. grow the business. D. compete successfully. E. conduct operations and improve the company's financial and market performance.

B

Why does a U.S. company exporting wooden furniture manufactured in Malaysia to the European Union benefit from the decline in the value of ringgit against the euro? A. Because decline in the value of ringgit against euro raises the cost of furniture manufactured in Malaysia, making it less competitive in European markets B. Because decline in the value of ringgit against euro reduces the cost of furniture manufactured in Malaysia, making it more competitive in European markets C. Because decline in the value of ringgit against euro has no impact on the cost of furniture manufactured in Malaysia, both in Malaysian or European markets D. Because decline in the value of ringgit against euro makes European goods more competitive as compared to Malaysian goods E. Because decline in the value of ringgit against euro makes Malaysian goods less competitive in the U.S. market

B. Because decline in the value of ringgit against euro reduces the cost of furniture manufactured in Malaysia, making it more competitive in European markets

What aspect of the diamond framework is MOST LIKELY responsible for GlenmarkPharma setting up manufacturing facilities in the United States, the world's largest market for pharmaceuticals? A. Licensing strategies B. Demand conditions C. Joint venture strategies D. Franchising strategies E. Firm strategy, structure, and rivalry

B. Demand conditions

What is the best way to achieve the efficiency potential of a global strategy? A. It demands managerial attention to be focused on objective-setting specifically oriented toward production practices. B. It requires that resources and best practices be shared, value chain activities be integrated, and capabilities be transferred from one location to another as they are developed. C. It requires that the best identified resources and capabilities be centralized at headquarters. D. It requires value chain activities to be dispersed across many countries to elevate cost control management as a primary focus in all countries. E. It requires giving local managers considerable latitude for executing strategies for the country markets they are responsible for.

B. It requires that resources and best practices be shared, value chain activities be integrated, and capabilities be transferred from one location to another as they are developed.

Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan signs a supply contract with the tire multinational. In which of the following ways is Renault-Nissan likely to gain from the pact? A. Different styles of management, organization, and strategy B. Knowledge sharing within same value chain system C. Availability of natural resources at low cost D. Growth potential and large size of the market E. Government policies in the host country

B. Knowledge sharing within same value chain system

When concentrating production in a few locations, which of the following can allow a manufacturer to lower unit costs, boost quality, or master a new technology more quickly? A. Significant scale economies B. Learning-curve effects C. Superior resources D. Profit sanctuaries E. Supporting industries

B. Learning-curve effects

66. Which of the following is the most UNLIKELY element of a "think global, act global" approach to crafting a global strategy? A. Having minimal responsiveness to buyer tastes, cultural traditions, and market conditions in each country market B. Scattering plants across many countries, with each plant producing product versions for local area markets C. Utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide D. Requiring local managers in host countries to stick close to the chosen global strategy E. Selling much the same products under the same brand names worldwide

B. Scattering plants across many countries, with each plant producing product versions for local area markets

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT accurate? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country can be undermined when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.

Which of the following statements regarding multidomestic competition is false? A. Buyers in different countries are attracted to different product attributes. B. The benefits from global integration and standardization are high. C. Industry conditions and competitive forces in each national market differ in important respects. D. The mix of competitors in each country market varies from country to country. E. Winning in one country market does not necessarily signal the ability to fare well in other countries.

B. The benefits from global integration and standardization are high.

A "think-local, act local" multidomestic strategy entails: A. offering a narrow product line aimed at serving buyers in the same segments of country markets worldwide. B. giving local managers considerable strategy-making latitude and often producing different product versions for different countries. C. adopting aggressive efforts to locate facilities in those country markets that have superior resources. D. pursuing strong product differentiation and competing in many buyer segments. E. extensive efforts to transfer a company's competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.

B. giving local managers considerable strategy-making latitude and often producing different product versions for different countries.

The diamond framework can be used to reveal the answers to all of the following that are important for competing on an international basis EXCEPT: A. where foreign entrants into an industry are most likely to come from. B. how to formulate an exit strategy to push foreign competitors out of the market. C. which countries' foreign rivals are likely to be the weakest. D. how managers can decide which foreign markets to enter first. E. where to locate different value chain activities so they are the most beneficial.

B. how to formulate an exit strategy to push foreign competitors out of the market.

Profit sanctuaries are found to differ by a company's strategy, such that a(n): A. domestic-only company has access to many profit sanctuary locations worldwide. B. international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share. C. globally competitive company generally has a profit sanctuary outside its home market in countries where it is a market leader and enjoys a strong competitive position. D. transnational company has profit sanctuaries in every country where it operates. E. company competing in a few country markets has more profit sanctuaries.

B. international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share.

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world: A. is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real. B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real. E. is unaffected by changes in the valuation of foreign currencies against the Brazilian real—all that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.

The big problem a franchisor faces is: A. allowing franchisees to achieve scale economies. B. maintaining quality control due to a lack of commitment to consistency and standardization. C. eliminating the costs and risks associated with establishing a foreign business location. D. sharing foreign facilities and marketing strategies with local businesses. E. achieving higher product quality and better product performance than with an export strategy.

B. maintaining quality control due to a lack of commitment to consistency and standardization.

A global strategy allows for: A. the leading companies to compete for the biggest share of the world market, but only occasionally compete head-to-head in different countries. B. the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked. C. a company's overall market strength to be the sum of its market shares in each country market where it has a presence. D. the industry leaders to be foreign companies, while domestic companies are relegated to runner-up status. E. a firm's overall competitive advantage to be determined by the size of the competitive advantage it has in each of its profit sanctuaries.

B. the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked.

Companies that compete on an international basis have a competitive advantage over their purely domestic rivals: A. to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success. B. to benefit from coordinating activities across different countries' domains. C. solely for the benefit of their shareholders. D. that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid. E. to give full access to the proprietary technological expertise or other competitively valuable capabilities.

B. to benefit from coordinating activities across different countries' domains.

1. A company's "macro-environment" refers to: A. the industry and the competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets where a company operates. C. the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company's industry.

C

1. What does business ethics concern? A. Developing a consensus among companies worldwide as to what ethical principles businesses should be expected to observe in the course of conducting their operations B. What ethical behaviors are imposed on company personnel by governments in the course of doing their jobs C. The application of general ethical principles to the actions and decisions of companies and the conduct of their personnel D. Developing a special set of ethical standards for different types of businesses to observe in conducting their affairs E. Picking and choosing among the consensus ethical standards of society to arrive at a set of ethical standards that apply directly to operating a business

C

10. Cavco Construction divests funds from its commercial property ventures to invest in gated community properties close to New York, signaling a change of strategy. Which of the following statements about Cavco is most likely true? A. Cavco is impeding the efforts to proficiently execute the strategy. B. Cavco is merely fine-tuning its existing strategy to test efficiency. C. Cavco is marshalling resources to support new strategic initiative. D. Cavco is hampering work climate conducive for good strategy execution. E. Cavco is focusing on activities that are a low priority in the strategy execution effort.

C

11. A company's strategy stands a better chance of succeeding when: A. it is developed through a collaborative process involving all managers and staff from all levels of the organization. B. managers employ conservative strategic moves based on past experience and form an underlying basis of control. C. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals. D. managers copy the strategic moves of successful companies in its industry. E. managers focus on meeting or beating shareholder expectations.

C

11. Tangible resources do not include: A. physical resources. B. financial resources. C. human assets. D. technological assets. E. organizational resources.

C

12. Well-conceived visions are ________ and ____________ to a particular organization and they avoid generic, feel-good statements that could apply to hundreds of organizations. A. widespread; unique B. recurring; customary C. distinctive; specific D. customary; familiar E. universal; established

C

12. Which of the following statements falsely characterizes the managerial task of executing strategy? A. Executing strategy is an action-oriented, make-things-happen task. B. Executing strategy tests a manager's ability to direct organizational change, achieve continuous improvement in operations and business processes, create and nurture a strategy-supportive culture, and consistently meet or beat performance targets. C. Implementing new strategic initiatives principally involves employing managerial techniques to overcome resistance to change. D. Executing strategy requires a team effort which entails that every manager think through the answer to "What does my area have to do to implement its part of the strategic plan, and what should I do to get these things accomplished effectively and efficiently?" E. Implementing and executing strategy is primarily an operations-driven activity revolving around the management of people and business processes.

C

13. Which of the following is true of ethical relativism? A. Concepts of ethically right and ethically wrong are relative across countries and cultures but are universal within countries or cultures. B. Individuals and businesses have a basic right to "moral free space" and it is inappropriate to specify ethically permissible and ethically impermissible actions and behaviors. C. There are important occasions when local cultural norms and morality and the circumstances of the situation determine whether certain behaviors are right or wrong, for there are no absolutes when it comes to business ethics. D. Concepts of right and wrong as applied to business situations are always a function of each company's own set of values, beliefs, and ethical convictions (as stated in the company's code of ethical conduct). E. Standards of what is ethically right and ethically wrong as applied to business behavior are determined solely by whatever business norms prevail in a particular company's home country and are applicable to its operations in all other countries.

C

14. Which of the following statements about implementing and executing a new strategy is true? A. Executing strategy calls for essentially the same kinds of creative management talent and innovative thinking as does crafting strategy. B. Executing strategy is chiefly a financially driven process aimed at squeezing the most profit out of conducting daily operations. C. Executing strategy is a job for a company's whole management team, not just a few senior managers. D. Executing strategy depends heavily on the caliber of a CEO's business vision, industry and competitive analysis skills, and entrepreneurial creativity. E. Executing strategy tends to be a simpler, quicker management task to perform as compared to crafting a winning strategy.

C

14. Which of the following topics would least likely be contained in a company's statement of its core values? A. A commitment to having fun and creating a fun work environment B. A commitment to operating excellence and superior results C. Mandating full compliance with all laws and regulations D. Exhibiting such qualities as integrity, fairness, trustworthiness, pride of workmanship, respect for co-workers, and ethical behavior E. Exhibiting teamwork and cooperative attitudes

C

14. Which of the following ways are employed by defending companies to fend off a competitive attack? A. Remain steadfast to current product features and models to ensure resources are not diverted toward unproductive efforts. B. Exclude volume discounts or better financing terms from the strategic response in order to maintain current profitability levels. C. Gain product line exclusivity to force competitors to use other distributors. D. Trimming the length of warranties to save money. E. Stay away from competitor's clients since their loyalty will not allow them to switch.

C

15. A company's strategy and its quest for competitive advantage are tightly connected because: A. without a competitive advantage a company cannot become the industry leader. B. without a competitive advantage a company cannot have a profitable business model. C. crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. D. a competitive advantage is what enables a company to achieve its strategic objectives. E. how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company.

C

15. Which of the following statements about the ethical relativism school of thinking is FALSE? A. In a multinational company, application of ethical relativism equates to multiple sets of ethical standards. B. There are few absolutes when it comes to business ethics and thus few ethical absolutes for consistently judging a company's conduct in various countries and markets. C. When there are cross-country or cross-cultural differences in ethical standards, it is appropriate for ethical standards in a company's home market to take precedence over what the local ethical standards may be. D. A company that adopts the principle of ethical relativism and holds company personnel to local ethical standards necessarily assumes that what prevails as local morality is an adequate guide to ethical behavior. E. According to the ethical relativism school of thinking, a "one-size-fits-all" template for judging the ethical appropriateness of business actions and the behaviors of company personnel does not exist.

C

16. Which of the following questions is NOT pertinent to company managers in thinking strategically about what directional path should be taken by the company and about developing a strategic vision? A. Is the outlook for the company promising if it continues with its present product offerings? B. Are changing market and competitive conditions acting to enhance or weaken the company's prospects? C. What business approaches and operating practices should we consider in trying to implement and execute our business model? D. What strategic course offers attractive opportunity for growth and profitability? E. What, if any, new customer groups and/or geographic markets should the company get in position to serve?

C

17. A belief in ethical relativism leads to the conclusion that: A. since ethical standards are subjective, it is perfectly appropriate for each company to define and implement its own ethical principles of right and wrong as concerns the use of underage labor and the payment of bribes and kickbacks. B. ethical standards are determined objectively (rather than subjectively). C. whether the use of underage labor and the payment of bribes/kickbacks should be deemed ethical or unethical depends on the moral standards, values, and business norms that prevail in particular cultures, societies, countries, or circumstances. D. ethical standards are objective and universal—thus whether the use of underage labor and the payment of bribes and kickbacks should be deemed ethical or unethical is definitely not dependent on the moral standards, values, and business norms that prevail in particular cultures, societies, countries, or circumstances. E. standards of right and wrong are governed by what is legal in a given country—thus whether the use of underage labor and the payment of bribes and kickbacks are ethical or unethical is governed by local law.

C

17. A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage: A. is a reliable indicator that the company has a socially responsible business model. B. is achievable in emerging but not mature industries. C. is a company's most reliable ticket to above-average profitability. D. signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. E. is the best indicator that the company's strategy and business model are well-matched and properly synchronized.

C

18. The rivalry among competing sellers tends to be less intense when: A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales. B. buyer demand is weak and many sellers have excess capacity and/or inventory. C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance. D. rivals have diverse strategies and objectives and are located in different countries. E. rival sellers have weakly differentiated products.

C

18. Which of the following are characteristics of an effectively worded strategic vision statement? A. Balanced, responsible, and rational B. Challenging, competitive, and "set in concrete" C. Graphic, directional, and focused D. Realistic, customer-focused, and market-driven E. Achievable, profitable, and ethical

C

19. Multinational companies that forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition: A. are generally advocates of the ethical relativism school of thought. B. are misguided in their efforts because bribes and kickbacks are really no different from tipping for service at restaurants as you pay for a service rendered. C. face a particularly vexing problem of losing business to competitors that have no scruples—an outcome that penalizes ethical companies and company personnel. D. are out-of-step with business reality given that the preponderance of company managers are immoral. E. are in a distinct minority compared to companies that view the payment of bribes and kickbacks as a legitimate or permissible practice.

C

19. Which of the following is NOT pertinent in identifying a company's present strategy? A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing B. Management's planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on) C. The company's mission, strategic objectives, and financial objectives D. Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions E. The strategic role of its collaborative partnerships and strategic alliances with others

C

2. A company's strategic plan: A. maps out the company's history. B. links the company's financial targets to control mechanisms. C. outlines the competitive moves and approaches to be used in achieving the desired business results. D. focuses on offering a more appealing product than rivals. E. lists methods of making money in its chosen business.

C

2. How do ethical principles apply to businesses? A. They chiefly deal with the actions and behaviors required to operate companies in a socially responsible manner. B. They chiefly deal with the rules each company's top management and board of directors make about "what is right" and "what is wrong." C. They are not materially different from ethical principles in general. D. They are generally less stringent than the ethical principles for society at large. E. They are generally more stringent than the ethical principles for society at large.

C

32. Adapting to new conditions like new innovations by competitors, fast-changing technological developments, and constantly evaluating what is working result in: A. an assured profitability strategy. B. a broad market entry strategy. C. an emergent strategy. D. unlimited revenue generation. E. a proactive strategy.

C

22. Breaking down resistance to a new strategic vision typically requires that management, on an as needed basis: A. institute a balanced scorecard approach to measuring company performance, with the "balance" including a mixture of both old and new performance measures. B. inform company personnel about forthcoming changes in the company's strategy. C. reiterate the company's need for the new direction, while addressing employee concerns head-on, calming fears, lifting spirits, and providing them with updates and progress reports as events unfold. D. explain all updates and merits of the company's business model to align strategy with employee concerns. E. raise wages and salaries to win the support of company personnel for the company's new direction.

C

22. The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when: A. new industry or market segments are yet to be developed and create altogether new consumer demand. B. fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. C. the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. D. entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. E. there are nearly always big advantages to being a slow mover rather than an early mover, especially in regards to avoiding the "mistakes" of first or early movers.

C

22. Which of the following is NOT one of the appeals of related diversification? A. It can offer opportunities for transferring expertise, technology, and other capabilities from one business to another. B. It can offer opportunities for reducing costs on advertising by leveraging use of a competitively powerful brand name. C. It is particularly well-suited for the use of first-mover strategies and capturing valuable financial fits. D. It may present opportunities for cross-business collaboration to create valuable new competencies and capabilities. E. It can facilitate sharing of other resources (besides brands) that support corresponding value chain activities across businesses.

C

23. In which of the following steps does updating the company's capabilities to match changing market conditions and customer expectations take place? A. Staffing the organization B. Recruiting and retaining talented employees C. Acquiring, developing, and strengthening key resources and capabilities D. Organizing value chain activities and business processes E. Structuring the organization and work effort

C

23. The BEST example of a company resource is: A. having higher earnings per share and a higher return on shareholders' equity investment than key rivals. B. being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders, or strategic alliances. C. having proven technological expertise and an ability to churn out new and improved products on a regular basis. D. having a larger number of competitive assets than competitive liabilities. E. having more built-in key success factors than rivals.

C

23. The backbone of the process of identifying, studying, and implementing best practices is: A. business process reengineering B. a corporate culture that has a core value of operating excellence C. benchmarking D. Six Sigma quality control techniques E. the innovative application of TQM techniques

C

23. The contention that ethical standards should reflect the collective views of multiple societies in establishing a set of universal ethical principles (that are widely recognized as laying legitimacy to ethical boundaries on actions and behavior in all situations) and in allowing inclusion of a set of prevailing customary actions of local cultures or groups (with their traditions and shared values), that further prescribe to what represents ethically permissible behavior and what does not, constitutes the basic principles of: A. the school of ethical relativism. B. the school of ethical universalism. C. integrated social contracts theory. D. corporate social responsibility. E. the triple bottom line.

C

24. The managerial task of effectively conveying the essence of the strategic vision is made easier by: A. having operating strategies that are easy for company personnel to understand and execute. B. combining the strategic vision and the company's values statement into a single document. C. adopting a catchy slogan and then using it repeatedly to illuminate the direction and purpose of "where we are headed and why." D. waiting until the company realizes its mission and ensures the existing corporate culture is compatible with the new vision and direction. E. distributing written statements that explain "where we are going and why."

C

24. Which of the following is NOT a good example of a company's resources? A. More intellectual capital and better e-commerce capabilities than rivals B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance C. Having higher earnings per share and a higher stock price than key rivals D. A well-known brand name and enjoying the confidence of customers E. A lower-cost value chain than rivals

C

25. General Electric has an up-or-out policy, where key personnel in underperforming units are pressured to boost performance to acceptable levels and keep it there or risk being replaced. What is this an example of? A. Staffing the organization with managers and employees capable of executing the strategy well B. Developing the resources and organizational capabilities required for successful strategy execution C. Tying rewards and incentives directly to the achievement of strategic and financial targets D. Adopting best practices and business processes to drive continuous improvement in strategy execution activities E. Exercising the internal leadership needed to propel strategy implementation forward

C

25. If a company doesn't possess standalone resource strengths capable of contributing to competitive advantage: A. all potential for competitive advantage is lost. B. it is unlikely to survive in the marketplace and should exit the industry. C. it may have a bundle of resources that can be leveraged to develop a distinctive competence. D. it is virtually blocked from using offensive strategies and must rely on defensive strategies. E. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities.

C

25. Which of the following is NOT a tool or method that managers can use to promote operating excellence and further the cause of good strategy execution? A. Benchmarking B. Business process reengineering C. Strategic resource training D. TQM and Six Sigma quality control techniques E. Best practices

C

25. Which of the following statements about a company's culture is NOT true? A. The more new employees a company is hiring the more important it becomes to screen job applicants every bit as much for how well their values, beliefs, and personalities match up with the culture as for their technical skills and experience. B. The longer people stay at an organization, the more that they come to embrace and mirror the corporate culture—their values and beliefs tend to be molded by mentors, fellow workers, company training programs, and the reward structure. C. A company's culture, once established, tends to remain stable and entrenched over time. D. Typically, key elements of the culture originate with a founder or certain strong leaders who articulated them as a set of business principles, company policies, operating approaches, and ways of dealing with employees, customers, vendors, shareholders, and local communities where the company has operations. E. Company cultures can be perpetuated by the telling and retelling of company legends, by regular ceremonies honoring members who display desired cultural behaviors, and by visibly rewarding those who display cultural norms and penalizing those who don't.

C

25. Which of the prime examples of strategic fit opportunities below are NOT related business activities? A. Transferring specialized expertise, technological know-how, or other valuable resources and capabilities from one business's value chain to another's B. Cost sharing between businesses by combining their related value chain activities into a single operation C. Overhauling and streamlining the operations of the business by refocusing value chain activities toward businesses that can provide a superior job of parenting D. Exploiting common use of a well-known brand name E. Sharing other resources (besides brands) that support corresponding value chain activities across businesses

C

26. A hallmark of a strong-culture company is: A. strictly enforced policies and procedures. B. a strongly entrenched competitive strategy. C. the dominating presence of certain deeply rooted values and norms of behavior that are widely shared. D. decentralized decision-making and empowered employees. E. a deep commitment to benchmarking, best practices, and operating excellence.

C

26. Because functional organization structures often result in pieces of strategically relevant activities and capabilities being scattered across many different functional departments, companies have found that: A. it is necessary to give these functional departments the freedom to collaborate closely with each other to achieve the desired degree of coordination. B. it is necessary to outsource those activities that are fragmented to strategic partners in order to achieve the needed coordination. C. there is merit in using business process reengineering to radically redesign and streamline strategy-critical processes and workflow from different departments and unifying their performance into a single department or cross-functional work group that has charge over the whole process. D. TQM is a potent way to reengineer the work effort, avoid the shortcomings of a functional organization structure, and achieve rapid-response capability. E. it makes good organizational sense to combine those functional departments where fragmentation is a problem into a single department.

C

26. Being the overall low-cost provider in an industry has the attractive advantage of: A. building strong customer loyalty and locking customers into its product because customers have high switching costs. B. giving the firm a very appealing brand image. C. putting a firm in the best position to win the business of price-sensitive customers and earn profits by setting the floor on market price. D. putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy. E. greatly reducing the strong bargaining power of rivals with the key distributors.

C

26. BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds of consumers, this resort caters mainly to gays with guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage? A. A low-cost provider strategy B. A broad differentiation strategy C. A focused low-cost strategy D. A focused differentiation strategy E. A best-cost provider strategy

C

27. A sound, well-communicated strategic vision matters, and the related payoffs occur in several respects, EXCEPT in connection with: A. reducing the risks of rudderless decision-making. B. helping the organization prepare for the future. C. avoiding strategic inflection points and management's reaction in aligning decision choices. D. helping to crystallize top management's own view about the firm's long-term direction. E. providing a tool for winning the support of organizational members for internal changes that will help make the vision a reality.

C

28. A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a: A. long-term derivative strategy. B. cash flow feasibility analysis. C. competitive advantage over other companies. D. resource deployment strategic plan. E. cost underestimation and benefit overestimation.

C

28. A competitive strategy predicated on low-cost leadership tends to work best when: A. there are widely varying needs and preferences among the various buyers of the product or service. B. there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C. price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D. buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E. buyers have high switching costs and there is considerable diversity in how buyers use the product.

C

29. The competitive power of a company resource strength or competitive capability hinges on all of the following EXCEPT: A. how hard it is for competitors to copy. B. whether it is rare and something rivals lack. C. whether it is really competitively valuable and has the potential to contribute to a competitive advantage. D. whether it is nonsubstitutable E. whether it available in plenty.

C

38. A good example of vertical integration is a: A. global public accounting firm acquiring a small local or regional public accounting firm. B. large supermarket chain getting into convenience food stores. C. crude oil refiner purchasing a firm engaged in drilling and exploring for oil. D. hospital opening up a nursing home for the aged. E. railroad company acquiring a trucking company specializing in long-haul freight.

C

29. Which of the following contribute to the emergence and sustainability of a strong culture? A. Senior executives that walk the talk of high ethical standards B. A strong emphasis on developing innovative core competencies and competitive capabilities C. A sincere, long-standing company commitment to operating the business according to established traditions, thereby creating an internal environment that supports decision making and strategies based on cultural norms D. Centralized decision making and strict enforcement of company policies E. A long-standing commitment to strict enforcement of established policies and procedures and steadfast unwillingness to change these policies and procedures

C

29. Which of the following is NOT a good example of a substitute product that triggers stronger competitive pressures? A. A salad as a substitute for French fries B. Wireless phones as a substitute for wired telephones C. Coca-Cola as a substitute for Pepsi D. Snowboards as a substitute for snow skis E. Video-on-demand services from a cable TV company as a substitute for going to the movies

C

3. From a strategy-implementing/strategy-executing perspective, operating budget allocations should: A. primarily be based on the number of new strategic initiatives being implemented in each operating department. B. be based on the number of people employed in each of the divisions. C. be strategy-driven and based on how much each organizational unit needs to carry out its piece of the strategic plan efficiently and effectively. D. be linked to the costs of performing value chain activities as determined by benchmarking against best-in-industry competitors. E. depend on how much stretch there is in each department's objectives and what additional resources are needed to help reach these performance targets.

C

3. Which of the following is NOT a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A. Whether to focus on building competitive advantages B. Whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for C. Whether to employ a market share leadership strategy D. Whether to display a strong bias for swift, decisive, and overwhelming actions to overpower E. Whether to create and deploy company resources to cause rivals to defend themselves

C

3. Which of the following is an integral part of the managerial process of crafting and executing strategy? A. Developing a proven business model B. Deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage C. Setting objectives and using them as yardsticks for measuring the company's performance and progress D. Communicating the company's values and code of conduct to all employees E. Deciding on the company's strategic intent

C

3. Which of the following is part of a company's macro-environment? A. Conditions outside the market B. European culture, values, and lifestyles C. The pace of technological change factors and legal and regulatory conditions D. The industry and competitive environment arena outside the company's operating territory E. The company's resource strengths, resource weaknesses, and competitive capabilities

C

30. A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when: A. there are many ways to achieve product differentiation that buyers find appealing. B. buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C. the offerings of rival firms are essentially identical, standardized, commodity-like products. D. entry barriers are high and competition from substitutes is relatively weak. E. the market is composed of many distinct segments with varying buyer needs and expectations.

C

30. Total quality management (TQM) emphasizes all of the following EXCEPT which? A. 100 percent accuracy in performing tasks B. Continuous improvement in all phases of operations C. Adoption of industry standard operating practices D. Benchmarking and total customer satisfaction E. Empowerment of employees and team-based work design

C

30. Which of the following statements about recruiting and retaining capable employees is FALSE? A. The quality of an organization's people is always an essential ingredient if critical value chain activities are to be performed competently. B. Recruiting and retaining capable employees is a particularly important organization-building task in enterprises where superior intellectual capital is a key resource and also a basis for competitive advantage. C. Recruiting and retaining capable employees are usually much more important to good strategy execution and the achievement of true operating excellence than is assembling a capable top management team. D. It is very difficult for a company to competently execute its strategy and achieve operating excellence without a large band of capable employees who are actively engaged in the process of making ongoing operating improvements. E. In many industries, adding to a company's talent base and building intellectual capital is more important to good strategy execution than additional investments in plants, equipment, and capital projects.

C

31. Total quality management (TQM) programs: A. deal exclusively with procedures to achieve defect-free manufacturing and assembly. B. nearly always contribute more to the achievement of operating excellence than either business process reengineering or Six Sigma quality control techniques. C. entail creating a corporate culture bent on continuously improving the performance of every task and every value chain activity. D. are considerably more effective in improving manufacturing and assembly activities than they are in improving such value chain activities as R&D, human resources management, supply chain management, information technology, sales, and marketing and finance. E. are generally considered the best tool for reengineering strategy-critical business processes.

C

31. Which of the following is generally NOT among the common practices that companies use to staff jobs with talented people, particularly if intellectual capital greatly aids good strategy execution? A. Careful screening and evaluation of job applicants, along with continuous training and retraining programs for employees that continue throughout their careers B. Rotating people through jobs that not only have great content but also span functional and geographic boundaries C. Eliminating the bottom 10 percent of the lowest-performing employees each year to increase the overall quality performance metrics to above-average industry standards D. Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses E. Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work

C

32. In companies where intellectual capital is crucial to good strategy execution, which of the following is generally NOT among the practices companies use to establish a talented knowledge base? A. Providing promising employees with challenging, interesting, and skill-stretching assignments and also rotating them through jobs that not only have great content but also span functional and geographic boundaries B. Providing employees promotions, salary increases, performance bonuses, stock options, and other perks C. Coaching underperformers and benchwarmers to improve their skills and capabilities D. Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses E. Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work

C

32. When discussing "economies of scope," it involves understanding that they: A. stem from the cost-saving efficiencies of operating over a wider geographic area. B. have to do with the cost-saving efficiencies of distributing a firm's product through many different distribution channels simultaneously. C. stem from cost-saving strategic fits along the value chains of related businesses. D. refer to the cost savings that flow from operating across all or most of an industry's value chain activities. E. arise from the cost-saving efficiencies of having a wide product line and offering customers a big selection of models and styles to choose from.

C

34. A company requires a dynamically evolving portfolio of resources and capabilities to: A. assist the strategic planning team in overall direction. B. sustain complex manufacturing systems as a strategic recall. C. sustain its competitiveness and help drive improvements in its performance. D. sustain benefits of high market share as an interest in growth strategies. E. transform knowledge into a management style supporting competition in a globally diverse world.

C

34. Six Sigma quality control: A. is a strategy implementer's best, most reliable tool for simultaneously achieving top-notch product quality and low manufacturing costs. B. consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations for a manufacturing or assembly process. C. consists of a disciplined, statistics-based system aimed at producing not more than 3.4 defects per million iterations for any business process. D. consists of a disciplined, statistics-based system aimed at fewer than 5.0 complaints per million customer transactions. E. is a powerful tool for companies whose customers are very picky about product quality and product performance and who can't afford for the product they use to break down and require repairs.

C

35. A company's values relate to such things as: A. how it will balance its pursuit of financial objectives against the pursuit of its strategic objectives. B. how it will balance the pursuit of its business purpose/mission against the pursuit of its strategic vision. C. fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch quality, superior customer service, social responsibility, and community citizenship. D. whether it will emphasize stock price appreciation or higher dividend payments to shareholders E. whether it will put more emphasis on the achievement of short-term performance targets or long-range performance targets.

C

35. Which of the following is NOT a typical characteristic of a weak company culture? A. A lack of values and principles that are consistently preached or widely shared B. A tendency among employees to view their jobs as just a way of making a living C. Co-worker peer pressure to do things in a particular way D. Few widely revered traditions and few culture-induced norms E. No strong employee allegiance to what the company stands for or to operating the business in well-defined ways

C

36. Crafting a deliberate strategy involves developing strategy elements that: A. imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. B. comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan period; big changes in strategy are thus made only once every five years. C. consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. D. deliberately eliminate the ongoing strategic elements and implement new planned initiatives. E. consist of adaptive change plans to new market situations along with abandoned redundant ongoing elements.

C

36. Which of the following statements about a weak company culture is true? A. In a weak-culture company, there is virtually no employee support for the company's strategic vision and strategy. B. Weak-culture companies do not usually have a code of ethics and have little regard for high ethical standards. C. Weak cultures provide little assistance in executing strategy because there are no traditions, values, or behavioral norms that management can use as levers to mobilize commitment to executing the chosen strategy. D. Weak-culture companies are fairly receptive to change and to people who champion new ways of doing things. E. In a weak-culture company, there is usually a dearth of intellectual capital and inattention to building core competencies.

C

36. With a strategy of unrelated diversification, an acquisition is deemed to have potential if it: A. can achieve at least existing profit margins into the near future. B. has the opportunity to generate positive buzz in the industry, even if it may not be able to contribute to the parent firm's bottom line C. can pass the industry attractiveness test and the cost-of-entry test, and if it has good prospects for profit growth. D. can pass at least the industry attractiveness test if not the cost of entry test. E. can add economic value for managers.

C

37. When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous: A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. D. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.

C

38. Which of the following is a benefit of closely aligning the corporate culture with the requirements for proficient strategy execution? A. A good strategy-culture alignment makes it possible to establish a much bolder strategic vision and strategic intent. B. A good strategy-culture alignment enhances a company's cost competitiveness. C. A tight strategy-culture fit steers company personnel into displaying behaviors and adopting operating practices that promote good strategy execution. D. A tight strategy-culture alignment enhances the creation of core competencies and distinctive competencies. E. A tight strategy-culture alignment makes it easier to change a company's culture over time—as a company's strategy evolves, the culture automatically evolves too.

C

39. Opportunities to differentiate a company's product offering: A. are most reliably found in the R&D portion of the value chain. B. are typically located in the sales and marketing portion of the value chain. C. can exist in activities all along an industry's value chain. D. usually are tied to product quality and customer service. E. are most frequently attached to a company's manufacturing expertise and to its ability to achieve economies of scale in production.

C

4. Although exposing children to hazardous work and long work hours is unquestionably deplorable, which of the following, if true, leads to a moral dilemma? A. Use of adults leads to higher labor costs. B. Children are not as efficient as adults in doing physically demanding work. C. Many child laborers come from poverty-stricken families. D. Banning child labor increases school attendance. E. Working children learn independence.

C

4. New strategies often entail budget reallocations because: A. revamping the performance of value chain activities can be costly. B. the accompanying policy revisions and compensation incentives tend to require different levels of funding than before. C. business units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets. D. empowering employees to carry out the new strategy elements and shifting to a total quality management type of culture to build skills in competent strategy execution typically require substantial new funding and budget revisions. E. adopting best practices and pushing for continuous improvement tends to reduce costs and reduce overall resource requirements.

C

4. One important indicator of how well a company's present strategy is working is whether: A. it has more core competencies than close rivals. B. its strategy is built around at least two of the industry's key success factors. C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign). E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

C

4. Which of the following is NOT among the principal managerial components of the strategy execution process? A. Building an organization with the competencies, capabilities, and resource strengths needed to execute strategy successfully B. Instituting policies and procedures that facilitate rather than impede strategy execution C. Deciding which core competencies and value chain activities to leave as is and which ones to overhaul and improve D. Adopting best practices and pushing for continuous improvement in how value chain activities are performed E. Tying rewards directly to the achievement of strategic and financial targets and to good strategy execution

C

40. Core competencies and competitive capabilities are usually: A. lodged in the narrow skills and specialized work efforts of a single department, as opposed to the combined expertise and capabilities of specialists scattered across several departments. B. observed to stem from collaborative efforts with strategic allies. C. bundles of skills and know-how that most often grow out of the collaborative efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. D. found to result in competitive advantage when they involve highly specific technologies and are grounded in a company's own deep technical expertise. E. built rapidly, usually in conjunction with important product innovations.

C

41. The two biggest drawbacks or disadvantages of unrelated diversification are: A. the difficulties of passing the cost-of-entry test and the ease with which top managers can make the mistake of diversifying into businesses where competition is too intense. B. the difficulties of capturing financial fit and having insufficient financial resources to spread business risk across many different lines of business. C. the demanding managerial requirements and the limited competitive advantage potential due to lack of cross-business strategic fit benefits. D. ending up with too many cash hog businesses and too much diversity among the competitive strategies of the businesses it has diversified into. E. the difficulties of achieving economies of scope and conflicts/incompatibility among the competitive strategies of the company's different businesses.

C

42. The big difference between business process reengineering and continuous improvement programs like TQM or Six Sigma is that: A. reengineering is a tool for installing process organization, whereas TQM/Six Sigma concern defect-free production methods and delivering world-class customer service. B. reengineering helps create core competencies, whereas TQM/Six Sigma are tools for making a core competence stronger and more efficient. C. reengineering is a tool for achieving one-time quantum improvement, whereas TQM and Six Sigma programs aim at ongoing incremental improvements. D. business process reengineering requires benchmarking, whereas TQM and Six Sigma do not. E. reengineering represents an effort to totally revamp a firm's value chain, whereas TQM looks at incrementally improving the performance of two or three targeted value chain activities and Six Sigma is primarily for reducing manufacturing defects.

C

43. Pursuing continuous quality improvement as a uniqueness factor is sound because it: A. can create differentiation even if little tangible differentiation exists otherwise. B. bestows the first-mover-in-the-market advantage on companies practicing it. C. can often reduce product defects and improve economy of use. D. always provides a competitive advantage. E. provides wider product variety and selection through product versioning.

C

47. Sometimes a company can short-circuit the task of building an organizational capability in-house by: A. putting in high-incentive bonuses to reward individual employees who train hard to develop the desired capability. B. launching an extensive training effort to develop the capability quickly with newly hired employees. C. either acquiring a company that has already developed the capability or else acquiring the desired capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise. D. using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed. E. empowering a team of employees to develop the capability however they best see fit.

C

47. Strategic intent refers to a situation where a company: A. commits to using a particular business model to make money. B. decides to adopt a particular strategy. C. relentlessly pursues an ambitious strategic objective. D. commits to pursuing balanced-scorecard objectives. E. changes its long-term direction and decides to pursue a newly adopted strategic vision.

C

47. Which of the following is NOT a strategic disadvantage of vertical integration? A. Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later. B. Vertical integration backward into parts and components manufacturing can impair a company's operating flexibility when it comes to changing out the use of certain parts and components. C. Vertical integration reduces the opportunity for achieving greater product differentiation. D. Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses. E. Vertical integration poses all kinds of capacity-matching problems.

C

48. Unhealthy company cultures typically have such characteristics as: A. tight budget controls, overly strict enforcement of longstanding policies and procedures, and high ethical standards. B. a preference for conservative strategies, an aversion to incentive compensation, and excessive emphasis on profitability. C. a politicized internal environment, hostility to change and an aversion to looking outside the company for best practices, new managerial approaches, and innovative ideas. D. overemphasis on employee empowerment, a complacent approach to building competencies and capabilities, no coherent business philosophy, and excessively bureaucratic policies and procedures. E. an emphasis on innovation, a strong preference for hiring managers from outside the company, and few core values and traditions.

C

49. A strategy of vertical integration can have substantial drawbacks, including: A. whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities. C. the environmental costs of coordinating operations across vertical chain activities. D. loss of technological know-how. E. the difficulties faced in entering outside vertical and horizontal markets.

C

49. The external market opportunities which are MOST relevant to a company are the ones that: A. can increase market share. B. are reinforced by the overall business strategy and reflect the business model. C. match up well with the firm's competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage. D. qualify to correct its internal weaknesses and resource deficiencies. E. are relevant for defending against the external threats to its well-being.

C

49. Which of the following factors is NOT a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak? A. Whether certain customers offer sellers important market exposure or prestige B. Whether customers are relatively well-informed about sellers' products, prices, and costs C. Whether buyer needs and expectations are changing rapidly or slowly D. Whether sellers' products are highly differentiated, making it troublesome or costly for buyers to switch to competing brands or to substitute products E. Whether buyers pose a major threat to integrate backward into the product market of sellers

C

49. Which of the following is NOT generally something that ought to be considered in evaluating the attractiveness of a multibusiness (diversified) company's business makeup? A. Market size and projected growth rate, industry profitability, and the intensity of competition B. Industry uncertainty and business risk C. The frequency with which strategic alliances and collaborative partnerships are used in each industry, and the extent to which firms in the industry utilize outsourcing D. Resource requirements, and whether an industry has significant social, political, regulatory, and environmental problems E. The presence of cross-industry strategic fits and matching resource requirements to the parent company

C

5. The biggest and most important differences among the competitive strategies of different companies boil down to: A. how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider. B. the different ways the companies try to cope with the five competitive forces. C. whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation. D. the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities. E. the relative emphasis they place on offensive versus defensive strategies.

C

5. The strategy-making, strategy-executing process: A. is usually delegated to members of a company's board of directors. B. includes establishing a company's mission, developing a business model aimed at making the company an industry leader, and crafting a strategy to implement and execute the business model. C. embraces the tasks of developing a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then monitoring developments and initiating corrective adjustments in light of experience, changing conditions, and new opportunities. D. is principally concerned with sizing up an organization's internal and external situation, so as to be prepared for the challenges of developing a sound business model. E. is primarily the responsibility of top executives and the board of directors; very few managers below this level are involved in the process.

C

5. To take advantage of cross-business value chain relationships and strategic fit and turn them into a competitive advantage requires that companies determine whether there are opportunities to strengthen the business, which includes such tasks as all of the following, EXCEPT: A. the transferring of valuable resources and capabilities from one business to another. B. combining related value chain activities of different businesses to achieve lower costs. C. forcing cultural independence, operating diversity, and sophisticated analytical responsibility on the businesses to ensure compatibility with the corporate overhead identity. D. sharing the use of powerful and well-respected brand names across multiple businesses. E. encouraging knowledge-sharing and collaborative activity among the businesses.

C

5. Which of the following is LIKELY to have the biggest strategy-shaping impact on mobile service providers? A. Coca-Cola launches mobile campaigns for community-connect and awareness. B. Discovery Channel launches a mobile game to promote its Gold Rush TV show. C. T-Mobile US signs a pact with Nokia Networks for greater spectrum support. D. Hugo Boss announces the launch of its fall/winter collection via mobile. E. Apple enters into a pact with PayPal to market its mobile wallet application.

C

50. Calculating quantitative attractiveness ratings for the industries a company has diversified into involves: A. determining each industry's key success factors, calculating the ability of the company to be successful on each industry KSF, and obtaining overall measures of the firm's ability to compete successfully in each of its industries based on the combined KSF ratings. B. determining each industry's competitive advantage factors, calculating the ability of the company to be successful on each competitive advantage factor, and obtaining overall measures of the firm's ability to achieve sustainable competitive advantage in each of its industries based on the combined competitive advantage factor ratings. C. selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to interpret the attractiveness of all the industries, both individually and as a group. D. rating the attractiveness of each industry's strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. E. identifying each industry's average profitability, rating the difficulty of achieving average profitability in each industry, and deciding whether the company's prospects for above-average profitability are attractive or unattractive, industry by industry.

C

50. Which of the following is NOT generally on a company's menu of actions to consider in crafting a strategy of social responsibility? A. Actions to ensure that the company's strategy is ethical and that ethical principles will be observed in operating the business B. Making charitable contributions, donating money and the time of company personnel to community service endeavors, supporting various worthy organizational causes C. Actions to look out exclusively for the best interests of its owners, the shareholders D. Actions to protect or enhance the environment (apart from what is required by governmental authorities) E. Actions to create a work environment that enhances employee well-being and makes the company a great place to work

C

51. The chief purpose of calculating quantitative industry attractiveness scores for each industry a company has diversified into is to: A. determine which industry is the biggest and fastest growing. B. get in position to rank the industries from most competitive to least competitive. C. provide a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into, both individually and as a group, and further to provide an indication of which industries offer the best and worst long-term prospects. D. ascertain which industries have the easiest-to-achieve key success factors. E. rank the attractiveness of the various industry value chains from best to worst.

C

53. When it is difficult or impossible to out-strategize rivals (beat them with a superior strategy), the other main avenue to competitive advantage is to: A. do a better job of empowering employees and flattening the organization structure. B. outcompete rivals with a stronger corporate culture. C. out execute them (beat them by performing certain value chain activities in superior fashion). D. beat them with a healthy corporate culture based on such core values as high ethical standards, a strong sense of corporate social responsibility, and genuine concern for customer well-being. E. institute a more motivating and cost-efficient compensation and reward system.

C

54. Striving to be socially responsible entails touching such bases as: A. what actions to take to moderate workforce diversity and make the company a great place to work. B. whether to shrink charitable contributions and trim down the time commitment of company personnel to community service endeavors to increase earnings. C. what, if any, actions to take to protect or enhance the environment (beyond what is legally required). D. exerting conscious efforts to ensure that all elements of the company's strategy are executed diligently. E. prioritizing stock repurchases over dividends.

C

66. Which of the following is NOT a part of checking a diversified company's business units for cross-business competitive advantage potential? A. Ascertaining the extent to which business units have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs B. Ascertaining the extent to which business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another C. Ascertaining the extent to which business units are making maximum use of the parent company's competitive advantages D. Ascertaining the extent to which business units have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources E. Ascertaining the extent to which business units present opportunities to share use of a well-respected brand name

C

66. Which of the following is unlikely to be a primary building block in a company's organizational structure? A. Functional departments B. Process and operations departments C. Empowered employee departments D. Divisional units performing major processing steps E. Geographic organizational units

C

58. Calculating quantitative competitive strength ratings for each of a diversified company's business units involves: A. determining each industry's key success factors, rating the ability of each business to be successful on each industry KSF, and adding the individual ratings to obtain overall measures of each business's ability to compete successfully. B. identifying the competitive forces facing each business, rating the strength of these competitive forces industry by industry, and then ranking each business's ability to be profitable, given the strength of the competition it faces. C. selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each business unit to obtain an overall competitive strength score, and using the overall competitive strength scores to evaluate the competitive strength of all the businesses, both individually and as a group. D. determining which businesses possess good strategic fit with other businesses, identifying the portion of the value chain where this fit occurs, and evaluating the strength of the competitive advantage attached to each of the strategic fits to get an overall measure of competitive advantage potential. Businesses with the highest/lowest competitive advantage potential have the most/least competitive strength. E. rating the caliber of each businesses strategic and resource fit, weighting the importance of each type of strategic/resource fit, calculating weighted strategic/resource fit scores, and adding the weighted ratings for each business to obtain an overall strength score for each business unit that indicates whether the company has adequate strategic/resource fits to be a strong market contender in each of the industries where it competes.

C

6. Which of the following does NOT exemplify a policy or procedure that facilitates strategy execution? A. A nonprofit agency that addresses only specific societal problems through public services B. A toy manufacturing company that plans on reaching three different segments of the market C. A fast food joint that has an onsite kindergarten and provides afterschool programs for its employees' children D. A sporting goods seller that monitors consumers' preferences for gear and accessories on its blog E. A bedding linen manufacturing company that recycles its water to cool the machines in the factory

C

61. The strategic role of a company's reward system is to: A. compensate employees for performing their assigned duties in a diligent fashion. B. boost employee morale in ways that create widespread job satisfaction. C. enlist employees' commitment to successful strategy execution by rewarding them, both monetarily and non-monetarily, for their valuable contributions. D. relieve managers of the burden of closely monitoring each employee's performance. E. boost labor productivity and help lower the firm's overall labor costs.

C

62. Reward and incentive systems serve as a(n): A. direct stimulus for satisfying the basic expectations of the standard job and mechanisms. B. indirect motivational tool designed to convert employee commitment into high-powered incentives. C. indirect type of control mechanism that conserves on more costly control mechanisms of supervisory oversight. D. direct base-pay financial compensation mechanism that competes with rival companies' salary bands for similar work efforts. E. negative motivational element.

C

63. Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the strategic priorities and financial objectives is best done by: A. having top executives commit to making employees the company's most valuable competitive asset. B. developing core competencies in the use of TQM, Six Sigma programs, and business process reengineering. C. resourceful and effective use of motivational incentives, both monetary and nonmonetary. D. clever and innovative use of benchmarking and best practices. E. providing employees with a high degree of job security and attractive perks.

C

63. The nine-cell attractiveness-strength matrix provides clear, strong logic for considering using: A. only industry attractiveness in allocating resources and investment capital to its different businesses. B. only business strength in allocating resources and investment capital to the different businesses. C. both industry attractiveness and business strength in allocating resources and investment capital to its different businesses. D. both industry attractiveness and product strength in allocating resources and investment capital to its different businesses. E. both resource fit and product strength in allocating resources and investment capital to its different businesses.

C

63. Which one of the following is NOT an appropriate step management can take to change a problem culture? A. Identifying which aspects of the present culture are supportive of good strategy execution and which ones are not B. Specifying what new actions, behaviors, and work practices should be prominent in the "new" culture C. Appointing a team of key managers and employees to design a plan for cultural change and then lead the internal effort to change the culture D. Talking openly about the problems of the present culture and how new behaviors will improve performance E. Employing visible, forceful actions—both substantive and symbolic—to ingrain a new set of behaviors, practices and cultural norms

C

66. The moral case for why a company should actively promote the betterment of society and act in a manner benefitting all its stakeholders: A. is based on the principle of treating people fairly and with respect. B. is based on the conviction that improving the well-being of society ranks higher in priority and is certainly nobler than making a profit and serving the interests of shareholders. C. boils down to "it's the right thing to do." D. rests on the principle that a business is duty bound to fulfill its social contract to serve the interests of all stakeholders in a business enterprise. E. is based on the principle that business activities lack real legitimacy and have few socially redeeming qualities unless and until a company exerts a significant and sincere effort to give something back to the community.

C

67. Changing a problem culture to create better alignment with strategy generally does NOT involve: A. replacing old-culture managers with new-breed managers. B. designing compensation incentives that boost the pay of teams and individuals who display the desired cultural behaviors and hit change-resisters in the pocketbook. C. altering the company's financial objectives. D. using company gatherings and ceremonial occasions to praise individuals and groups that display the desired new cultural traits and behaviors. E. both symbolic and substantive actions by executives to implant new cultural behaviors.

C

67. From the standpoint of promoting successful strategy execution, it is important that the firm's motivation and reward system: A. be completely free of such elements as tension, pressure, anxiety, job insecurity, and tight deadlines—a no-pressure/no-adverse-consequences work environment is essential. B. emphasize only positive types of rewards. C. accentuate positive rewards but also carry out the "up-or-out" policy for performance that does not meet expectations. D. not deny rewards to employees who put forth good effort and try hard, though performance is subpar. E. reduce job insecurity and give employees an incentive to stay busy and work hard.

C

68. Which of the following is NOT likely to be an effective management action (making a compelling case to employees) about culture-remodeling efforts that can create a better strategy-culture fit? A. Citing reasons why and how certain behavioral norms and work practices in the current culture pose obstacles to good execution of new strategic initiatives B. Explaining how new behaviors and work practices that are to be introduced and have important roles in the new culture will be more advantageous and produce better results C. Calling upon first-level supervisors and rank-and-file employees to identify cultural barriers to good strategy execution and then to lead the cultural change effort D. Granting pay raises to individuals who step out front, lead the adoption of the desired work practices, display the new-style behaviors, and achieve pace-setting results E. Revising policies and procedures in ways that will help drive cultural change

C

7. Merely fine-tuning the execution of a company's existing strategy normally requires : A. big shifts of resources from one area to another. B. a larger allocation of resources to the effort. C. trimming costs and shifting resources to activities that have a higher priority. D. creativity in finding ways for cost reductions, i.e. ways to do less with less . E. cost-cutting in key value chain activities.

C

7. The generic types of competitive strategies include: A. market share growth provider, sales revenue leader strategy, and market share retention strategy. B. offensive strategies, defensive strategies, and counter maneuvers strategies. C. low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies. D. low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E. price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies.

C

70. A portfolio approach to managing a company's financial resource fit is based on: A. diversifying risk across a broad spectrum of businesses. B. the risk/reward concept of financial analysis. C. the fact that different businesses have different cash flow and investment characteristics. D. acknowledging that each business unit has varying degrees of opportunity. E. acknowledging that each business is financially strong.

C

72. The first principle in designing an effective compensation system and the most dependable way to keep people focused on strategy execution and the achievement of performance targets is to: A. establish ethical compensation policies and convince employees that they are the firm's most valuable competitive asset. B. design monetary and nonmonetary incentives that boost labor productivity and help lower the firm's overall labor costs. C. generously reward and recognize people who meet or beat performance targets and to deny rewards and recognition to those who don't. D. pay employees a bonus for each strategic and financial objective that the company achieves. E. allow employees to propose what rewards they would like to receive to achieve the company's stretch objectives.

C

73. An information technology multinational issues a public statement that the company's accounts had been falsified by billions of dollars over recent years to keep new investments flowing in. Following the news, the CEO is arrested and the company's stock price sharply declines. Which of the following has the company incurred? A. Only visible and internal administrative costs B. Visible but not intangible costs C. Visible and intangible costs D. Internal administrative costs but not visible costs E. Internal administrative costs but not intangible costs

C

73. Which of the following is NOT part of the task of checking a diversified company's business lineup for adequate resource fit? A. Determining whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses B. Determining whether recently acquired businesses are acting to strengthen a company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thinly across its businesses C. Determining whether opportunity exists for achieving 1 + 1 = 2 outcomes D. Determining whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating E. Determining whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into

C

75. A decentralized organizational structure is predicated on the belief that: A. top executives should establish a collegial, collaborative culture where decisions are made by general consensus on what to do and when. B. strict enforcement of detailed procedures backed by rigorous managerial oversight is necessary because company personnel cannot be counted on to act wisely or keep costs to a bare bones level. C. decision-making authority should be pushed down to the lowest organizational level capable of making timely, informed, and competent decisions. D. most company personnel have neither the time nor the inclination to direct and properly control the work they are performing and that they lack the knowledge and judgment to make wise decisions about how best to do their work. E. lower-level managers and employees should go up the ladder of command for approval on most all strategic and operating issues of much importance.

C

78. The leadership challenges that top executives face in making corrective adjustments when things are not going well include: A. knowing when to replace poorly performing workers and when to do a better job of coaching them to do the right things. B. being able to discern whether to emphasize adjustments that will promote better achievement of strategic performance targets or whether to emphasize adjustments that will promote better achievement of financial performance targets. C. undertaking a thorough analysis of the situation, exercising good business judgment in deciding what actions to take, and then ensuring good implementation of the corrective actions that are initiated. D. having the analytical skills to separate the problems due to a bad strategy from the problems due to bad strategy execution. E. deciding whether the company would be better off making adjustments that curtail the achievement of strategic objectives or that curtail the achievement of financial objectives or that curtail the achievement of some of both.

C

78. The resolute standard for judging whether individuals, teams, and organizational units have done a good job must be measured by: A. comparing industry performance standards against the company's own internal criteria. B. the level of rapid growth in industry (buyer) demand. C. whether they meet or beat performance targets that reflect good strategy execution. D. the number of rivals existing in the marketplace and their growth results. E. the relative competitive strengths of the industry leaders and how vulnerable they are to mimicry.

C

79. Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed, which one of the following is NOT one of the main strategy options that a company can pursue? A. Multinational diversification B. Restructure the company's business lineup with a combination of divestitures and new acquisitions C. Craft new initiatives designed to build/enhance the reputation and image of the company D. Divest some businesses and retrench to a narrower diversification base E. Broaden the diversification base

C

8. Each of the following exemplifies the impact of the macro-environment on a company's strategic opportunities EXCEPT: A. sales of Smirnoff dwindle on account of new laws regulating the sale of liquor. B. consumer confidence in GM rises as its stock price soars. C. Nike considers Adidas its most potent rival in the industry. D. footfalls at the outlets of Pizza Express increase following its drive to go vegan. E. sales of Smooth Fitness Treadmills surge on account of a new feature that monitors users' blood pressure.

C

81. The task of top executives in making corrective adjustments includes: A. knowing when to continue with the present corporate culture and when to shift to a different and better corporate culture. B. being good at figuring out whether to arrive at decisions quickly or slowly in choosing among the various alternative adjustments. C. thoroughly analyzing the situation and exercising good business judgment in deciding what actions to take. D. deciding whether to try to fix the problems of poor strategy execution or simply shift to a strategy that is easier to execute correctly. E. deciding how to identify the problems that need fixing.

C

82. One of the big weaknesses of organization structures that do not have cross-business collaboration is: A. making it hard to effectively empower employees. B. making it difficult to have closely related activities report to a single executive. C. that pieces of strategically relevant activities and capabilities often end up scattered across many departments, with each pursuing its own priorities, projects, and agendas. D. impeding the use of outsourcing. E. making it hard to fix managerial accountability for poor results.

C

9. The two best signs of good strategy execution are whether: A. the company is challenging its current performance targets and whether value chain activities are fully integrated within the strategic response criteria. B. managers are personally leading the change process and whether they are meeting deadlines set for budgetary requirements. C. the company is meeting or beating its performance targets and whether it is performing value chain activities in a manner that is conducive to companywide operating excellence. D. managers are fully behind the changes and whether the company's value chain managers are executing them diligently. E. the company identifies what the organization must do and how to make the necessary internal changes.

C

Which of the following is LIKELY to be viewed as a pro-business government policy from the perspective of companies competing on an international basis? A. Argentina increases its interest rate on loans to foreign entrants from 15% to 19%. B. The European Union imposes a 16% tariff on the import of agricultural produce. C. Australia introduces a permanent employer-sponsored visa program for skilled manpower. D. Denmark levies a per metric ton carbon tax on electricity. E. The Chinese government favors partial local ownership of foreign-owned companies.

C. Australia introduces a permanent employer-sponsored visa program for skilled manpower.

Which of the following is an example of an export strategy? A. The popular Disney character Mickey Mouse can only be leased or rented for use by companies. B. Subway allows small-business owners to use its trademarks, services, and products for a fee. C. The Unites States is the world's largest producer and supplier of artificial fur. D. American Airlines' common stock, owned by AMR Corp., is not available for public purchase. E. Walmart earns a quarter of its revenue outside the United States.

C. The Unites States is the world's largest producer and supplier of artificial fur.

Profit sanctuaries are country markets or geographic regions where: A. a company can rank the competitive advantage opportunities in each industry. B. a company possesses good strategic fit with other businesses and identifies the value chain where this fit occurs. C. a company derives substantial profits because of its protected market position or unassailable competitive advantage. D. a company creates substantial investment strategies because it is losing competitive advantage over competitors. E. a company invests its dividends in expanding its foreign market presence.

C. a company derives substantial profits because of its protected market position or unassailable competitive advantage.

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world: A. is competitively disadvantaged when the euro declines in value against the Brazilian real. B. is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the euro appreciates in value against the Brazilian real. E. has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.

A European manufacturer that exports goods made at its European plants to the United States: A. is competitively disadvantaged when the euro declines in value against the U.S. dollar. B. is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It would, however, be affected if its plants were in the U.S. C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar. D. becomes more competitive in European markets when the euro declines in value against the U.S. dollar. E. has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar.

A think-global, act-global strategic theme puts emphasis on: A. executing a global domination strategy that focuses the company's resource strengths on entry strategies across all country boundaries. B. ensuring that value chain activities are defined by country-specific attributes to capitalize on economies of scale. C. building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another. D. elevating resources and capabilities developed on a country-by-country basis so as to capitalize on a country's uniqueness. E. implementing mass-customization techniques that can address local preferences efficiently.

C. building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another.

To use location to build competitive advantage, a company that operates transnationally or globally must: A. employ either an export strategy or a franchising strategy. B. scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C. consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities. D. locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E. concentrate all of its value chain activities in the one country that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.

C. consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities.

Companies often implement a transnational strategy because it: A. combines flexible coordination with the pursuit of conflicting objectives simultaneously. B. provides an easy mode of operating to transfer and share resources and capabilities across borders. C. is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner. D. is the least complex and easiest to implement of all the strategy choices. E. is capable of achieving an efficiency potential through centralized decision making and strong headquarter control.

C. is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner.

A "think local, act local" multidomestic type of strategy: A. is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods. B. is usually defeated by a "think global, act global" type of strategy. C. is more appealing when the country-to-country differences in buyer tastes, cultural traditions, and market conditions are diverse. D. is generally an inferior strategy when one or more foreign competitors are pursuing a global low-cost strategy. E. can defeat a global strategy if the "think local, act local" multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.

C. is more appealing when the country-to-country differences in buyer tastes, cultural traditions, and market conditions are diverse.

The approach of a firm using a "think global, act local" version of a transnational strategy entails: A. producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B. having little or no strategy coordination across countries. C. pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D. selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so buyers in each country market will think they are buying a locally made brand. E. selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country),but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

C. pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.

The essential difference between a "think global, act global" and a "think global, act local" approach to strategy-making is that: A. a "think global, act global" approach entails extensive strategy coordination across countries and a "think global, act local" approach entails little or no strategy coordination across countries. B. the former aims at implementing the same business model worldwide, whereas the latter aims at implementing customized business models to better match local market circumstances. C. the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions. D. a "think global, act global" approach involves selling a mostly standardized product worldwide, whereas a "think global, act local" approach entails selling products that are highly differentiated from country to country. E. a "think global, act global" approach involves selling under a single brand name worldwide, whereas a "think global, act local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

C. the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.

The big issue an acquisition-minded firm must consider is whether: A. to acquire the firm at a price that cannot recapture the investment. B. to require the acquired firm's resources and management capability to sustain the ongoing struggling operation. C. to pay a premium price for a successful local company or to buy a struggling firm at a discount price. D. to pay a price that builds in all the synergistic advantages to the acquired firm. E. to pay a very high premium price that sends a signal to the market that the new firm has arrived.

C. to pay a premium price for a successful local company or to buy a struggling firm at a discount price.

The basic strategy options for local companies in competing against global challengers include: A. best-cost provider and focused low-cost provider and low-cost leadership strategies. B. export strategies, licensing strategies, and cross-border transfer strategies. C. utilizing understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals. D. franchising strategies, multidomestic strategies keyed to product superiority, global low-cost leadership strategies, and cross-border coordination strategies. E. focused differentiation and broad differentiation strategies.

C. utilizing understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals.

10. A blue-ocean strategy: A. is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B. involves an unexpected (out-of- the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

D

10. At companies where executives believe in the merits of practicing the values and ethical principles that have been espoused, the: A. executives have usually personally written the statement of core values and the code of ethics. B. company's pursuit of higher profits is tempered, so that the company will not come across to customers and the general public as greedy. C. company's chances for strategic success and market leadership are substantially reduced because company personnel are hesitant to engage in business practices that are unethical. D. stated core values and ethical principles are the foundation of the corporate culture. E. core values and ethical standards are made a prominent and visible part of the company's strategic intent and strategy.

D

10. The strength of the beliefs underlying ethical universalism is that: A. ethical universalism recognizes significant variation in basic moral standards according to local cultural beliefs, local religious beliefs, and social mores. B. ethical standards are objectively determined by religious and moral experts. C. what is deemed right or wrong, fair or unfair, moral or immoral, ethical or unethical is (or should be) grounded in religious doctrine and applied strictly to all business situations. D. it draws upon the collective views of multiple societies and cultures to put some clear boundaries on what constitutes ethical business behavior and what constitutes unethical business behavior no matter what country or culture a company is operating in. E. it leaves room for thinking that concepts of right and wrong can be varying shades of gray.

D

11. A corporate culture founded on ethical business principles and socially approved values: A. virtually guarantees that a company will be (or soon become) the acknowledged industry leader because of the ethical and socially approved manner in which its business is being conducted. B. doesn't necessarily impact a company's long-term strategic success favorably or unfavorably. C. does more to detract from a company's chances for strategic success and market leadership than to help it. D. is a positive force underlying a company's long-term financial success and reduces the likelihood of lapses in ethical and socially approved behavior that can damage the company's reputation. E. is seldom more than window-dressing and is generally regarded by customers, suppliers, employees, shareholders, and society at large as nothing more than good public relations.

D

11. The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves assessing whether the move will: A. make the company better off because it will produce a greater number of core competencies. B. make the company better off by improving its balance sheet strength and credit rating. C. make the company better off by spreading shareholder risks across a greater number of businesses and industries. D. produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts. E. help each business earn exactly what they were earning before coming under the same corporate umbrella.

D

11. Well-conceived policies and operating procedures facilitate strategy execution in all of the following ways EXCEPT they: A. provide top-down guidance regarding how things are to be done. B. help ensure consistency in how execution-critical activities are performed. C. promote the creation of a work climate that facilitates good strategy execution. D. facilitate cost cutting (finding ways to do less with less) while undertaking new strategic initiatives. E. channel individual and group efforts along a strategy-supportive path.

D

12. In crafting a company's strategy, managers: A. face the biggest challenge of how closely to replicate strategies of successful companies in the industry. B. have comparatively little freedom in choosing the "hows" of strategy. C. are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility. D. need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals. E. are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-be-different" strategies are rarely successful.

D

12. Tangible resources include: A. human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel. B. reputational assets, which can include the company's reputation for quality, service, and reliability as well as their reputation for fair dealings with suppliers. C. relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets. D. technological assets such as patents, copyrights, and innovation technologies. E. company culture and incentive system, which includes the norms of behavior and business principles.

D

12. The two culture-building roles of a company's stated values and ethical standards are to: A. communicate the company's good intentions and establish a corporate conscience. B. confirm the integrity of company personnel and signal the above-board nature of the company's business principles and operating methods. C. steer company personnel toward doing the right thing and convince outsiders that the company is socially responsible. D. foster a work climate where company personnel share common and strongly held convictions about how the company's business is to be conducted and to provide them with guidance about how to do their jobs, steering them toward both doing things right and doing the right things. E. provide a basis for designing culture-supportive incentive compensation plans and reinforcing the appropriateness of particular ethical and moral actions.

D

34. A company's strategy is a "work in progress" and evolves over time because of: A. the importance of developing a fresh strategic plan every year that keeps employees from becoming bored with executing the same strategy year after year. B. the ongoing need to imitate the new strategic moves of the industry leaders. C. the need to make regular adjustments in the company's strategic vision. D. the ongoing need of company managers to react and respond to changing market and competitive conditions. E. the frequent need to modify key elements of the company's business model.

D

13. Providing top-down guidance can aid the task of implementing strategy: A. provided they promote greater use of and commitment to best practices and total quality management. B. because really effective internal policies and procedures are not easily duplicated by other firms. C. because astutely conceived policies or procedures can result in competitive advantage. D. by helping align the actions and behavior of company personnel with the requirements for good strategy execution, placing limits on independent action, and helping overcome resistance to change. E. by making it easier to impose tight budget controls and avoid wasting scarce resources.

D

14. The pattern of actions and business approaches that would NOT define a company's strategy include actions to: A. strengthen market standing and competitiveness by acquiring or merging with other companies. B. strengthen competitiveness via strategic coalitions and partnerships. C. upgrade competitively important resources and capabilities. D. gain sales and market share with lower prices despite increased costs. E. strengthen the firm's bargaining position with suppliers and distributors.

D

15. Which of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy? A. Placing limits on independent action and helping overcome resistance to change B. Providing top-down guidance to operating managers, supervisory personnel, and employees regarding how things need to be done and what behavior is expected C. Promoting the creation of a work climate that facilitates good strategy execution D. Helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma E. Helping enforce consistency of effort in how particular activities are performed in geographically scattered organization units

D

15. Which of the following topics would least likely be contained in a company's code of ethics? A. Prohibiting giving or accepting bribes, kickbacks, or gifts B. Expecting all company personnel to display honesty and integrity in their actions and avoid conflicts of interest C. Barring dealing with suppliers that employ child labor or engage in other unsavory practices D. Committing to a no-layoff policy and to adequate funding of employee retirement programs E. Avoiding use of company assets, resources, and property for personal or other inappropriate purposes

D

16. A company's stated core values and ethical principles are: A. important because of their role in ensuring that company executives will not engage in unethical behavior or behave in a manner that is contrary to the company's core values. B. typically tightly linked to its strategic vision and strategy. C. the best indicators of a company's social responsibility strategy. D. meant to foster a work climate where company personnel share common and strongly held convictions about how the company's business is to be conducted and provide guidance in displaying the core values in their actions and behaviors. E. strictly enforced in strong culture companies and weakly enforced in weak culture companies.

D

16. Which of the following is NOT a factor that makes it appealing to diversify into a new industry by forming an internal startup subsidiary to enter and compete in the target industry? A. When internal entry is cheaper than entry via acquisition B. When a company possesses the skills and resources to overcome entry barriers and there is ample time to launch the business and compete effectively C. When adding new production capacity will not adversely impact the supply demand balance in the industry by creating oversupply conditions D. When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms E. When incumbent firms are likely to be slow or ineffective in combating a new entrant's efforts to crack the market

D

17. The four tests of a resource's competitive power are often referred to as the: A. SCIR test, which asks if a resource is sustainable, competitive, internalized, and reproducible. B. competitive advantage sustainable method test. C. reliability resources simulation. D. VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable. E. organizational capability metric analysis.

D

18. In which of the following instances is being a first-mover NOT particularly advantageous? A. When moving first with a preemptive strike makes imitation difficult or unlikely B. When first-time buyers remain strongly loyal to pioneering firms in making repeat purchases C. When early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals D. When markets are slow to accept the innovative product offering of a first-mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover E. When being a pioneer helps build a firm's image and reputation with buyers

D

18. The degree of cross-country variability in paying bribes and kickbacks to grease business transactions: A. violates ethical principles of right and wrong in all countries. B. is ethically acceptable according to the principle of ethical universalism and ethically unacceptable according to the principle of ethical relativism. C. is acceptable to immoral managers but not to amoral managers. D. is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others. E. is more acceptable in dealing with a company's suppliers than in dealing with a company's customers.

D

18. The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as: A. whether the company is located all over the globe. B. whether the company's key success factors are more dominant than the key success factors of close rivals. C. whether the company has the industry's most efficient and effective value chain. D. what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats. E. what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

D

18. What separates a powerful strategy from a run-of-the-mill or ineffective one is: A. the ability of the strategy to keep the company profitable. B. the proven ability of the strategy to generate maximum profits. C. the speed with which it helps the company achieve its strategic vision. D. management's ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals, and produces sustainable competitive advantage. E. whether it allows the company to maximize shareholder value in the shortest possible time.

D

19. Company managers can significantly advance the cause of superior strategy execution by doing all of the following EXCEPT: A. employing best practices methods and using process management tools to drive continuous improvement in how internal operations are conducted. B. adopting benchmarking of the company's operating activities and business processes against "best-in-industry" and "best in world" performers. C. adopting "best-in-company" operating activities and processes when a company's various organizational units are performing the same functions differently. D. instituting operating practices that generate economies of scale and scope with current value chain activities. E. develop performance yardsticks for judging effectiveness and efficiency for particular value chain activities and business processes deemed strategically critical.

D

19. Rivalry among competing sellers is generally more intense when: A. there are relatively few industry key success factors. B. the industry's driving forces are strong and rivals have strongly differentiated products. C. barriers to entry are moderately high and the pool of likely entry candidates is small. D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising, and otherwise gain sales and market share. E. barriers to entry are high and buyer switching costs are high.

D

19. The three components of building a capable organization are: A. making periodic changes in the firm's internal organization to keep people from getting into a comfortable rut, instituting a decentralized approach to decision making, and developing the appropriate competencies and capabilities. B. hiring a capable top management team, empowering employees, and establishing a strategy-supportive corporate culture. C. putting a centralized decision-making structure in place, determining who should have responsibility for each value chain activity, and aligning the corporate culture with key policies, procedures, and operating practices. D. staffing the organization, acquiring, developing, and strengthening key resources and competitive capabilities, and structuring the organization and work effort. E. optimizing the number of core competencies and competitive capabilities, making sure that all managers and employees are empowered, and maximizing internal operating efficiency.

D

19. Which of the following is NOT a characteristic of an effectively worded strategic vision statement? A. Directional (is forward-looking, describes the strategic course that management has charted that will help the company prepare for the future) B. Easy to communicate (is explainable in 5-10 minutes, and can be reduced to a memorable slogan) C. Graphic (paints a picture of the kind of company management is trying to create and the market position(s) the company is striving to stake out) D. Consensus-driven (commits the company to a "mainstream" directional path that almost all stakeholders will enthusiastically support) E. Focused (provides guidance to managers in making decisions and allocating resources)

D

2. The approach to identifying the items needed to be placed on management's action agenda of the strategy execution plan always involves: A. generalized activities that will underscore the particulars of the company's situation. B. some definitive managerial recipe for successful strategy execution that works for all company situations and all types of strategies, or that works for all types of managers. C. a set of unimportant managerial tasks that must be covered no matter what the circumstances. D. senior management's judgment about how to proceed in light of prevailing circumstances. E. a high-end differentiation strategy for proficient implementation and execution.

D

2. Which of the following is NOT an analytical tool for revealing a company's competitiveness and for helping to match the strategy to the company's own particular circumstances? A. Resource and capability analysis B. SWOT C. Value chain analysis D. Best practice concept E. Competitive strength analysis

D

20. In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise? A. When the costs of pioneering are much higher than being a follower and only negligible learning/experience benefits accrue to the pioneer B. When the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover C. When the pioneer's products are somewhat primitive and are easily bested by late movers D. When opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand E. When technological change is rapid and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own

D

20. The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage, suggest the rivalry force: A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies. B. is often weak when rivals have emotional stakes in business or face high exit barriers. C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders. E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.

D

20. The retelling of legendary stories does a lot for establishing a company's core values, but it should NOT: A. place pressure on company personnel to display core values and to do their part in keeping the companies traditions alive. B. illustrate the kind of behavior the company reveres. C. inspire company personnel to perform similarly and reinforce the depth of commitment that people have displayed. D. reflect an aspect of company culture no longer current. E. steer company personnel toward both doing things right and doing the right thing.

D

22. The idea behind benchmarking and best practices is to: A. identify which companies are the best performers of a strategically relevant activity and then copy their methods exactly. B. search the world for a company that performs a strategically relevant task or value chain activity at the lowest possible cost and then use business process reengineering techniques to try to meet or beat the costs of the world's low-cost performer of that activity. C. perform each activity in the industry value chain according to standard industry practice and then regularly benchmark the company's performance to see if it is actually achieving the industry standard. D. identify companies that are the best performers of an activity and then "adapt" their practices to fit the company's own specific circumstances and operating requirements. E. determine whether a company has a "world-class" value chain.

D

23. Strategic fit between two or more businesses exists when one or more activities comprising their respective value chains present opportunities: A. to prevent the transfer of expertise or technology or capabilities from one business to another. B. to independently preserve common brand names from cross-business usage. C. to increase costs by combining the performance of the related value chain activities of different businesses. D. for cross-business collaboration to build valuable new resource strengths and competitive capabilities. E. to maintain business value chain activities separate and apart from one business to another to protect company independence.

D

24. Which of the following is NOT particularly helpful in perpetuating a company's culture? A. Word-of-mouth indoctrination of new members in the culture's fundamentals B. Frequent reiteration of core values by senior managers and group members C. Visibly rewarding those who display cultural norms and penalizing those who don't D. Maintaining a consistent strategic vision and strategic intent over time E. Telling and retelling of company legends and regular ceremonies honoring members who display desired cultural behaviors

D

25. A competitive strategy of striving to be the low-cost provider is particularly attractive when: A. buyers are not very price-conscious. B. most rivals are trying to be best-cost providers. C. there are many ways to achieve product differentiation that have value to buyers. D. most buyers use the product in much the same ways, with user requirements calling for a standardized product. E. most rivals are pursuing focused low-cost or focused differentiation strategies.

D

25. Easy DriveIn, a fast food facility, offers products at lower prices than its competitors in the market and has a drive-through-only operation with no indoor seating. What strategy is Easy DriveIn using to gain competitive advantage? A. A low-cost provider strategy B. A broad differentiation strategy C. A focused low-cost strategy D. A focused differentiation strategy E. A best-cost provider strategy

D

25. What does the scope of the firm refer to? A. The range of activities the firm performs externally and its social responsibility activities B. To gain competitive advantage based on where it locates its various value chain activities C. The firm's capability to employ vertical integration strategies D. 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 E. To prevent foreign competition from affecting the market

D

26. Putting together a capable top management team with the right mix of experiences, skills, and abilities: A. should take top priority in building competitively valuable core competencies. B. is particularly important when the firm is pursuing unrelated diversification or making a number of new acquisitions in related businesses. C. is important in building an organization capable of proficient strategy execution, but is nearly always less crucial than doing a superior job of training and retraining employees. D. entails filling key managerial slots with smart people who are clear thinkers, good at figuring out what needs to be done, and who are skilled in "making it happen" and delivering good results. E. is particularly essential for executing a strategy to keep a company's costs lower than rivals and become the industry's low-cost leader.

D

27. A competitive strategy to be the low-cost provider in an industry works well when: A. price competition among rival sellers is especially sluggish. B. there are numerous ways to achieve product differentiation that have no value to buyers. C. buyers incur high costs in switching their purchases from one seller/brand to another. D. industry newcomers use introductory low prices to attract buyers and build a customer base. E. industry newcomers use high introductory prices to let buyers know they have a superior product to build a customer base.

D

27. Different companies across different industries adopt any one of the five generic strategies to gain competitive advantage. Which of the following is most likely to use a low-cost provider strategy? A. A fashion clothing line uses sought-after designers and natural fabrics. B. A mortgage company specializes in lending money for second homes. C. An online retailer delivers organic groceries overnight. D. A baby products retailer sells unassembled baby furniture produced in China. E. A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy products.

D

27. Integrated social contracts theory maintains that: A. there is no such thing as "moral free space"—all ethical standards are determined by societal norms, and individuals have an implied social contract to live up to these standards. B. few nations or cultures have common moral agreement on what is ethically right and wrong. C. there should be no absolute limits put on what actions and behaviors fall inside the boundaries of what is ethically or morally right and which actions/behaviors fall outside. D. adherence to universal ethical norms always takes precedence over local ethical norms. E. .ethical relativism should always be adhered to before ethical universalism when dealing within boundaries of a country's culture and norms.

D

27. Which of the following is one of the first steps to take in launching the strategy execution process? A. Ensure all requirements of the value chain are fulfilled. B. Form a mission statement as a basis for managers to achieve organizational objectives. C. Go on the offensive by employing moves to make its product offering more distinctive and appealing to buyers. D. Put together a talented management team with the right mix of experiences, skills, and abilities to get things done. E. Strive to be more profitable than rivals and aim for a competitive edge based on bigger profit margins.

D

28. What is the difference between economies of scale and economies of scope? A. Scale refers to the magnitude or size of the operation, while scope refers to the reach of defined savings within the value chain. B. Scale refers to the extent of change, while scope refers to the possibilities of change. C. Scale is about dimensions, while scope is about the capacity available for production capabilities. D. Scale refers to cost savings that accrue directly from larger-sized operations, while scope stems directly from strategic fit along the value chains of related businesses. E. Scale and scope mean the same thing and the only difference is the extent of cost savings accrued from unrelated businesses in each.

D

29. Which of the following statements about cross-business strategic fit in a diversified enterprise is NOT accurate? A. Strategic fit between two businesses exists when the management know-how accumulated in one business is transferable to the other. B. Strategic fit exists when two businesses present opportunities to economize on marketing, selling, and distribution costs. C. Competitively valuable cross-business strategic fits are what enable related diversification to produce a synergistic performance outcome. D. Strategic fit is primarily a by-product of unrelated diversification and exists when the value chain activities of unrelated businesses possess economies of scope and good financial fit. E. Strategic fit exists when a company can transfer its brand-name reputation to the products of a newly acquired business and add to the competitive power of the new business.

D

3. Ethical principles as they apply to the conduct of personnel and business decisions: A. deal chiefly with standards a company has about what is right and wrong insofar as the conduct of its business is concerned and about what behaviors are expected of company personnel. B. deal chiefly with the behaviors that a company's board of directors expects of all company personnel in both their conduct on the job and off the job. C. involve the rules a company's top management and board of directors make about "what is right" and "what is wrong." D. deal primarily with the company's duty to comply with legal requirements and conform to ethical norms of society, in general. E. are generally less stringent than the ethical principles for society at large because it is well understood that businesses should not be expected to operate any differently than what the law requires of them.

D

3. The best indicator of how well a company's strategy is working is whether the company: A. is achieving its stated financial objectives, its financial performance equates to the industry average, and market share gains reflect short-term preferences for capacity maximization. B. is attentive to its poor execution in functional areas, business goals are stretch, and the value proposition has a product focus. C. is geared to initiatives designed to build market share and to promote corporate responsibility. D. is achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing its market share. E. is geared to initiatives to promote corporate social responsibility.

D

3. Which of the following is NOT a fundamental part of a company's culture? A. The work practices and behaviors that define "how we do things around here" B. The company's standard of what is ethically acceptable and what is not, along with the "chemistry" and "personality" that permeates its work environment C. The core values and business principles that management preaches and practices D. The company's strategic vision, strategic intent, and culture strategy E. The legends and stories that people repeat to illustrate and reinforce the company's core values, traditions, and business practices

D

30. The difference between the concept of a company mission statement and the concept of a strategic vision is that: A. a mission concerns what to do to achieve short-term objectives, while a strategic vision concerns what to do to achieve long-term performance targets. B. a mission statement focuses on the methods needed to make a profit, whereas a strategic vision concerns what business model to employ in striving to make a profit. C. a mission statement deals with what to accomplish on behalf of shareholders, while a strategic vision concerns what to accomplish on behalf of customers. D. a mission statement typically concerns a company's purpose and its present business scope, whereas the principal concern of a strategic vision is a company's aspirations for its future. E. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?"

D

30. What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities? A. Social ambiguity and causal uncertainty B. Social simplicity and causal complexity C. Collective complexity and causal ambiguity D. Social complexity and causal ambiguity E. Social simplicity and causal uncertainty

D

30. Which of the following is NOT a factor in contributing to the emergence and sustainability of a strong culture? A. Continuity of leadership, small group size, stable group membership, geographic concentration, and considerable organizational success B. A founder or strong leader who establishes values, principles, and practices that are consistent and sensible in light of customer needs, competitive conditions, and strategic requirements C. A sincere, long-standing company commitment to operating the business according to established traditions, thereby creating an internal environment that supports decision making and strategies based on cultural norms D. Centralized decision making, strict enforcement of company policies, and a strong commitment to being the market share leader E. A genuine concern for the well-being of the organization's three biggest constituencies—customers, employees, and shareholders

D

30. Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions? A. To gain quick access to new technologies or other resources and capabilities B. To create a more cost-efficient operation out of the combined companies C. To expand a company's geographic coverage D. To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy E. To extend a company's business into new product categories

D

31. Which of the following statements about a strong-culture company is NOT true? A. In a strong-culture company, culturally approved behaviors and ways of doing things are nurtured while culturally disapproved behaviors and work practices get squashed. B. In a strong-culture company, senior managers make a point of reiterating key principles and core values to organization members; more importantly, they make a conscious effort to display these principles and values in their own actions and behavior and they insist that company values and business principles be reflected in the decisions and actions taken by all company personnel. C. Continuity of leadership, small group size, stable group membership, geographic concentration, and considerable organizational success all contribute to the emergence and sustainability of a strong culture. D. Centralized decision making, strict enforcement of company policies, diligent pursuit of a distinctive competence, and a bold strategic intent are the hallmarks of a strong-culture company. E. In a strong-culture company, values and behavioral norms are like crabgrass: deeply rooted and hard to weed out.

D

34. A company's values or core values concern: A. whether and to what extent it intends to operate in an ethical and socially responsible manner. B. how aggressively it will seek to maximize profits and enforce high ethical standards. C. the beliefs and operating principles built into the company's "balanced scorecard" for measuring performance. D. the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. E. the beliefs, principles, and ethical standards that are incorporated into the company's strategic intent and business model.

D

34. Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. whether the profits of suppliers are relatively high or low. B. the average number of suppliers that each seller/industry member purchases from. C. how aggressively rival industry members are trying to differentiate their products. D. whether demand for supplier products is high and they are in short supply. E. whether the prices of the items being furnished by the suppliers are rising or falling.

D

34. Which of the following is a typical characteristic of a weak company culture? A. Enthusiastic support for the company's strategic vision and strategy B. No code of ethics and deep hostility to change and to people who champion new ways of doing things C. A complicated value chain that acts to create multiple subcultures D. A lack of values and principles that are consistently preached or widely shared E. A dedicated sense of teamwork

D

35. It is normal for a company's strategy to end up being: A. a blend of offensive actions on the part of managers to improve the company's profitability and defensive moves to counteract changing market conditions. B. a combination of conservative moves to protect the company's market share and somewhat more risky initiatives to set the company's product offering apart from rivals. C. a close imitation of the strategy employed by the recognized industry leader. D. a blend of proactive actions to improve the company's competitiveness and financial performance, and adaptive reactions to unanticipated developments and fresh market conditions. E. more a product of clever entrepreneurship than of efforts to clearly set a company's product/service offering apart from the offerings of rivals.

D

35. Successful broad differentiation allows a firm to: A. be the industry's best-cost provider. B. set the industry ceiling on price. C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D. command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E. take sales and market share away from rivals by undercutting them on price.

D

35. The basic premise of unrelated diversification is that: A. the least risky way to diversify is to seek out businesses that are leaders in their respective industry. B. the best companies to acquire are those that offer the greatest economies of scope rather than the greatest economies of scale. C. the best way to build shareholder value is to acquire businesses with strong cross-business financial fit. D. any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity. E. the task of building shareholder value is better served by seeking to stabilize earnings across the entire business cycle than by seeking to capture cross-business strategic fits.

D

37. A broad differentiation strategy improves profitability when: A. it is focused on product innovation. B. differentiating enhances product performance and quality. C. the differentiating features appeal to sophisticated and prestigious buyers. D. the higher price the product commands exceeds the added costs of achieving the differentiation. E. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

D

37. Six Sigma's DMADV process of define, measure, analyze, design, and verify is a particularly good vehicle for: A. improving performance when there are small variations in how well an activity is performed. If there are wide variations, then the Six Sigma DMVSI process has to be used. B. achieving 100 percent control over how a task is performed and eliminating 100 percent of the variability in how a task is performed. C. improving performance when there are wide variations in how well an activity is performed. D. developing new processes or products at Six Sigma quality levels. E. improving customer satisfaction, whereas Six Sigma improves manufacturing processes.

D

37. The best reason for investing company resources in vertical integration (either forward or backward) is to: A. expand into foreign markets and/or control more of the industry value chain. B. broaden the firm's product line and/or avoid the need for outsourcing. C. gain a first-mover advantage over rivals in revamping the industry value chain. D. add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability. E. achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.

D

37. Which of the following statements about a company's strategy is true? A. A company's strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level managers (so as to catch rival companies by surprise when the strategy is launched). B. A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches because of the risks of making on-the-spot changes. C. A company's 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. D. A company's strategy is typically a blend of proactive and reactive strategy elements. E. A company's strategy is developed mostly on the fly because of the constant efforts of managers to come up with fresh moves to keep the company's product offering clearly different and set apart from the product offerings of rival companies.

D

38. Cultural demands to employ unethical means if circumstances become challenging can prompt: A. otherwise dishonorable people to behave ethically. B. increased observance of ethical strategic actions. C. a moral work climate. D. clever ways to operate outside established policies to boost profits. E. company authorization to observe what's right.

D

39. Which of the following statements about the match between a company's culture and its strategy is NOT true? A. When a company's present work climate promotes attitudes and behaviors that are well suited to first-rate strategy execution, its culture functions as a valuable ally in the strategy execution process. B. A deeply embedded culture tightly matched to the strategy aids the cause of competent strategy execution by steering company personnel to culturally approved behaviors and work practices and thus makes it far simpler to root out operating practices that are a misfit. C. It is in management's best interest to dedicate considerable effort to embedding a corporate culture that encourages behaviors and work practices conducive to good strategy execution. D. A tight strategy-culture alignment facilitates building core competencies and distinctive competencies that lead to low operating costs and a cost-based competitive advantage. E. When a company's culture is grounded in many of the needed strategy-executing behaviors, employees feel genuinely better about their jobs and what the company is trying to accomplish; as a consequence, greater numbers of company personnel exert their best efforts to execute the strategy and achieve performance targets.

D

4. Whatever strategic approach is adopted by a company to deliver value, it nearly always requires: A. that management undertake formal planning sessions with functional departments to ensure productivity improvement. B. the identification of strengths and weaknesses within the company. C. matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D. performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match. E. constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium.

D

40. When a company's culture is out of sync with what is needed for strategic success and good strategy execution: A. the strategy has to be changed to fit the culture as rapidly as possible. B. the company's strategic vision, strategic intent, and strategy have to be adjusted to better reflect ingrained core values and cultural norms. C. management needs to go on the offensive to reinterpret the culture and explain to company personnel why there really is good overall cultural fit with the strategy. D. the culture has to be changed to accommodate the requirements of good strategy execution as rapidly as can be managed. E. management must urge the company to participate in an all-out effort to create a different portfolio of competencies and capabilities that will permit the strategy to be changed in ways that will fit the culture.

D

40. When an activity becomes something a company has learned to perform proficiently and capably, the company is said to have: A. a competence. B. a competitive advantage over rivals. C. a key value chain proficiency. D. a distinctive capability. E. a resource advantage.

D

42. Which of the following statements about developing organizational competencies and capabilities is FALSE? A. Core competencies or capabilities are most often bundles of skills and know-how that grow out of the combined efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. B. Evolving changes in customer needs and competitive conditions often require tweaking and adjusting a company's portfolio of competencies and intellectual capital to keep its capabilities freshly honed and on the cutting edge. C. Normally, core competencies and competitive capabilities emerge incrementally as a company (1) acts to bolster skills that contributed to earlier successes, or (2) acts to respond to customer problems, new technological or market opportunities, and the competitive maneuvers of rivals. D. Building organizational capabilities is best and most cost-effectively accomplished by hiring a cadre of people with the right talent and expertise, putting them together in a single work group, and then teaming the work group with key strategic allies/partners to mesh the skills, expertise, and competencies needed to perform the desired capabilities with some proficiency. E. The key to leveraging a core competence into a distinctive competence (or transforming a capability into a competitively superior capability) is concentrating more effort and talent than rivals on deepening and strengthening the competence or capability so as to achieve the dominance needed for competitive advantage.

D

43. A core competence: A. detracts from a company's arsenal of competitive capabilities and competitive assets and is not a resource strength considered to be genuine. B. is typically results-based, residing in a company's tangible physical assets on the balance sheet. C. is often grounded in a single department's set of knowledge and expertise. D. is an activity that a firm performs proficiently that is also central to its strategy and competitive success. E. is a proficiently performed external activity.

D

43. The two biggest drawbacks or disadvantages of unrelated diversification are: A. underemphasizing the importance of resource fit and the strong likelihood of diversifying into businesses that top management does not know all that much about. B. insufficient cash flows to finance so many different lines of business and a lack of uniformity among the strategies of the businesses it has diversified into. C. volatile sales and profits and making the mistake of diversifying into too many cash cow businesses. D. the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides. E. over-investing in the achievement of economies of scope and the difficulties of achieving a good mix of cash cow and cash hog businesses.

D

43. Which of the following is NOT a potential advantage of backward vertical integration? A. Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity) B. Reduced risks of disruptions in obtaining crucial components or support services C. Reduced costs D. Reduced business risk because of controlling a bigger portion of the overall industry value chain E. Increase in a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage

D

49. Why is it important to craft a business model? A. Because it sets forth management's game plan for maximizing profits for shareholders B. Because it details exactly how management's strategy will result in the achievement of the company's strategic intent C. Because it is a part of an operating model that focuses on delivering excellence and creating value for external shareholders and internal labor force D. Because it sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner E. Because it sets forth management's long-term action plan to match the business standards set by formidable rivals

D

43. Which of the following is NOT one of the traits of core competencies and/or competitive capabilities? A. The key to leveraging core competencies into competitive advantage is concentrating sufficient effort and talent on deepening and strengthening them so the firm achieves dominating depth and gains the capability to outperform rivals by a meaningful margin. B. Core competencies have to be tweaked and adjusted to keep them fresh and responsive to changing customer needs and market conditions. C. Core competencies typically are lodged in the combined efforts of different work groups and departments. D. Core competencies generally grow out of company efforts to master a strategy-critical technology or to invent and patent a valuable technology. E. Core competencies tend to emerge gradually rather than blossom quickly.

D

44. Firms generally leverage the expertise of their talent pool in building capabilities by: A. updating existing capabilities. B. establishing a new arsenal of resource capabilities by phasing out existing capabilities. C. refreshing existing capabilities. D. augmenting or recombining well-established capabilities with existing resources. E. building resource capabilities from scratch so it is easy and less time-consuming.

D

45. In adaptive corporate cultures: A. the prevailing view is that the best way to look out for the interests of employees is to change core values and cultural norms in whatever ways are needed to fit the changing requirements of an evolving strategy. B. company personnel are amenable to changing policies and operating practices as long as the core elements of the company's strategic vision and strategy remain intact. C. members are willing to embrace a proactive approach to trying new ideas, altering operating practices, and changing pieces of the strategy provided it doesn't imperil their job security, entail cuts in compensation, or require different work practices. D. there's a spirit of doing what's necessary to ensure long-term organizational success provided that core values and business principles are not compromised and provided top management undertakes the changes in a manner that exhibits genuine concern for the legitimate interests of stakeholders. E. there is little need for policies and procedures because group members willingly accept experimentation and innovation.

D

46. Which of the following does NOT represent a potential core competence? A. Skills in manufacturing a high-quality product at a low cost B. Know-how in creating and operating systems for cost-efficient supply chain management C. The capability to fill customer orders accurately and swiftly D. Having a sprawling factory E. The capability to speed new or next-generation products to the marketplace

D

47. Which of the following exemplifies one of the most widely used methods of gauging how well a company is executing its strategy? A. Merrill & Company has a disconnected organizational arrangement whereby pieces of an activity are performed in different functional departments. B. Oceania identifies agents of change who are convinced about sticking to the old ways of doing things. C. Honwell narrates success stories of rival brands to convince its personnel about traditional wisdom. D. Fizz-Cola judges the efficiency of internal operations by benchmarking them against best-in-industry performers. E. Motorola develops the data to measure how poorly rival brands perform against the best-practice standards across industry.

D

47. Which of the following is NOT a common trait of an unhealthy company culture? A. A politicized internal environment and empire-building managers who jealously guard their turf B. Hostility to change and a wariness of people who champion new ways of doing things C. An aversion to looking outside the company for best practices, new managerial approaches, and innovative ideas D. An aversion to incentive compensation and overemphasis on working in teams, E. Overzealous pursuit of wealth and status on the part of key executives

D

48. Which of the following does NOT exemplify business process reengineering? A. Blue Mountain creates teams of mixed-occupation freelancers to design Christmas cards. B. Speedmore integrates three distribution units to form a consolidated zonal distribution center. C. Bank of America automates global transaction services in a quest for operational efficiencies. D. PayPal segregates payment notification operations from mobile transfer operations to expand its customer base. E. Florida Power eliminates work depots, entrusting the task of repair to crew members in a mobile van.

D

49. A "balanced scorecard" that includes both strategic and financial performance targets is a conceptually strong approach for judging a company's overall performance because: A. it assists managers in putting roughly equal emphasis on short-term and long-term performance targets. B. it entails putting equal emphasis on good strategy execution and good business model execution. C. a balanced-scorecard approach pushes managers to avoid setting objectives that reflect the results of past decisions and organizational activities. D. financial performance measures are lagging indicators that reflect the results of past decisions and organizational activities, whereas strategic performance measures are leading indicators of a company's future financial performance and business prospects. E. it forces managers to put equal emphasis on financial and strategic objectives.

D

49. Which of the following is NOT one of the four basic routes to achieving a differentiation-based competitive advantage? A. Delivering value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well-matched to the requirements of the strategy B. Incorporating tangible features that raise product performance and increase customer satisfaction with the product C. Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D. Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes E. Incorporating features that enhance buyer satisfaction in intangible or noneconomic ways

D

49. Which of the following takes the route of business process reengineering to attain operational excellence? A. AT&T works toward creating a total quality culture by continuously reviewing the performance of every value chain activity. B. Acer Phones uses advanced statistical methods to remove the causes of defects at its manufacturing units. C. Ericsson introduces continuous-improvement business philosophy at its customer care centers. D. Cellkon pulls the pieces of an activity out of different departments to create a cross-functional work group. E. Honeywell strives to incrementally reduce defects through an ongoing assessment process.

D

6. The school of ethical universalism holds that: A. concepts of right and wrong are not absolute and leave room for deviation from country to country or circumstance to circumstance. B. concepts of right and wrong are universal within countries but not across countries and cultures. C. concepts of right and wrong are governed by the Global Code of Ethical and Social Morality. D. the most fundamental conceptions of right and wrong are universal and apply to members of all societies, all companies, and all businesspeople. E. there are multiple sets of standards concerning what is ethically right or wrong that are universally applicable to citizens of a country.

D

6. To improve performance, there are many different avenues for outcompeting rivals such as: A. realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growth. B. creating products analogous with competitors so as to be competitive in the same markets. C. pursuing similar personalized customer service or quality dimensions as rivals. D. confining operations to local or regional markets or developing product superiority or concentrating on a narrow product lineup. E. strengthening competitiveness by restricting strategic alliances and collaborative partnerships when compared to rivals.

D

60. Management's most powerful tool for winning employee commitment to good strategy execution is: A. the establishment of strategy-supportive policies and procedures. B. empowering employees and encouraging them to adopt best practices. C. setting stretch objectives. D. a structure of rewards and incentives tied tightly to the achievement of the organization's strategic priorities. E. aggressive use of TQM and Six Sigma quality control programs.

D

61. Which of the following is NOT something a company should consider in crafting an environmental sustainability strategy? A. Actions to protect the environment that will guard against the ultimate endangerment of the planet B. Actions to maintain ecological support systems for future generations C. Actions to provide for the longevity of natural resources D. Actions to couple environmental degradation and economic growth E. Actions to contain the adverse effects of greenhouse gases

D

65. The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on the: A. much shorter time it takes to build core competencies and competitive capabilities. B. benefit such an organizational scheme has in reducing costs. C. benefit such an organizational scheme has in improving the productivity of geographically scattered organizational units. D. thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact, they have to be centerpieces in the organizational scheme. E. benefit such an organizational scheme has in making the empowerment of employees more effective.

D

66. Which of the following is NOT a substantive culture-changing action that a company's managers can undertake to alter a problem culture? A. Promoting individuals who are known to possess the desired cultural traits, who have stepped forward to advocate the shift to a different culture, and who can serve as role models for the desired cultural behavior B. Appointing outsiders with the desired cultural attributes to high-profile positions C. Screening all candidates for new positions carefully, and hiring only those who appear to fit in with the new culture D. Urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing, and paying sizable bonuses to those employees who identify practices that the company ends up adopting E. Designing compensation incentives that boost the pay of teams and individuals who display the desired cultural behaviors and hitting change-resisters in the pocketbook

D

67. Which of the following is NOT part of the moral case for why a company should actively promote the betterment of society? A. Every action a company takes can be interpreted as a statement of what it stands for. B. Most business leaders can be expected to acknowledge that socially responsible actions and environmental sustainability are important and that businesses have a duty to be good corporate citizens. C. In return for society granting a business a "license to operate" and not be unreasonably restrained in its pursuit of a fair profit, a business is obligated to act as a responsible citizen and do its fair share to promote the general welfare. D. Acting in a socially responsible manner is in the best financial interest of shareholders. E. Every business has a duty to do what's best for shareholders while operating honorably, provide good working conditions to employees, and be a good environmental steward.

D

69. How is a functional structure or unitary structure organized? A. With a central executive handling all major decisions B. To lighten the load of senior executives so they can concentrate on value chain action agendas C. Specifically to manage unrelated diversification opportunities D. Into functional departments, with departmental managers who report to the CEO and small corporate staff E. With top-heavy management, and senior executives forming a central office of the chairman

D

7. According to the school of ethical universalism: A. concepts of what constitute ethical behavior and unethical behavior are dictated by subjectively provable moral principles but not by objectively provable moral principles. B. concepts of right and wrong are universal within countries/societies but not across countries or cultures. C. concepts of what is ethical and what is unethical are socially determined, leaving room for variation from country to country or circumstance to circumstance. D. to the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies and all individuals can be held accountable. E. all societies and countries are obligated to apply universally defined ethical principles of right and wrong as set forth by a global body that formulates the Code of Ethical Behavior for the world.

D

7. The real purpose of the company's strategic vision: A. is management's story line for how it plans to implement and execute a profitable business model. B. sets forth what business the company is presently in and why it uses particular operating practices in trying to please customers. C. serves as management's tool for giving the organization a sense of direction. D. defines "who we are and what we do." E. spells out a company's strategic intent, its strategic and financial objectives, and the business approaches and operating practices that will underpin its efforts to achieve sustainable competitive advantage.

D

72. The tests of whether a diversified company's businesses exhibit resource fit do NOT include: A. whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses. B. whether a business adequately contributes to achieving the corporate parent's performance targets. C. whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating. D. whether the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money. E. whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into.

D

74. Which of the following companies incurs mainly internal administrative costs due to unethical practices? A. Company A loses its customer loyalty by selling low-quality products for a high cost. B. Company B's tax evasion practices are revealed, leading to a drastic fall in stock prices. C. Company C incurs penalties of $1.5 billion for discharging toxic wastes into a river. D. Company D must retrain its employees who are using their Twitter accounts to post workplace frustrations. E. Company E pays men higher wages than women while at the same time propagating messages of equality and fair play.

D

74. Which of the following is NOT one of the leadership roles that senior managers have to play in pushing for good strategy execution and operating excellence? A. Learning the obstacles in the path of good execution and clearing the way for progress B. Being out in the field, seeing how well operations are going C. Being out front personally, leading the execution process and driving the pace of progress D. Weeding out managers who are consistently in the ranks of the lowest performers (the bottom 10 percent) and who are not enthusiastic about the strategy or how it is being executed E. Delegating authority to middle and lower-level managers and creating a sense of empowerment among employees to move the implementation process forward

D

75. When management is leading the drive for good strategy execution and operating excellence, it calls for all of the following actions on their part EXCEPT: A. staying on top of what is happening. B. monitoring progress closely. C. putting constructive pressure on the organization to execute the strategy with excellence. D. establishing a must-be-invented-here mindset. E. empowering rank-and-file employees to act on their own initiative.

D

76. A company that promotes carpooling among its employees, has cut its printer-paper usage in half, and has installed solar panels on its roof is an example of a corporate social responsibility action to: A. promote workforce diversity. B. ensure the company operates honorably and ethically. C. support philanthropy and participate in community service. D. protect and sustain the environment. E. enhance workplace amenities and employee well-being.

D

76. Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution? A. The reward system must be administered with scrupulous objectivity and fairness. B. The payoff for meeting or beating performance targets must be a major, not minor, piece of the total compensation package. C. The incentive plan should extend to all managers and all employees, not just top management. D. The reward system must reward nonperformers who, despite expending tremendous effort, have not fared well in achieving the benchmarks under the incentive system. E. Make sure that the performance targets each individual or team is expected to achieve involve outcomes that the individual or team can personally affect.

D

77. Which of the following is a disadvantage of a decentralized organizational structure? A. Increasing the size of the corporate bureaucracy B. Reducing a company's response times to changing external events C. Discouraging lower-level managers and rank-and-file employees from exercising initiative D. Putting the organization at risk if higher-level management is unaware of their actions E. Creating more layers of management

D

8. A company's culture is typically grounded in and shaped by: A. its core competencies and competitive capabilities. B. its long-term strategic success or lack thereof. C. the degree to which top management is committed to achieving market leadership. D. its core values and the bar it sets for ethical standards. E. its strategic intent and its reward system.

D

80. The organizing challenge of a decentralized structure that stresses employee empowerment is: A. how to keep empowered employees from making lots of stupid decisions. B. establishing a collegial, collaborative culture so that decisions can be made by gaining a quick consensus on what to do and when to do it. C. how to avoid de-motivating employees (because empowered employees are expected to take responsibility for their actions and decisions). D. how to exercise control over the actions and decisions of empowered employees so that the business is not put at risk while trying to capture the benefits of empowerment. E. how to convince lower-level managers and employees that they are empowered.

D

86. Strategies to restructure a diversified company's business lineup involve: A. revamping the value chains of each of a diversified company's businesses. B. focusing on restoring the profitability of its money-losing businesses and thereby improving the company's overall profitability. C. revamping the strategies of its different businesses, especially those that are performing poorly. D. divesting low-performing businesses that do not fit and acquiring new ones where opportunities are more promising to put a new face on the company's business makeup. E. broadening the scope of diversification to include a larger number of smaller and more diverse businesses.

D

9. A low-cost leader's basis for competitive advantage is: A. lowest possible prices for comparable products. B. a low-cost/moderate price approach to gain the biggest market share. C. high buyer switching costs. D. meaningful lower overall costs than rivals on comparable products. E. higher unit sales than rivals.

D

9. Kimberly-Clark, the manufacturer of Kleenex tissues and Huggies diapers, streamlines its healthcare business by listing Halyard Health as a separately traded company. The company's move is likely to: A. promote healthcare wings of rival companies. B. increase the cost of manufacturing medical devices. C. curtail the cost of manufacturing medical devices. D. enhance the strategy execution capabilities of the company. E. increase the demand for personal protective equipment.

D

Which of the following is NOT a risk of cross-border alliances between domestic and foreign firms? A. Overcoming language and cultural barriers B. Launching new initiatives to stay abreast of shifting market conditions C. Developing mutually agreeable ways of dealing with key issues or differences D. Disengaging from the alliance once its purpose has been served E. Becoming overly dependent on foreign partners for essential expertise

D. Disengaging from the alliance once its purpose has been served

Which of the following does NOT accurately characterize the differences between a localized multidomestic strategy and a global strategy? A. A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries. B. A global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments). C. A global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country. D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries. E. A global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.

Which of the following is NOT a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A. Prepare to compete on the basis of low price. B. Modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). C. Change the local market to better match the way the company does business elsewhere. D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly. E. Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances.

D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly.

Which of the following statements regarding global competition is false? A. In global competition, rivals vie for worldwide market leadership. B. In globally competitive industries, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets. C. In global competition, a firm's overall competitive advantage (or disadvantage) grows out of its entire worldwide operations. D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails. E. In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a strong global position in the industry.

D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails.

What can happen when international rivals compete against one another in multiple-country markets? A. It could create attractive industries that would have otherwise badly deteriorated. B. It could produce a business lineup consisting of too many slow-growth, declining, low-margin, or competitively weak businesses. C. It could create a greater diversity in the types of value chain activities between each business. D. It could initiate a deterrence effect that encourages mutual restraint in taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war. E. It could increase shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

D. It could initiate a deterrence effect that encourages mutual restraint in taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war.

What is a primary drawback of a localized multidomestic strategy? A. It hinders the use of cross-border coordination of a company's activities and increases a company's vulnerability to adverse shifts in currency exchange rates. B. It makes it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods. C. It makes it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. D. It hinders the transfer of a company's competencies and resources across country boundaries and hinders the pursuit of a single, uniform competitive advantage in all country markets where a company operates. E. It is unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company's business model to compete on the basis of low price.

D. It hinders the transfer of a company's competencies and resources across country boundaries and hinders the pursuit of a single, uniform competitive advantage in all country markets where a company operates.

Which of the following is NOT a typical host government requirement that affects the operations of foreign companies? A. Establishing local content requirement on goods made inside their borders by foreign companies B. Having rules and policies that protect local companies from foreign competition C. Placing restrictions on exports to ensure adequate local supplies D. Requiring foreign companies to use vertical integration to support operations of local companies E. Imposing burdensome tax structures and regulatory requirements upon foreign companies doing business within their borders

D. Requiring foreign companies to use vertical integration to support operations of local companies

Greenfield ventures, like all market entry strategies can pose serious problems to achieving foreign market entry success. What is NOT deemed a barrier to success? A. Such ventures can require costly capital investments. B. Such ventures can have a tendency to divert valuable resources from current business. C. Such ventures really need well-functioning strong markets. D. Such ventures are the fastest entry route to achieve a sizeable market share. E. Such ventures require legal protections of foreign investors.

D. Such ventures are the fastest entry route to achieve a sizeable market share.

Exxon Mobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Moscow. Which of the following is most likely the reason for Exxon Mobil to opt for this strategic alliance? A. To gain access to new customers B. To scale back its core competencies C. To restrict its factors of production D. To gain access to low-cost inputs of production E. To better compete with Gasprom

D. To gain access to low-cost inputs of production

Which of the following is NOT a reason why a company decides to enter foreign markets? A. To spread business risk across a wider geographic market base B. To capitalize on company competencies and capabilities C. To achieve lower costs through economies of scale, experience, and increased purchasing power D. To impart technical knowledge to high-cost human resources in developing nations E. To gain access to more buyers for the company's products/services

D. To impart technical knowledge to high-cost human resources in developing nations

Televisa, a Mexican media company, became the world's most prolific producer of Spanish-language soap operas owing to its expertise in Spanish culture and linguistics. Which of the following strategies did Televisa employ to defend against global giants? A. Develop business models that exploit shortcomings in local distribution networks or infrastructure. B. Utilize keen understanding of local customer needs and preferences to create customized products or services. C. Take advantage of aspects of the local workforce with which large international companies may be unfamiliar. D. Transfer company expertise to cross-border markets and initiate actions to contend on an international level. E. Use acquisition and rapid-growth strategies to better defend against expansion-minded internationals.

D. Transfer company expertise to cross-border markets and initiate actions to contend on an international level.

Which of the following is a condition that makes an internal startup strategy appealing over an acquisition? A. When an internal startup is more costly. B. When an internal startup affects the supply-demand balance by increasing production capacity C. When an internal startup is unable to gain distribution access advantages D. When an internal startup has the necessary scale and resource strengths to compete with rivals E. When an internal startup lacks the experience in establishing new subsidiaries

D. When an internal startup has the necessary scale and resource strengths to compete with rivals

When is a think-local, act-local approach to strategy making appropriate? A. When the need for local responsiveness is minimal and when potential efficiency gains from standardization is unrestricted by cross-country opportunities B. When the local manager is intellectually savvy C. When the local market provides strong opportunity for growth and profitability D. When the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited E. When the need for centralized decision making is relevant due to various macroeconomic and market conditions

D. When the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited

The advantages of manufacturing goods in a particular country and exporting them to foreign markets: A. are largely unaffected by fluctuating exchange rates. B. are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders. C. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. are multiplied by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets: A. is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. B. is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in foreign countries. C. becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting. D. becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. E. has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.

D. becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.

The advantages of using a licensing strategy to participate in foreign markets include: A. being especially well-suited to achieve scale economies. B. being able to charge lower prices than rivals. C. being able to achieve first-mover advantages quickly and easily. D. being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets. E. being able to achieve higher product quality and better product performance than with an export strategy.

D. being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets.

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by: A. building a state-of-the-art facility to fully capture scale economies via an export strategy. B. using export, licensing, or franchising strategies so as to minimize risk and capital investment. C. locating buyer-related activities in all countries where it sells its product. D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets. E. avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets it enters.

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.

The reason the world economy is globalizing at an accelerated pace is because: A. countries previously open to foreign companies have closed their markets. B. countries that previously had market or mixed economies now embrace planned economies. C. information technology expands the importance of geographic distance. D. growth-minded companies are racing to build stronger competitive positions in the markets of more countries. E. countries opposed to market or mixed economies have stringent trade barriers in place.

D. growth-minded companies are racing to build stronger competitive positions in the markets of more countries.

A primary drawback of a global strategy is that it: A. allows firms to address local needs as precisely as locally based rivals can. B. permits firms to be more responsive to changes in local market conditions, either in the form of new opportunities or competitive threats. C. provides for lower transportation costs and also may involve higher tariffs. D. involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise. E. raises production costs due to the greater variety of designs and components.

D. involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise.

Companies that compete internationally can pursue competitive advantage in world markets(or offset domestic disadvantages) by: A. using a differentiation-based competitive strategy in those country markets with superior resources. B. choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D. locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination. E. employing a multidomestic strategy instead of a global strategy.

D. locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination.

One of the biggest strategic challenges to competing in the international arena includes: A. how to leverage the opportunities arising from shifting exchange rates. B. how to charge the same price in all country markets. C. how to identify foreign firms licensed to produce and distribute the company's products. D. whether to offer a standardized product worldwide or a customized product offering in each different country market. E. whether to pursue a franchising strategy or a joint venture strategy.

D. whether to offer a standardized product worldwide or a customized product offering in each different country market.

12. Prescribing policies and operating procedures aids the task of implementing strategy by: A. helping ensure that worker eligibility for incentive bonuses is measured consistently and awarded fairly. B. fostering the use of best practices, TQM, Six Sigma, and continuous improvement efforts. C. acting as a powerful lever for changing employee attitudes about the need for a different incentive and reward system. D. helping build employee commitment to strengthening the company's core competencies and competitive capabilities. E. placing limits on ineffective independent action and channelling efforts of individuals along a path more conducive to good strategy execution and operating excellence.

E

13. The heart and soul of a company's strategy-making effort is determining how to: A. become the industry's low-cost provider. B. maximize profits and shareholder value. C. improve the efficiency of its business model. D. maximize profits while simultaneously operating in a socially responsible manner that keeps the company's prices as low as possible. E. come up with moves and actions that produce a durable competitive edge over rivals.

E

10. The competitive pressures on companies within an industry come from all of the following, EXCEPT: A. those associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B. those companies in other industries attempting to win buyers over to their substitute products. C. those associated with the threat of new entrants into the marketplace. D. those associated with the bargaining power of suppliers and customers. E. those associated with environmental factors such as water shortages.

E

10. To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use: A. the profit test, the competitive strength test, the industry attractiveness test, and the capital gains test. B. the better-off test, the competitive advantage test, the profit expectations test, and the shareholder value test. C. the barrier-to-entry test, the competitive advantage test, the growth test, and the stock price effect test. D. the strategic fit test, the industry attractiveness test, the growth test, the dividend effect test, and the capital gains test. E. the attractiveness test, the cost-of-entry test, and the better-off test.

E

10. While listening or categorizing company resources, what matters is that: A. all tangible resources are categorized correctly. B. important resources are reported against strategically subjective activities. C. resources are prioritized in terms of value propositions. D. strategically placed resources are manageable. E. all the different types of resources are included in the inventory.

E

11. Executing strategy is a make-things-happen task that tests a manager's ability to perform all of the following EXCEPT: A. manage the people, talents, and business processes of an operations-driven activities company. B. direct organizational change and achieve continuous improvement in operations and business processes. C. create and nurture a strategy-supportive culture. D. meet or beat performance targets consistently. E. focus on market conditions and the company's resources and capabilities.

E

11. Which of the following is NOT an example of a company that uses blue-ocean market strategy? A. eBay's online auction industry B. NetJets' fractional jet ownership C. Drybar's hair blowouts D. Cirque de Soleil's live entertainment E. Walmart's logistics and distribution

E

12. All firms are subject to offensive challenges from rivals. Which of the following is NOT among the intent of the best defensive move? A. Lower the risk of being attacked B. Weaken the impact of any attack that occurs C. Pressure challengers to aim their efforts at other rivals D. Help protect a competitive advantage E. Harm the firm's competitive position

E

14. If one accepts the tenets of the school of ethical relativism, then which of the following is NOT true? A. There are multiple sets of ethical standards rather than a single universal set. B. At least some ethical standards are governed by local norms, religious doctrines, and social customs rather than by absolute standards of right and wrong. C. What constitutes ethical or unethical behavior on the part of businesses must in some cases be judged in the light of local customs and social mores. D. It is inappropriate to hold businesses accountable for observing a universal set of ethical standards. E. Ethical standards for businesses are established on the basis of conceptions of right and wrong that apply to all businesses.

E

15. Market maneuvering among industry rivals: A. determines whether the industry's strategic group map will be static or dynamic. B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. C. is usually an industry's strongest driving force. D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.

E

16. In prescribing policies and procedures that facilitate independent action on the part of empowered employees for good strategy execution companies need to do ALL of the following EXCEPT: A. give organization members clear direction and place reasonable boundaries on their actions. B. empower employees to act within the company's set boundaries in pursuit of company goals. C. allow company personnel to act with some defined degree of freedom, especially when individual creativity and initiative are more essential to good strategy execution than standardization and strict conformity. D. institute policies that give employees substantial leeway to carry out activities the way they think best. E. produce policy manuals on strategy execution that prescribe exactly how daily operations are to be conducted.

E

16. Which of the following signals would NOT warn challengers that strong retaliation is likely? A. Publicly announcing management's commitment to maintain market share B. Publicly committing to a company policy of matching competitors' terms or pricing C. Maintaining a war chest of cash and marketable securities D. Making a strong counter-response to the moves of weak competitors E. Announcing strong quarterly earnings potential to financial analysts

E

17. Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when: A. pioneering helps build up a firm's image and reputation and creates strong brand loyalty. B. buyers remain strongly loyal to pioneering firms because of incentives and switching costs barriers. C. there is a steep learning curve and when learning can be kept proprietary. D. moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E. market uncertainties make it difficult to ascertain what will eventually succeed.

E

17. Which of the following is NOT a technique that companies employ to embed core values and ethical standards? A. Incorporating the statement of values and the code of ethics into orientation programs for new employees and training courses for managers and employees B. Making the display of core values and ethical principles a factor in evaluating each person's job performance C. Encouraging everyone to use their influence in helping enforce observance of core values and ethical standards D. Using ceremonial occasions to recognize individuals and groups who display the values and ethical principles E. Instituting standard practices and procedures for employees to follow as a foundation for maintaining ethical and cultural norm conflict clashes and behavioral lapses

E

17. Which of the following is NOT an action that a company should take to perform value chain activities more cost-effectively? A. Striving to capture all available economies of scale and taking advantage of experience and learning-curve effects B. Trying to operate facilities at full capacity C. Adopting labor-saving operating methods D. Improving supply chain efficiency E. Over-differentiating so that product features exceed the needs of most buyers

E

17. Which of the following questions is NOT something that company managers should consider in choosing to pursue one strategic course or directional path versus another? A. Are changing market and competitive conditions acting to enhance or weaken the company's business outlook? B. Is the company stretching its resources too thinly by trying to compete in too many markets or segments, some of which are unprofitable? C. Will our present business generate sufficient growth and profitability in the years ahead to please shareholders? D. What market opportunities should the company pursue and which ones should not be pursued? E. Do we have a better business model than key rivals?

E

18. The transaction costs of completing a business agreement or deal of some sort, over and above the price of the deal, can include all of the following EXCEPT: A. the costs of searching for an attractive target. B. the costs of evaluating its worth. C. bargaining costs. D. the costs of completing the transaction. E. the premium cost.

E

18. Which of the following does NOT facilitate strategy execution? A. Hyundai service centers follow same routines when receiving vehicles for servicing. B. Ford encourages staff to skip practices out of sync with the company's mission. C. General Motors showrooms have similar operating practices across regions. D. Chevrolet Service center replicates the caliber of customer service across locations. E. Renault is averse to standardization of the way activities are performed at its service centers.

E

19. First-mover disadvantages (or late-mover advantages) rarely ever arise when: A. the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own. C. the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D. the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E. the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

E

2. Managers must chart a company's strategic course by: A. focusing on the local environment in which they are operating. B. ensuring excess production capacity and/or inventory. C. competing fiercely for a share in the market. D. building a bigger dealer network. E. developing a thorough understanding of the company's external and internal environment.

E

2. The character of a company's corporate culture is a product of all of the following EXCEPT: A. the shared values and core business principles and beliefs that management preaches and practices. B. its standards of what is ethically acceptable and what is not and the stories that get told over and over to illustrate and reinforce the company's shared values, business practices, and traditions. C. the company's approach to people management and the "chemistry" and "personality" that permeates its work environment. D. the work practices and behaviors that define "how we do things around here." E. its lack of mechanisms for aligning, constraining, and regulating the actions, decisions, and behaviors of company personnel.

E

2. The task of crafting a company's overall corporate strategy for a diversified company encompasses all of the following EXCEPT: A. picking the new industries to enter and deciding on the means of entry. B. initiating actions to boost the combined performance of the corporation's collection of businesses. C. pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage. D. establishing investment priorities and steering corporate resources into the most attractive business units. E. divesting well-performing businesses.

E

2. Which of the following would NOT lead to cost savings? A. A company that sets up its own direct sales force B. A company that eliminates low-value-added work steps C. A company that motivates employees through incentives D. A company that conducts sales operations at its website E. A company that sources the best from suppliers across the world

E

20. Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage? A. Striving to be the industry's low-cost provider B. Outcompeting rivals on the basis of differentiating features that will appeal to a broad spectrum of buyers C. Developing a best-cost provider strategy that gives customers more value for the money D. Focusing on a narrow market niche and serving buyers' special needs and tastes E. Striving to be the industry's high-price provider

E

21. Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is: A. to be the first mover. B. to be a fast follower. C. to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer—first-mover disadvantages usually overwhelm first-mover advantages). D. to be the last-mover—playing catch-up is usually fairly easy and almost always is much cheaper than any other option. E. to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

E

21. Which of the following is NOT one of the positive impacts that a company's stated values and ethical standards have on its corporate culture? A. Communicating the company's good intentions B. Validating the integrity and above-board nature of the company's business principles and operating methods C. Steering company personnel toward both doing things right and doing the right thing D. Establishing a corporate conscience E. Identifying how best to adapt to changing market conditions

E

21. Which of the following is NOT part of a senior executive's agenda in big organizations with geographically scattered operating units? A. Communicating the case for change B. Directing resources to the right places C. Building consensus for how to proceed D. Establishing deadlines and measures of progress E. Orchestrating the action steps and implementation sequence

E

21. Which of the following is NOT true about why codes of conduct based on ethical relativism are ethically dangerous for multinational companies? A. They create a maze of conflicting ethical standards. B. They justify conflicting ethical standards for operating in different countries. C. They establish little moral basis for establishing ethical standards for a company worldwide. D. They restrict enforcement of ethical standards worldwide. E. They create standards that mostly relate to ethical codes in a company's home market, which might trigger compliance issues in the local market.

E

22. Which of the following companies would have the LEAST bargaining power with its suppliers? A. A company that is involved in mass production of goods to cater its expanding customer base B. A company that actively caters to a broad price-sensitive customer base C. A company that generates high quality product components from easily available raw materials for a broad customer base D. A company whose products are highly popular and easily available across most supermarkets E. A company that offers high-cost specialized products that could be used only by customers of a certain age group

E

22. Which of the following is part of strategy-supportive resources and capabilities? A. Recruiting and retaining talented employees B. Instituting organizational arrangements C. Establishing lines of authority D. Creating reporting relationships E. Deciding how much authority to delegate

E

23. In which of the following instances is rivalry among competing sellers NOT more intense? A. When certain competitors are dissatisfied with their market position and make moves to bolster their standing B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders C. When competitors are fairly equal in size and capability D. When the products of rivals are weakly differentiated, buyer switching costs are low, and market demand is growing slowly E. When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

E

23. Winning a sustainable competitive edge over competitors does NOT hinge on which of the following? A. Having a distinctive competitive product offering B. Building competitively valuable expertise and capabilities not readily matched, and offering distinctive products C. Building experience, know-how, and specialized capabilities that have been perfected over a long period of time D. Having "hard-to-beat" capabilities and impressive product innovation E. Building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

E

32. A company's mission statement does NOT: A. identify the company's services and products. B. specify the buyer's needs that the company seeks to satisfy. C. identify the customer or market that the company intends to serve. D. give the company its own identity. E. explain "where we are headed."

E

25. Which of the following regarding integrated social contracts theory is NOT true? A. Certain universal ethical principles apply in those situations where all societies—those endowed with rationality and moral knowledge—have a common moral agreement on what is right and wrong. B. Within the boundaries of a social contract, local cultures or groups can specify what additional actions may or may not be ethically permissible. C. Universal ethical principles or norms leave some "moral free space" for the people in a particular country (or local culture or even a company) to make specific interpretations of what other actions may or may not be permissible within the bounds defined by universal ethical principles. D. Universal ethical norms always take precedence over local ethical norms. E. Local ethical norms always take precedence over universal ethical norms.

E

26. Businesses with strategic fit with respect to their supply chain activities perform better together because of all of the following EXCEPT: A. the potential for skills transfer in procuring materials. B. the sharing of resources and capabilities in logistics. C. the benefits of added collaboration with common supply chain partners. D. the added leverage gained with shippers when securing volume discounts on incoming parts and components. E. the increased allocation and allotment of support activities and specialized resources and capabilities.

E

26. Which one of the following is NOT a key element of integrated social contracts theory? A. Universal ethical principles apply in those situations where most all societies—endowed with rationality and moral knowledge—have common moral agreement on what is wrong and thereby put limits on what actions and behaviors fall inside the boundaries of what is right, and which ones fall outside. B. Commonly held views about what is morally right and wrong form a "social contract" (contract with society) that is binding on all individuals, groups, organizations, and businesses in terms of establishing the line between ethical and unethical behaviors. C. Universal ethical principles or norms leave some "moral free space" for the people in a particular country (or local culture or even a company) to make specific interpretations of what other actions may or may not be permissible within the bounds defined by universal ethical principles. D. Universal ethical norms always take precedence over local ethical norms. E. Integrated social contracts theory rejects the slippery slope of ethical relativism and embraces ethical universalism.

E

27. Competitive pressures associated with the threat of entry are greater in all of the following situations, EXCEPT when: A. incumbent firms are willing to strongly contest the entry of newcomers with moves designed to make entry unprofitable. B. a large pool of potential entrants exists, some of which have the capabilities to overcome high entry barriers. C. entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents. D. existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence. E. customers have low brand preferences and low degrees of loyalty to seller.

E

28. The best test of whether potential entry is a strong or weak competitive force is: A. the strength of buyer loyalty to existing brands. B. whether the industry's driving forces make it harder or easier for new entrants to be successful. C. whether the strategies of industry members are well-matched to the industry's key success factors. D. whether there are any vacant spaces on the industry's strategic group map. E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

E

28. The characteristics of a strong-culture company include all of the following EXCEPT: A. deeply rooted values and operating approaches that "regulate" the conduct of a company's business and the climate of its workplace. B. strong managerial commitment to display company values and principles in their own actions and behavior. C. dedicated efforts on the part of management to communicating values and business principles to organization members and explaining how they relate to the company's business environment. D. ingrained shared values and business principles guide management in making decisions. E. co-worker peer pressure to challenge cultural norms.

E

28. Which of the following is NOT the result of a well-conceived and communicated strategic vision? A. Senior executives solidify their own view of the firm's long-term direction. B. The risk of rudderless decision-making is minimized. C. Organizational members support the changes internally that will help make the vision a reality. D. The vision assists the organization in preparing for the future. E. Stockholders protest that the business is rudderless.

E

29. The difference between a merger and an acquisition relates to: A. strategy and competitive advantage. B. the presence of available resources and competitive capabilities. C. whether the end result is related to horizontal or vertical scope. D. creating a more cost-efficient operation out of the combined companies. E. the details of ownership, management control, and the financial arrangements.

E

29. Which of the following is NOT typically a trigger to an evolving strategy? A. The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations B. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy C. The need to abandon some strategy features that are no longer working well D. The need to respond to the newly initiated actions and competitive moves of rival firms E. The need to respond to short-term swings in the stock market

E

29. Within the integrated social contracts approach, we find that a multinational company's code of conduct involves universal norms that must be enforced worldwide and also the inclusion of local moral standards (traditions and cultures) by the host country, thereby allowing for ethical diversity which entails: A. the self-righteous company trying to operate as a standard bearer of morality worldwide. B. the disturbing case where a multinational's ethical conduct is found to be no higher than those local ethical norms, where local ethical norms permit practices generally considered immoral. C. the necessity to activate compromises on what is ethically permissible and what is not. D. much internal conflict because "first-order" ethical norms always take precedence over local "second-order" norms. E. a "no compromise" position in instances involving universally applicable ethical norms on what is ethically permissible and what is not.

E

4. Which of the following is NOT one of the principal components of strategic significance in the PESTEL analysis? A. Political factors including the extent to which government intervenes in the economy B. Economic conditions that include the general economic climate and specific factors such as interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can affect consumer confidence C. Sociocultural forces including societal values, attitudes, cultural factors, and lifestyles that impact business D. Technological factors that include the pace of change and technical developments that have the potential for impacting society E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business

E

40. In the course of crafting a strategy, which of the following is NOT a common management function? A. Abandoning certain strategy elements that have grown stale or become obsolete B. Modifying the current strategy when market and competitive conditions take an unexpected turn or some aspects of the company's strategy hit a stone wall C. Modifying the current strategy in response to the fresh strategic maneuvers of rival firms D. Taking proactive actions to improve this or that piece of the strategy E. Sharing the strategy with the public to gain additional customer and shareholder support

E

40. Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on: A. the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive. B. how many buyers are engaged in collaborative partnerships with sellers. C. whether entry barriers are high or low and the size of the pool of likely entry candidates. D. whether the overall quality of the items being furnished by industry members is rising or falling. E. whether demand-supply conditions represent a buyer's market or a seller's market.

E

41. The traits of the capability building process involve all of the following EXCEPT: A. evolving changes in customer needs and competitive conditions that often require tweaking and adjusting a company's portfolio of competencies and intellectual capital to keep its capabilities freshly honed and on the cutting edge. B. a core competence or capability that emerges incrementally out of company efforts either to bolster skills that contributed to earlier successes or to respond to customer problems, new technological and market opportunities, and the competitive maneuverings of rivals. C. core competencies or capabilities that are most often bundles of skills and know-how that grow out of the combined efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. D. the key to leveraging a core competence into a distinctive competence (or transforming a capability into a competitively superior capability), which concerns concentrating more effort and talent than rivals on deepening and strengthening a competence or capability so as to achieve the dominance needed for competitive advantage. E. saving time by creating capabilities from scratch to remain aligned with external conditions and company strategy rather than updating and remodeling existing capabilities.

E

41. Which of the following is NOT one of the ways managers can enhance differentiation based on value drivers? A. Striving to create superior product features, design, and performance B. Striving for innovation and technological advances C. Pursuing continuous quality improvement D. Increasing the intensity of marketing, brand building, and sales activities E. Seeking out low-quality inputs

E

41. Which of the following is NOT true regarding the effect of ethical standards on a company's strategy? A. An unethical strategy reflects badly on the character of the company personnel involved. B. A strategy that is unethical in whole or in part is morally wrong. C. Pursuing an unethical strategy damages a company's reputation and can have costly consequences. D. An ethical strategy is good business and is in the best interest of shareholders. E. An ethical strategy results in higher employee turnover.

E

42. Buyer bargaining power is stronger when: A. winning the business of certain high-profile customers offers a seller important market exposure or prestige. B. the extent and importance of collaborative partnerships and alliances between particular sellers and buyers is credible. C. buyers cannot integrate backward into the product market of sellers. D. sellers' products are differentiated, making it easy and inexpensive for buyers to switch to competing brands. E. the industry's products are standardized or undifferentiated.

E

42. For an unrelated diversification strategy to produce financial results above that of stand-alone entities, executives must do all of the following EXCEPT: A. diversify into businesses that can produce consistently good earnings and returns on investment and thereby satisfy the attractiveness test. B. negotiate favorable acquisition prices (to satisfy the cost-of-entry test). C. do a superior job of corporate parenting via high-level managerial oversight and resource sharing, financial resource allocation and portfolio management, or restructuring underperforming businesses (to satisfy the better-off test). D. satisfy the attractiveness test, the cost-of-entry test, and the better-off test. E. leverage the cross-business strategic fit advantage effectively

E

43. The strength of the beliefs underlying the moral case for an ethical strategy relates to all EXCEPT which of the following? A. It begins with managers who themselves have strong character (for example, who are honest, have integrity, and truly care about how they conduct a company's business). B. It starts with managers who walk the talk in displaying the company's stated values. C. It involves managers with high ethical principles and standards who are advocates of a corporate code of ethics and strong ethics compliance and are genuinely committed. D. It starts with managers who understand there is a big difference between adopting values statements superficially and truly accepting a company's actual strategy and business conduct. E. It starts with mangers that involve themselves in creating strategies based on risks and loss of reputation that implementing an unethical strategy can cost.

E

44. Approaches to enhancing differentiation through changes in the value chain do NOT include: A. coordinating with retailers to enhance the buying experience and building a company's image. B. coordinating with suppliers to speed up new product development cycles. C. coordinating with distributors or shippers to lower shipping costs. D. collaborating with suppliers to improve many dimensions affecting product features and quality. E. coordinating with employees to create a greater incentive systems to encourage worker productivity

E

46. A computer chip manufacturing giant decides to outsource its operations to a new geographical location with cheaper labor amidst ongoing labor strikes in a few of its existing locations (due to proposed job cuts). This draws criticism in its new market and affects its current market position and productivity. Which of the following would be an appropriate reactive (emergent) strategy while moving forward? A. Hiring and training new talent to begin operations in the emerging market B. Acquiring a local computer chip marketing and distribution specialist firm in the new location C. Cancelling the idea of outsourcing and retaining the existing the workforce to run operations D. Shifting the existing workforce to the new geographical location and paying them according to new standards E. Cancelling the job cuts till the market situation and entry operations stabilize

E

46. Which of the following is NOT accurate as concerns a company's competencies and capabilities? A. Competencies and capabilities that grow stale can impair competitiveness unless they are refreshed, modified, or even phased out and replaced in response to ongoing market changes and shifts in company strategy. B. Core competencies have to be tweaked and adjusted to keep them fresh and responsive to changing customer needs and market conditions. C. The imperatives of keeping capabilities in step with ongoing strategy and market changes make it appropriate to view a company as a bundle of evolving competencies and capabilities. D. Even after core competencies and competitive capabilities are in place and functioning, company managers can't relax. They still have to wrestle with when and how to recalibrate existing competencies and capabilities and when and how to develop new ones. E. When a company succeeds in hiring talented employees and training them properly, competencies and capabilities tend to develop quickly and, once put in place, can last for a decade or more.

E

48. A "balanced scorecard" for measuring company performance: A. entails putting equal emphasis on financial and strategic objectives. B. entails putting balanced emphasis on profit and non-profit objectives. C. prevents the drive for achieving financial objectives from overwhelming the pursuit of strategic objectives. D. prevents the drive for achieving strategic objectives from overwhelming the pursuit of financial objectives. E. strikes a "balance" between financial and strategic objectives.

E

48. A company's resource weaknesses can relate to all of the following EXCEPT: A. inferior or unproven skills, expertise, or intellectual capital in competitively important parts of the business. B. something that it lacks or does poorly in comparison to rivals. C. deficiencies in competitively important physical, organizational, or intangible assets. D. missing or competitively inferior capabilities in key areas. E. rare resources and capabilities.

E

48. A differentiation-based competitive advantage: A. nearly always is attached to the quality and service aspects of a company's product offering. B. usually is the result of highly effective marketing and advertising to enhance the brand, raise awareness, and build consistent customer experience. C. requires developing at least one distinctive competence that buyers consider valuable. D. hinges on a company's success in developing top-of-the-line product features that will command the highest price premium in the industry. E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or noneconomic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

E

48. As a rule, the key indicators of industry attractiveness, for all the industries represented in a diversified company's business portfolio, should NOT be measured on such attractiveness factors as: A. market size and projected growth rate. B. emerging opportunities and threats, and the intensity of competition. C. resource requirements and the presence of cross-industry strategic fits. D. seasonal and cyclical factors, industry profitability, and whether an industry has significant social, political, regulatory, and environmental problems. E. the utility of the products for consumers from all age-groups.

E

48. Buyers are in position to exert strong bargaining power in dealing with sellers when: A. their costs to switch to competing brands or to substitute products are relatively high. B. a particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands. C. they buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products, prices, and costs. D. buyer demand is growing rapidly. E. buyers are price-sensitive due to the product representing a significant fraction of their purchases.

E

49. The notion of social responsibility as it applies to businesses is concerned with: A. a company's duty to put the public interest ahead of shareholder interests. B. societal expectations that all company stakeholders will be treated equally and fairly. C. a company's duty to establish a loyal workforce. D. the responsibility that top management has for ensuring that the company's actions and decisions are in the best interest of stakeholders at large. E. a company's duty to operate in an honorable manner and provide good working conditions for employees.

E

49. Which of the following does NOT describe an unhealthy company culture? A. Insular and inwardly-focused B. Change-resistant C. Unethical and greed-driven D. Politicized E. Hyper-adaptive

E

5. A company's culture is NOT manifested in which of the following? A. Its approaches to people management and problem-solving and in the "chemistry" and "personality" that permeates the work environment B. Its revered traditions and the stories that get told over and over to illustrate the importance of certain values C. Its acceptance of the peer pressures that exist to do things in particular ways and conform to expected norms D. Its approach to people management and its official policies, procedures, and operating practices that paint the white lines for the behavior of company personnel E. Its strategic vision, strategic intent, and strategy

E

5. Key "functional" strategies of a company include all of the following EXCEPT: A. R&D, technology, and product design strategies. B. production and information technology and supply chain management strategies. C. human resource and finance strategies. D. sales, marketing, and distribution strategies. E. alliance and partnerships as well as merger and acquisition growth strategies.

E

50. A strategy of vertical integration can have both important strengths and weaknesses depending on all of the following, EXCEPT: A. whether it can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. the impact on investment costs, flexibility, and response times. C. the administrative costs of coordinating operations across more vertical chain activities. D. how difficult it will be for the company to acquire the set of skills and capabilities needed to operate in another stage of the vertical chain. E. whether competitors outsource any of their value chain activities.

E

50. Achieving a differentiation-based competitive advantage does NOT involve: A. incorporating product attributes and user features that lower a buyer's overall cost of using the product. B. incorporating features that raise the performance a buyer gets from using the product. C. incorporating features that enhance buyer satisfaction in noneconomic or intangible ways. D. delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match. E. appealing to buyers on the basis of attributes that rivals are emphasizing

E

50. All of the following are distinctive characteristics of an unhealthy corporate culture EXCEPT: A. the presence of counterproductive cultural traits that adversely impact the work climate and company performance. B. a preoccupation with risk management and capitalizing on related market opportunities. C. a decision-making effort that is subject to pressure from many different cliques. D. ethical behavior that is driven by subcultures. E. a strong fixation on attending to what customers are saying and how their needs and expectations are to be met.

E

50. In which one of the following instances is the training and retraining of employees likely to make the LEAST important contribution to good strategy execution? A. When a company shifts to a strategy requiring different skills, competitive capabilities, managerial approaches, and operating methods B. When an organization is striving to build skills-based competencies C. When technical know-how is changing so rapidly that a company loses its ability to compete unless its skilled people have cutting-edge knowledge and expertise D. When the chosen strategy calls for a deeper technological capability or building and using new capabilities E. When the strategy execution effort is based on tried-and-true operating practices that vary little from year to year

E

52. A weighted industry attractiveness assessment is generally analytically superior to an unweighted assessment because: A. a weighted ranking identifies which industries offer the best/worst long-term profit prospects. B. an unweighted ranking doesn't discriminate between strong and weak industry driving forces and industry competitive forces. C. it does a more accurate job of singling out which industry key success factors are the most important. D. an unweighted ranking doesn't help identify which industries have the easiest and hardest value chains to execute. E. the various measures of attractiveness are not likely to be equally important in determining overall attractiveness.

E

52. Accessing capabilities through an external source can be accomplished through all of these EXCEPT: A. outsourcing, but depends on what can safely be delegated to outside suppliers. B. joint ventures, which depend on how well the partners will work together. C. strategic alliances, which should be selected as much for management style, culture, and goals as for their resources and capabilities. D. learning-based collaborative partnerships for the purpose of learning how the partner does things, internalizing its methods, and thereby acquiring its capabilities. E. promoting qualified people with the right know-how in a timely and cost-effective manner.

E

52. Which of the following is NOT a factor that makes a politicized internal environment so unhealthy? A. The political infighting that consumes a great deal of organizational energy B. The continuous empire-building that is a common practice as managers pursue their own agendas C. The building of autonomous fiefdoms that pervades the work climate D. The overabundance of political maneuvering that takes away from efforts to execute strategy E. The taking of positions on issues

E

53. A company's social responsibility strategy typically comprises all of the following EXCEPT: A. actions to enhance workforce diversity and make the company a great place to work. B. making charitable contributions and donating money and the time of company personnel to community service endeavors. C. actions to protect or enhance the environment. D. conscious efforts to ensure that all elements of the company's strategy are ethical and that its actions protect or enhance the environment (beyond what is legally required). E. actions to keep the company's profits at a reasonable and acceptable level to ensure the company's products/pricing will not be viewed by the general public as obscenely high or exorbitant.

E

53. The broad areas that internal information business systems need to cover include all of the following EXCEPT: A. financial performance data. B. supplier/strategic partner data. C. customer data. D. operations data. E. competitor data.

E

54. Superior strategy execution capabilities are: A. easy for rivals to copy. B. socially simple.. C. develop quickly. D. easy to achieve. E. hard to imitate.

E

54. What hurdles are present in calculating industry attractiveness scores? A. Deciding on the appropriate weights for the attractiveness measures B. Different analysts use different weights for the different attractiveness measures C. Gaining sufficient command of the industry to assign more accurate and objective ratings D. Deciding the impact of strategic fits to unrelated and related diversification E. Deciding whether a business is related or unrelated

E

54. Which of the following does NOT define an unethical and greed-driven culture? A. Company managers and staff have little regard for ethical standards. B. Company executives are driven by greed and ego gratification. C. Executives exude an "ends-justify-the-means" mentality in pursuing overambitious operating and financial targets. D. Companies adopt accounting principles that make their financial performance appear better than it really is. E. Frontline employees display high-performance behaviors and a passion for making the company successful.

E

64. Checking the competitive advantage potential of cross-business strategic fits in a diversified company involves evaluating the extent to which sister businesses present opportunities: A. to combine the performance of certain cross-business activities and thereby reduce costs. B. to transfer skills, technology, or intellectual capital from one business to another. C. for the company's different businesses to share use of a well-respected brand name. D. for sister businesses to collaborate in creating valuable new competitive capabilities. E. to create a positive image in the industry irrespective of the financial performance of its businesses.

E

64. In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence, managers are well advised to use all of the following incentives EXCEPT: A. providing attractive perks and fringe benefits. B. giving awards and public recognition to high performers and showcasing company successes. C. creating a work atmosphere in which there is genuine caring and mutual respect among workers and between management and employees. D. relying on opportunities for promoting from within wherever possible. E. .withholding information from employees about financial performance, strategy, and competitors' actions.

E

64. Sourcing a supply from a small, women-owned business is an example of a corporate social responsibility action to: A. enhance employee well-being. B. support philanthropy. C. protect and sustain the environment. D. ensure honorable and ethical action. E. promote workforce diversity.

E

64. The menu of actions management can take to change problem culture does NOT include which of the following? A. Making a compelling case for why the company's new strategic direction and culture-remodeling efforts are in the organization's best interests and why company personnel should wholeheartedly join the effort to doing things somewhat differently B. Replacing senior executives who are strongly identified with the old culture and who may be stonewalling needed organizational and cultural changes C. Promoting individuals who are known to possess the desired cultural traits, who have stepped forward to advocate the shift to a different culture, and who can serve as role models for the desired cultural behavior D. Revising policies and procedures in ways that will help drive cultural change E. Shifting from decentralized to centralized decision-making so as to give senior executives more authority and control in driving the cultural change

E

65. Checking a diversified company's business portfolio for the competitive advantage potential of cross-business strategic fits does NOT involve ascertaining the extent to which sister business units: A. have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs. B. have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another. C. have opportunities to share use of a well-respected brand name. D. have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources. E. are cash cows and which ones are cash hogs.

E

67. Which of the following does NOT describe the standard type of structural form of organization? A. A functional structure where function is a major step in the firm's value chain B. A simple structure where all major decisions and oversight are a duty of the central executive C. A multidivisional structure where each division of the firm is an independent profit center D. A matrix structure where there are two or more divisions organized to enhance cross-communication E. A network structure where independent organizations are involved in a common undertaking

E

68. A reward system that accentuates positive rewards for good performance: A. works best in strong culture organizations, while negative motivational approaches and reward systems tend to be most successful in weak culture organizations. B. is especially effective in aligning the well-being of organizational members with achieving the company's performance targets; reward systems with negative elements tend to be very dysfunctional in motivating employees. C. seldom works very well because the threat of denying rewards to sub-par performers is typically the most powerful motivator. D. works fine so long as 100 percent emphasis is placed on monetary incentives. E. has considerable appeal because when cooperation is positively enlisted and rewarded, rather than strong-armed by orders and threats (implicit or explicit), people tend to respond with more enthusiasm, dedication, creativity, and initiative.

E

7. In formulating an action agenda to implement and execute a new or different strategy, the place for managers to begin is with: A. the task of revising and enhancing the company's core competencies. B. choosing which leadership style to employ in trying to carry out the strategy successfully. C. evaluating whether existing policies and procedures are adequately strategy-supportive. D. allocating more resources to strategy-critical parts of the business. E. a probing assessment of what the organization must do differently and better to carry out the strategy successfully.

E

7. Initiating actions to boost the combined performance of the corporation's collection of businesses includes all of the following strategic options, EXCEPT: A. sticking closely with the existing business lineup and pursuing available opportunities. B. broadening the scope of diversification by entering additional industries. C. divesting some businesses and retrenching to a narrower collection of businesses. D. restructuring the entire company by adding and removing businesses to improve overall performance. E. refocusing the existing businesses on new substitute product-line opportunities outside the existing industry framework.

E

70. Symbolic culture changing actions include all of the following EXCEPT: A. leading by example. B. reinforcing and celebrating culture-change successes. C. praising individuals and groups that exemplify the new desired behavior. D. ensuring top executives' actions match their rhetoric. E. revising policies and procedures in ways that will help drive cultural change.

E

73. In leading the push for proficient strategy execution and operating excellence, the roles of top-level managers include all of the following EXCEPT: A. being out in the field and seeing how well operations are going. B. delegating authority to middle and lower-level managers and creating a sense of empowerment among employees to move the implementation process forward. C. gathering information firsthand and gauging the progress being made. D. learning the obstacles in the path of good execution and clearing the way for progress. E. holding periodic ceremonies to honor people who excel in displaying the company values and ethical principles.

E

73. Which of the following is NOT a characteristic of a highly centralized organizational structure? A. Top-level managers retain decision authority for most strategic and operating activities. B. Strict control and enforcement of detailed procedures backed by rigorous managerial accountability is the most reliable way to keep the daily execution of strategy on track. C. Tight control from the top is a more effective means for coordinating company actions and makes it easy to fix accountability when things do not go well. D. One of the basic tenets is that most company personnel have neither the time nor the inclination to direct and properly control the work they are performing and, further, they lack the knowledge and judgment to make wise decisions about how best to do their work. E. The decision about where to draw the divisional lines depends foremost on the nature of the relatedness and the strategy-critical building blocks, in terms of which businesses have key value chain activities in common.

E

74. A disadvantage of the decentralized organization is that it: A. lengthens response times by those closest to the market conditions because they must seek approval for their actions. B. does not encourage responsibility among lower-level managers and rank-and-file employees. C. discourages lower-level managers and rank-and-file employees from exercising any initiative. D. diverts authority away from those closest to, and most knowledgeable about, the situation for actions. E. results in higher-level managers being unaware of actions taken by empowered personnel under their supervision.

E

74. An important consideration in designing a strategy-supportive reward system is to: A. link the payment of all monetary rewards to the company's bottom-line profitability. B. employ incentives that will help motivate employees to put in long hours and sacrifice personal ambitions and aspirations to pursue the priorities of management. C. choose those types of rewards and incentives that will focus employees' attention on total customer satisfaction. D. make across-the-board wage and salary increases the cornerstone of monetary rewards. E. make nonmonetary rewards and recognition an integral part of the reward system.

E

75. The options for allocating a diversified company's financial resources include all of the following EXCEPT: A. making acquisitions to establish positions in new businesses or to complement existing businesses. B. investing in ways to strengthen or grow existing businesses. C. funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. D. paying off existing debt and building cash reserves,. E. .decreasing dividend payments and/or selling shares of stock.

E

77. Corporate strategy options for already diversified companies include all of the following EXCEPT: A. broadening the company's business scope by making new acquisitions in new industries. B. divesting weak-performing businesses and retrenching to a narrower base of business operations. C. restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup. D. pursuing growth opportunities within the existing business lineup. E. pursuing certain acquisitions even if they have done badly or haven't quite lived up to expectations.

E

77. Which of the following is NOT characteristic of a compensation and reward system designed to help drive successful strategy execution? A. Tying incentives to performance outcomes directly linked to good strategy execution and financial performance B. Keeping the time between achieving the target performance outcome and the payment of the reward as short as possible C. Making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect D. Providing generous rewards for people who turn in outstanding performances E. Offering rewards that amount to 3 percent of an employee's total compensation

E

77. Which of the following managerial practices is NOT used to lead the effort to foster a results-oriented, high-performance culture? A. Using empowerment to help create a fully engaged workforce B. Making champions out of the people who spearhead new ideas and/or turn in winning performances C. Celebrating individual, group, and company successes D. Treating employees as valued partners in the drive for operating excellence and good business performance E. Placing a premium on not making mistakes, prompting managers to lean toward safe, conservative options intended to maintain the status quo

E

78. Which of the following is most likely to be morally valid from the perspective of ethical relativism? A. Bribing a government official to allow you to transfer gambling winnings to a tax haven B. Performing genital mutilations on nonconsenting female teens C. Employing as laborers children under the age of nine D. Agreeing to a country's policy of prohibiting the education of females E. Bribing a government official in an underdeveloped country to obtain a permit to build a hospital

E

79. Which of the following builds a moral case for corporate social responsibility and environmentally sustainable business practices? A. Socially responsible actions and sustainable business practices can lower costs and enhance employee recruiting and workforce retention. B. Opportunities for revenue enhancement may also come from CSR and environmental sustainability strategies. C. C.Well-conceived CSR strategies and sustainable business practices are in the best long-term interest of shareholders. D. A business engages in ordinary decency and civic-mindedness, and contributes to society's wellbeing. E. A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents.

E

79. Which of the following is NOT an example of leadership actions or managerial practices taken to foster a results-oriented, high-performance culture? A. Treating employees as valued partners B. Utilizing people-management practices to build morale and foster pride C. Setting stretch objectives and clearly communicating expectations for reaching targets D. Using motivational techniques and compensation incentives to inspire employees E. Following a must-be-invented-here mindset

E

8. Diversification becomes a relevant strategic option for a company EXCEPT when it: A. spots opportunities to expand into industries whose technologies and products complement its present business. B. leverages existing resources and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets. C. has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D. can open up new avenues for reducing costs by diversifying into closely related businesses. E. expands into additional businesses that unlock possibilities for a comprehensive cost enhancement strategy.

E

8. Which of the following generic types of competitive strategies is typically the "best" strategy for a company to employ? A. A strategy that seeks to underprice rivals on comparable products that attract a broad spectrum of buyers B. A strategy that seeks to differentiate product offerings from rivals by offering superior attributes that attract a broad spectrum of buyers C. A strategy that concentrates on a narrow buyer segment and outcompetes rivals by offering niche members customized attributes D. A strategy that concentrates on value-conscious buyers and outcompetes rivals by offering products at attractive prices E. A strategy that is customized to fit the macro-environment and industry and employs resources and capabilities that rivals have trouble duplicating

E

80. A company that is already diversified may choose to broaden its business scope by building positions in new related or unrelated businesses because of all of the following EXCEPT: A. it has resources or capabilities that are eminently transferable to other related or complementary businesses. B. the company's growth is sluggish and it wants the sales and profit boost that a new business can provide. C. management wants to lessen the company's vulnerability to seasonal or recessionary influences or to threats from emerging new technologies, legislative regulations, and new product innovations that alter buyer preferences and resource requirements. D. it wants to make new acquisitions to strengthen or complement some of its present businesses, market positioning, and competitive capabilities. E. its top management wants to increase its compensation.

E

83. Diversified companies striving to capture the benefits of synergy between separate businesses have to be aware of all of the following challenges EXCEPT: A. giving business-unit heads full rein to operate independently. B. having pieces of strategically relevant activities and capabilities scattered across many departments, with each pursuing its own priorities, projects, and agendas. C. centralizing performance of functions requiring close coordination at the functional level. D. serving the interests of individual businesses and not the company as a whole. E. forming cross-business strategic fit by enforcing close collaboration.

E

83. Retrenching to a narrower diversification base can be attractive or advisable EXCEPT when: A. certain businesses have questionable long-term potential. B. a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on. C. certain business units are weakly positioned and show poor prospects for providing a good return on investment. D. market conditions in a once-attractive business have badly deteriorated. E. business units are cash cows with promising futures.

E

85. Which of the following is NOT a characteristic of a network structure? A. It ensures that the right partners are included and the activities are coordinated. B. It encourages a more effective collaboration and cooperation among partners. C. It includes a hand-picked, integrated network of suppliers. D. It is an arrangement of independent organizations involved in a common undertaking. E. It established that no one firm has a central control over the others.

E

86. A company must do all of the following to match structure to strategy EXCEPT: A. choose a basic organizational design and modify it to fit the company's particular business. B. supplement the design structure with coordinating mechanisms. C. institute networking and communication arrangements to support strategy execution. D. set up "ideal" organizational arrangements despite having to disturb existing relationships. E. knit the efforts of outsourced groups together.

E

88. Conditions that may make corporate restructuring strategies appealing include all of the following EXCEPT: A. ongoing declines in the market shares of one or more major business units that are falling prey to more market-savvy competitors. B. a business lineup that consists of too many slow-growth, declining, low-margin, or competitively weak businesses. C. an excessive debt burden with interest costs that eat deeply into profitability. D. ill-chosen acquisitions that haven't lived up to expectations. E. a business lineup that consists of too many cash cow businesses.

E

89. Which of the following is NOT a good candidate for divestiture in a corporate restructuring effort? A. Business units that lack strategic fit with the businesses to be retained B. Weak performers C. Businesses in unattractive industries D. Businesses that are cash hogs or that lack other types of resource fit E. Businesses compatible with the company's revised diversification strategy

E

9. Challenging a struggling rival can do all of the following EXCEPT: A. sap the rival's financial strength and competitive position. B. weaken the rival's resolve. C. accelerate the rival's exit from the market. D. threaten the rival's overall survival in the market. E. strengthen the rival's loyal following.

E

Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex? A. Because factors that affect industry competitiveness vary from country to country B. Because of the potential for location-based advantages to conducting value chain activities in certain countries C. Because different government policies and economic conditions make the business climate more favorable in some countries than others D. Because of the risks for shifts in currency exchange rates E. Because similarities in buyer tastes and preferences facilitate standardization of products and services

E. Because similarities in buyer tastes and preferences facilitate standardization of products and services

Competing in the markets of foreign countries generally does NOT involve which of the following? A. Country-to-country differences in consumer buying habits and buyer tastes and preferences B. Country-to-country variations in host government restrictions and requirements and fluctuating exchange rates C. Whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide D. In which countries to locate company operations for maximum locational advantage, given country-to-country variations in wage rates, worker productivity, energy costs, tax rates, and the like E. Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market

E. Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market

Which of the following is NOT an advantage of strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms? A. Competing on a more global scale while still preserving their independence B. Gaining better access to scale economies in production and/or marketing C. Filling competitively important gaps in their technical expertise and/or knowledge of local markets D. Sharing distribution facilities and dealer networks, thus mutually strengthening their access to buyers E. Creating permanent arrangements between the domestic and foreign firms

E. Creating permanent arrangements between the domestic and foreign firms

Which of the following exemplifies location-based advantage for the companies competing on an international basis? A. Microsemi Corporation acquires California based Actel Corporation. B. RBC Wealth Management closes operations in South Florida. C. Samsung diversifies and ventures into textiles and food processing. D. Hyundai signs a memorandum of understanding with the government of South Korea to halt exports. E. De Beers sets up operations in the mining region of South Africa.

E. De Beers sets up operations in the mining region of South Africa.

Which of the following is an example of a modification in the company's business model to accommodate the unique local circumstances of developing countries? A. Mahindra and Mahindra ranked number one in J. D. Power Asia Pacific's new-vehicle overall quality category. B. Home Depot could rely on its value propositions only in some developing countries. C. Unilever developed a low-cost detergent, named Wheel, for the Indian market. D. Japan is known for its competitive strength in consumer electronics. E. In China, Dell moved from its traditional Internet-based orders to orders over phone and fax.

E. In China, Dell moved from its traditional Internet-based orders to orders over phone and fax.

Which of the following statements regarding multidomestic and global competition is false? A. In global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries. B. In globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries. C. In multidomestic competition, there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets. D. With multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries. E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

Which of the following exemplifies cross-country differences in demographic, cultural, and market conditions? A. Nike produces its own line of skate shoes. B. Starbucks acquires a large coffee farm in Costa Rica. C. Ireland provides low-costs loans to foreign entrants to stimulate capital investment. D. Intel's silicon chips are identical across the world. E. McDonald's offers 100% beef-free products in its outlets in India.

E. McDonald's offers 100% beef-free products in its outlets in India.

Which of the following is the most unlikely element of a localized multidomestic strategy? A. Granting country managers fairly wide strategy-making latitude B. Scattering plants across many host countries, each producing product versions for local area markets C. Adapting marketing and distribution to the buying habits, customs, and culture of each host country D. Considering the preference for local suppliers (use of some local suppliers may be mandated by host governments) E. Selling directly to buyers (perhaps via the company's website) to avoid having to establish networks of wholesale/retail dealers in each country market

E. Selling directly to buyers (perhaps via the company's website) to avoid having to establish networks of wholesale/retail dealers in each country market

What does the World Trade Organization (WTO) NOT do primarily? A. Promotes fair trade practices B. Actively polices dumping C. Deals with the rules of trade between nations D. Helps producers, exporters, and importers conduct business E. Sets countries' tariff rates

E. Sets countries' tariff rates

Which of the following is NOT a factor analyzed and relied on by firms when developing competitive strength in a foreign market? A. The relative size of the market, its growth potential, and the nature of domestic buyers' needs and wants B. The availability, quality, and cost of raw materials and other inputs that firms will require to produce their products and services C. The development of different styles of management, organization, and strategy D. The degree of collaboration with key suppliers and the greater the knowledge sharing throughout the related-industry cluster E. The level of industry-related support activities to foster customization of products and services

E. The level of industry-related support activities to foster customization of products and services

The diamond framework is NOT LIKELY to answer which of the following questions about competing on an international basis? A. Where will the foreign entrants come from? B. Which countries have the weakest foreign rivals? C. What are the attributes of a country's business environment? D. What location of value chain activities is most beneficial? E. What are the disadvantages of allowing foreign competition?

E. What are the disadvantages of allowing foreign competition?

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following, EXCEPT: A. being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions. B. being in better position to choose where and how to challenge rivals. C. shortening delivery times to customers by having geographically scattered distribution facilities. D. locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers. E. centralizing value chain activities to foster just-in-time inventory activities.

E. centralizing value chain activities to foster just-in-time inventory activities.

Viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets include all of the following, EXCEPT: A. trying to change the local market to better match the way the company does business elsewhere. B. being prepared to modify aspects of the company's business model to accommodate local circumstances. C. preparing to compete on the basis of low price. D. staying away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances. E. focusing on local markets whose circumstances will be most challenging to the company's business model.

E. focusing on local markets whose circumstances will be most challenging to the company's business model.

The reasons why a company opts to expand outside its home market include all of the following EXCEPT: A. gaining access to new customers for the company's products/services. B. spreading its business risk across a wider market base. C. achieving lower costs through economies of scale, experience, and increased purchasing power. D. exploiting its core competencies and capabilities. E. identifying resources and capabilities in the company's home market.

E. identifying resources and capabilities in the company's home market.

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous in all of the following situations, EXCEPT: A. when high transportation costs make it expensive to operate from central locations. B. whenever buyer-related activities are best performed in locations close to buyers. C. if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions or (3) adverse political developments. E. if resources retain their foreign contexts so there is competitive advantage over a broader domain.

E. if resources retain their foreign contexts so there is competitive advantage over a broader domain.

A "think local, act local" multidomestic strategy works particularly well in all of the following situations, EXCEPT when there are: A. regulations enacted by the host governments requiring that products sold locally meet strictly defined manufacturing specifications or performance standards. B. significant country-to-country differences in customer preferences and buying habits. C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country. D. significant country-to-country differences in distribution channels and marketing methods. E. large demands to pursue conflicting objectives simultaneously.

E. large demands to pursue conflicting objectives simultaneously.

The risks of strategic alliances often include all of the following EXCEPT: A. conflicting objectives and strategies. B. deep differences of opinion about how to proceed operationally and strategically. C. important differences in corporate values. D. misunderstandings about appropriate ethical standards. E. potential for royalty from trustworthy firms.

E. potential for royalty from trustworthy firms.

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations in all of these situations, EXCEPT when: A. there are significant scale economies in performing an activity. B. the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C. when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D. certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. the addition of new production capacity will not adversely impact the supply-demand balance in the local market.

E. the addition of new production capacity will not adversely impact the supply-demand balance in the local market.

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous, EXCEPT when: A. buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers. B. buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations. C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D. there are diseconomies of scale in trying to operate from a single location. E. there are reasons to decouple buyer-related activities in favor of locational advantages.

E. there are reasons to decouple buyer-related activities in favor of locational advantages.

A global strategy is one in which a company performs all of the following tasks, EXCEPT: A. employs the same basic competitive approach in all countries where it operates. B. sells much of the same products everywhere. C. strives to build global brands. D. coordinates its actions worldwide with strong headquarters control represents a think-global, act-global approach. E. uses local brand names to cater to a country's specific needs.

E. uses local brand names to cater to a country's specific needs.

Companies operating in an international marketplace have to respond to all of the following, EXCEPT: A. whether to customize their offerings in each different country market to match the tastes and preferences of local buyers. B. whether to pursue a strategy of offering a mostly standardized product worldwide. C. how much to customize their offerings in each different country market to match the tastes and preferences of local buyers. D. the tensions between market pressures to localize a company's product offerings country by country and the competitive pressures to lower costs through greater product customization. E. whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to the local market.

E. whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to the local market.

A company's competitive strategy deals with: A. the specifics of management's game plan for competing successfully—its specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular kind of competitive advantage. B. what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on. C. its efforts to change its position on the industry's strategic group map. D. its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E. its plans for overcoming the five competitive forces.

a

A company's internal strengths should always serve as the basis of strategy because: A. placing heavy reliance on the company's best competitive assets is the soundest route to attracting customers and competing successfully against rivals. B. they represent what the company considers relevant despite the prevailing opportunities. C. they can overpower the impact of important external threats. D. they form the foundation of the firm's position in the marketplace. E. All of these.

a

A company's value-creating activities can offer a competitive advantage in one of two ways: A. contribute greater efficiency and lower costs and provide a basis for differentiation. B. contribute expense savings and enhance product exclusivity. C. reduce cost disadvantages and market price anomalies. D. contribute customer experience value and conserve operating functionality. E. contribute to competitive assets and continue distinctive competencies.

a

9. A powerful tool for sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace is termed: A. Resource and capability analysis B. SWOT C. Competitive analysis D. Financial and asset management analysis E. Value chain analysis

a

A Greenfield venture in a foreign market is one: A. where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up. B. where foreign facilities and marketing strategies are shared with local businesses. C. where the company learns through training by the foreign entity on how to compete. D. that supports exports into a foreign market by marketing indirectly thru local rivals. E. that offers lower risk and a faster path to financial returns.

a

A company attempting to be successful with a broad differentiation strategy has to: A. study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B. incorporate more differentiating features into its product/service than rivals. C. concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D. have a widely known and highly respected brand name image. E. provide a top-of-the-line product and sell it at premium prices.

a

Activity-based costing: A. is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost. B. involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival. C. is a powerful tool for identifying the different pieces of a company's value chain and classifying them as primary activities and support activities. D. involves determining which value chain activities represent variable costs and which represent fixed costs. E. is a tool for identifying the activities that cause a company's product to be strongly differentiated from the products of rivals.

a

Alliance management is considered an organizational capability and: A. develops over time, out of effort and learning. B. decreases a company's knowledge assets. C. creates successful strategic alliances. D. decreases a company's knowledge capabilities. E. rapidly transfers assets into the strategic alliance.

a

An example of how companies can revamp their value chain to reduce costs is: A. to increase service availability while reducing staffing requirements. B. to continue to utilize traditional methods of distribution and sales. C. to not make any changes in product manufacturing but change end distribution methods. D. to increase extra services to increase staffing requirements. E. to facilitate the learning curve by providing superior training to new employees.

a

An offensive to yield good results can be short if: A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign). B. competition creates an appealing new product. C. the technology needs debugging. D. new production capacity needs to be installed. E. consumer acceptance of an innovative product takes time.

a

Benchmarking involves: A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities. B. checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with. C. studying whether a company's resource strengths are more/less powerful than the resource strengths of rival companies. D. studying how a company's competitive capabilities stack up against the competitive capabilities of selected companies known to have world-class competitive capabilities. E. comparing the best practices in one industry against the best practices in another industry.

a

Benchmarking provides a company with which of the following? A. Hard evidence of cost competitiveness B. Proof of resource availability C. A company strategy D. Verification of total cost ownership E. Improvements to internal processes

a

Best-cost provider strategies are appealing in those market situations where: A. diverse buyer preferences make product differentiation the norm and where a large number of value-conscious buyers can be induced to purchase mid-range products. B. a company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance. C. buyers are more quality-conscious than price-conscious. D. there are numerous buyer segments, buyer needs are diverse across these segments, only a few of the segments are growing rapidly, and seller's products are strongly differentiated. E. buyers are more performance-conscious than value-conscious.

a

Best-cost provider strategies are: A. a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/service attributes while beating rivals on price. B. rewarded by providing buyers with the best attributes at the best cost. C. those strategy elements related to the low-cost provider in the largest and fastest growing (or best) market segment. D. those that stake out a middle ground between a focused advantage and low-cost advantage and appeal to broad market segments and narrowly defined customer propositions. E. All of these

a

Brands create customer loyalty, which in turn: A. increases the perceived cost of switching to another product. B. strengthens the product's quality. C. validates the motivation for alternate products. D. provides monetary incentive for using the product. E. All of these.

a

Broad differentiation strategies are well-suited for market circumstances where: A. there are many ways to differentiate the product or service that have value to buyers. B. most buyers have the same needs and use the product in the same ways. C. buyers are susceptible to clever advertising. D. barriers to entry are high and suppliers have a low degree of bargaining power. E. price competition is especially vigorous.

a

Broad differentiation strategies generally work best in market circumstances where: A. buyer needs and uses of the product are diverse and they are not fully satisfied by a standardized product. B. most buyers have similar needs and use the product in the same ways. C. the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D. buyers are price sensitive and buying switching costs are quite low. E. the five competitive forces are strong.

a

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if: A. it reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users. B. it can result in better coordination of the firm's direct sales activity to wholesalers and distributors C. it can establish a retail frontal attack while efficiently managing its backward (defensive) sales orientation. D. it combines the best of all sales channels and provides financial support to distribution allies. E. it creates a channel conflict, thereby providing competitive improvisation.

a

Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate: A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully. B. which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups. C. which competitors are employing offensive strategies and which competitors are employing defensive strategies. D. which competitors are likely to make money and which are likely to lose money in the years ahead. E. what the industry's key success factors are.

a

Calculating competitive strength ratings for a company and its rivals using the industry's most telling measures of competitive strength or weakness: A. is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage. B. is the most reliable indicator of which industry member has the highest overall product quality. C. is a powerful way of revealing which competitors are in the best and worst strategic groups. D. is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader. E. pinpoints which industry rivals are most insulated from the industry's driving forces.

a

Companies racing for global market leadership: A. generally have to consider establishing competitive positions in the markets of emerging countries. B. are well-advised to avoid all the risks and problems of competing in emerging country markets. C. seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D. can usually be expected to earn sizable profits quickly in emerging country markets. E. usually encounter very low barriers in entering the markets of emerging countries.

a

Cost-efficient management of a company's overall value chain activities requires that management: A. ferret out cost-saving opportunities in every part of the value chain. B. undertake an operations functionality redesign. C. establish sales productivity and operating practices guidelines. D. re-create rivals' assembly plant structuration savings. E. All of these

a

Easy-to-copy differentiating features: A. cannot produce sustainable competitive advantage. B. seldom are perceived by buyers as having much value. C. tend to give buyers a high degree of power in bargaining for a lower price. D. should never be incorporated in a company's product offering if its differentiation strategy is to succeed. E. lead to vigorous price competition.

a

Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where: A. the market is composed of distinctly different buyer groups who have different needs or use the product in different ways. B. most other rival firms are using a best-cost producer strategy. C. buyers have strong bargaining power and entry barriers are low. D. most industry rivals have weakly differentiated products. E. most industry participants are also using focused low-cost or focused differentiation strategies.

a

For a company to translate its performance of value chain activities into competitive advantage, it must: A. undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages. B. have more core competencies than rivals. C. have at least three distinctive competencies. D. have competencies that allow it to produce the highest-quality product in the industry. E. have more competitive assets than competitive liabilities.

a

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should: A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals. B. be something that a company does internally rather than in collaborative arrangements with outsiders. C. be patentable. D. be an industry key success factor and occupy a prime position in the company's value chain. E. have the potential for lowering the firm's unit costs.

a

For every emerging opportunity there exists: A. a market penetration curve, and this typically has an inflection point where the business model falls into place. B. an opportunity to achieve first-mover status, which depends on analyzing the competitive status curve where all the potential rivals are encoded. C. an emerging pitfall exists that is a counterpoint to the intended growth. D. a normal curve scenario which signifies the average growth curve will be opportunistic. E. All of these.

a

How valuable a low-cost leader's cost advantage is depends on: A. whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs. B. how easy it is for the low-cost leader to gain the biggest market share. C. the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs. D. the leader's ability to combine the cost advantage with a reputation for good quality. E. the low-cost leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs.

a

Identifying and assessing a company's resource strengths and weaknesses and its external opportunities and threats is called: A. a SWOT analysis. B. a competitive asset/liability analysis. C. a competitive positioning analysis. D. a strategic resource assessment. E. a company resource mapping.

a

Low-cost leaders, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable: A. positioned to deliver affordable luxury products at mass market quality. B. encouraged to exit the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. C. considered favorites to win the game of strategy in the long run. D. understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers.

a

Mergers and acquisitions are often driven by such strategic objectives as: A. expanding a company's geographic coverage or extending its business into new product categories. B. reducing the number of industry key success factors. C. reducing the number of strategic groups in the industry. D. facilitating a company's shift from a low-cost leadership strategy to a focused low-cost strategy. E. lengthening a company's value chain and thereby putting it in a better position to deliver superior value to buyers.

a

Organizational capabilities are virtually always: A. knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. B. more complex than resources and are exercised only through key personnel. C. require constant evaluation to ensure cooperative support from management. D. are easier and less challenging to categorize than resources because there are fewer to be concerned about. E. reflective of the industry's driving forces.

a

The characteristics of a world market where global competition prevails include: A. a market situation where competitive conditions across national markets are linked strongly enough to form a true world market and where leading competitors typically compete head to head in many different countries. B. minor cost variations from country to country (as concerns production, distribution, sales and marketing, and other primary components of the industry value chain) and minimal cross-country trade restrictions. C. a competitive environment comprised of so many competitors that no company has a sizable worldwide market share. D. many companies racing for global market leadership, with most contenders using the same basic type of competitive strategy and positioned in the same strategic group. E. low barriers to entry, such a large number of rivals that the actions of any one rival have little impact on the sales and market shares of other rivals, and key success factors that vary from country to country.

a

The chief difference between a broad differentiation strategy and a focused differentiation is: A. the size of the buyer group that a company is trying to appeal to. B. the degree of bargaining power that buyers have. C. whether the product is strongly differentiated or weakly differentiated from rivals. D. the type of value chain being used to achieve a differentiation-based competitive advantage. E. the number of upscale attributes incorporated into the product offering.

a

The culture of a company can be a cost-efficient value chain activity because it can: A. allow for safeguarding internalized operating benefits. B. distinguish a company's capacity integration efforts. C. spur worker pride in productivity and continuous improvement. D. foster quality technological enhancements. E. All of these.

a

The difference between a resource and a capability is: A. a resource is a productive input or competitive asset, while a capability is the capacity of the firm to perform some internal activity competently. B. a resource is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function. C. a resource is a mechanism used for carrying out some responsibility, while a capability possesses the qualities needed to do a particular thing. D. a resource is the firm's fixed assets, while a capability defines whether the firm is competent to perform some function. E. All of these.

a

The difference between political risks and economic risks is that: A. political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies. B. political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections. C. political rights stem from hostility to foreign business, while economic risks stem from the instability of the monetary system. D. political risks stem from risks due to exchange rate fluctuations, while economic risks stem from hostility to foreign business. E. political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

a

The formation of a new corporation, jointly owned by two or more companies agreeing to share in the revenues, expenses, and control, is known as: A. a joint venture. B. a limited liability company. C. a partnership. D. sole proprietorship. E. an S corporation.

a

The higher a company's costs are above those of close rivals, the more: A. competitively vulnerable the company becomes. B. a net profit margin analysis becomes vital. C. its value proposition remains attractive. D. important cost-tracking becomes. E. All of these.

a

The keys to maintaining a broad differentiation strategy are: A. to stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features. B. to charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal. C. to out-innovate and out-advertise rivals. D. to emphasize personalized customer service and to add as many differentiating features as possible. E. to keep prices close to the average of all rivals and to spend heavily on new product R&D.

a

The major avenues for achieving a cost advantage over rivals include: A. performing value chain activities more cost-effectively than rivals or revamping the firm's overall value chain to eliminate or bypass some cost-producing activities. B. having a management team that is highly skilled in cutting costs. C. being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture. D. outsourcing high-cost activities to cost-efficient vendors. E. paying lower wages and salaries than rivals.

a

The market opportunities most relevant to a particular company are those that: A. offer the best prospects for growth and profitability. B. provide a strong defense against threats to the company's profitability. C. embrace the most potential for product innovation. D. provide avenues for taking market share away from close rivals. E. hold the most potential to reduce costs.

a

The objective of a best-cost provider strategy is to: A. deliver superior value to value-conscious buyers at a comparatively lower price than rivals B. offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C. attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D. out-compete rivals using low-cost provider strategies. E. translate its best-cost status into achieving the highest profit margins of any firm in the industry.

a

The objective of differentiation: A. is to offer customers something rivals can't, at least in terms of the level of satisfaction. B. is to develop strategies that are different from those of rivals. C. is to establish objectives that are measurable and meaningful when it comes to sales growth. D. is to offer customers a sustainable competitive advantage. E. All of these.

a

The options for remedying a supplier-related cost disadvantage include: A. pressuring suppliers for more favorable prices, switching to lower-priced substitute inputs, and collaborating closely to identify mutual cost-saving opportunities. B. instituting forward vertical integration. C. shifting into the production of substitute products. D. shifting from a low-cost leadership strategy to a differentiation or focus strategy. E. cutting selling prices and trying to win a bigger market share.

a

The steps of SWOT analysis are: A. identifying the company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation, and translating the conclusions into strategic actions to improve the company's strategy. B. pinpointing the company's competitive assets, pinpointing its competitive deficiencies, and determining whether it enjoys a competitive advantage. C. determining whether the company has more competitive assets than competitive liabilities, determining whether the company has good market opportunities, and evaluating the seriousness of the threats to the company's future profitability. D. matching the company's strategy to its resource strengths, correcting the company's important resource weaknesses, and identifying the company's best market opportunities. E. benchmarking the company's strengths and weaknesses against those of key rivals, identifying its market opportunities and the external threats it faces, and determining the company's potential for establishing a competitive advantage over rivals.

a

The strategic impetus for forward vertical integration is to: A. gain better access to end users and better market visibility. B. achieve the same scale economies as wholesale distributors and/or retail dealers. C. control price at the retail level. D. bypass distributors and dealers and sell direct to consumers at the company's website. E. build a core competence in mass merchandising.

a

The strength of a "think local, act local" multidomestic strategy is that: A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country. B. each of a company's country strategies is almost totally different from and also unrelated to its strategies in other countries. C. the plants located in different countries can be operated independent of one another, thus promoting greater achievement of scale economies. D. it avoids host country ownership requirements and import quotas. E. it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

a

The target market of a best-cost provider is: A. value-conscious buyers. B. brand-conscious buyers. C. price-sensitive buyers. D. middle-income buyers. E. young adults (in the 18-35 age group).

a

The underlying criteria of a best-cost provider strategy usually is found in the ability of a company to: A. offer similar goods at more attractive prices. B. create attributes that appeal specifically to niche members. C. lower overall costs more than rivals in serving niche members. D. offer buyers something attractively different from competitors' offerings. E. None of these.

a

There are two approaches that can make the process of uncovering and identifying a firm's capabilities more systematic. They include: A. resources assessment and the functional approach. B. strengths valuations and weaknesses estimations. C. sustainability resource allocation methods and a resource bundling approach. D. cross-functional analysis and collaborative resource methodology. E. financial statement analysis and management support analysis.

a

Transferring core competencies and resource strengths from one country market to another is A. a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. B. best accomplished with a multidomestic strategy as opposed to a global strategy. C. feasible only with a global strategy; it can't be done with a multidomestic strategy. D. unlikely to result in a competitive advantage. E. nearly always the easiest and most sure-fire way to build competitive advantage in trying to compete successfully in foreign markets.

a

Uniqueness drivers are a: A. set of factors (analogous to cost drivers) that are particularly effective in having a strong differentiation effect. B. company's hidden success factor for creating over-the-top product features that will command the highest price in the industry. C. technique for easily identifying factors that validate the firm's performance. D. set of factors that verify the unique nature of the firm. E. All of these.

a

Using domestic plants as a production base for exporting goods to selected foreign country markets: A. can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets. B. can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country and does not have to compete head-to-head against strong host country competitors. C. can be a powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities. D. is usually a weak strategy when competitors are pursuing multi-country strategies. E. can be a powerful strategy because a company is not vulnerable to fluctuating exchange rates.

a

Value chain analysis and benchmarking in comparison to that of rivals: A. is one of the most useful ways a company can uncover and strengthen competitive advantages. B. allows a company to drive the impact of the five competitive forces. C. is one of the best ways for a company to avoid being impacted by the industry's driving forces. D. allows a company to move into a higher strategic group. E. helps neutralize external threats to a company's future business prospects.

a

Vertical integration strategies: A. extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. B. are one of the best strategic options for helping companies win the race for global market leadership. C. offer good potential to expand a company's lineup of products and services. D. are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E. is a good strategy option for helping a company revamp its value chain and bypass low value-added activities.

a

What is it called when a company sells its goods in foreign markets at prices that are below the prices at which it normally sells in its home market or well below its full costs per unit? A. Dumping practices. B. Price-clearing system. C. Clearance sale. D. Discounting practices. E. Competitive advantage.

a

What makes cross-border alliances an attractive strategic means of gaining a foothold in foreign markets? A. Alliances provide the flexibility to readily disengage when the purpose has been served or the benefits prove elusive and also provide the firm with some degree of autonomy and operating control, as well as independence. B. Alliances are permanent arrangements and thus are considered a long-term strategic advantage. C. Alliances bind firms to "local" customary behavior, language, and cultural identities and operating practices. D. Alliances are not relevant compared to acquisition approaches for foreign entry. E. Alliances direct the firm's competitive energies to each other instead of toward mutual rivals, allowing advanced internal strategic responses to differences in operating practices.

a

What strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders? A. A transnational strategy. B. An international strategy. C. A think-local, act-global strategy. D. A cross-border integrated strategy. E. A standardized integrated strategy.

a

What supports competitive offensives in one market with resources and profits diverted from operations in another market? A. Cross-market subsidization. B. A foreign market strategy. C. A domestic-only company. D. A home market offensive. E. A multidomestic company.

a

When an activity becomes something a company has learned to perform proficiently and capably, it is said to have: A. a competence. B. a competitive advantage over rivals. C. a key value chain proficiency. D. a distinctive capability. E. a resource advantage.

a

When firms are involved in a mix of in-house and outsourced activity in any given stage of the vertical chain, it is called: A. tapered integration. B. partial integration. C. full integration. D. forward integration. E. backward integration.

a

Whether a resource or capability can support a competitive advantage is determined by which two components of the four tests of competitive power analysis? A. Whether the resource or capability is competitively valuable and/or is something that rivals lack B. Whether the resource or capability is rare and/or is hard to copy C. Whether the resource or capability can be trumped and/or is hard to copy D. Whether the resource or capability is competitively valuable and/or there are good substitutes available for the resource E. Whether the resource or capability is hard to copy and/or can be trumped by different types of resources and capabilities

a

Which of the following areas within a company's total value chain system can managers use to improve efficiency and effectiveness? A. A company's own internal activity segments, the suppliers' part, and the forward (distribution) channel portion of the value chain system B. A company's reinforced activities identified as efficiency measures for improved effectiveness C. A company's comparative disadvantages schedule identified with benchmarking practices D. None of these. E. All of these.

a

Which of the following factors does not determine whether to employ the entry strategy options? A. Cross-border transfer activities and home country advantages B. The nature of the firm's objectives C. Whether the firm has a full range of resources and capabilities needed to operate abroad D. Country-specific factors such as trade barriers E. Transaction costs involved (the cost of contracting with a partner and monitoring compliance with the terms of the contract)

a

Which of the following is NOT a purpose of a defensive strategy? A. To increase the risk of having to defend an attack. B. To weaken the impact of any attack that occurs. C. To pressure challengers to aim their efforts at other rivals. D. To help protect a competitive advantage. E. To decrease the risk of being attacked.

a

Which of the following is NOT a viable strategy option for a local company in competing against global challengers? A. Using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments. B. Developing business models to exploit shortcomings in local distribution networks or infrastructures. C. Taking advantage of low-cost labor and other competitively important local workforce qualities. D. Transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale. E. Using acquisitions and rapid growth strategies to defend against expansion-minded multinationals.

a

Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries? A. A multi-country strategy is generally superior to a global strategy. B. There are country-to-country differences in consumer buying habits and buyer tastes and preferences. C. A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. D. Product designs suitable for one country are often inappropriate in another. E. Market growth rates vary from country to country.

a

Which of the following is NOT one of the pitfalls of pursuing a differentiation strategy? A. Over-emphasizing efforts to strongly differentiate the company's product from those of rivals rather than be content with weak product differentiation B. Offer trivial improvements in quality, service, or performance features C. Overcharging for the differentiating features D. Adding so many frills and extra features that the product exceeds the needs of buyers E. Overspending on efforts to differentiate the company's product offering

a

Which of the following is NOT one of the six questions that comprise the task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working? C. Are the company's cost structure and customer value proposition competitive? D. Is the company competitively stronger or weaker than key rivals? E. What strategic issues and problems merit front-burner managerial attention?

a

Which of the following is NOT one of the strategy options for competing in the markets of foreign countries? A. A profit sanctuary strategy. B. An international strategy. C. A global strategy. D. A multicountry strategy. E. A transnational strategy.

a

Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

a

Which one of the following is NOT one of the ways a company can strive to gain competitive advantage (or offset domestic disadvantages) by expanding into foreign markets? A. By competing in both developed and emerging country markets and/or by selling direct to foreign buyers via the company's website. B. By dispersing its activities among various countries in a manner that lowers costs. C. By transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets. D. By dispersing its activities among various countries in a manner that helps achieve greater product differentiation and/or working to deepen/broaden its resource strengths and capabilities. E. By using cross-border coordination of its strategic moves in ways that a domestic-only competitor cannot.

a

Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment? A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores. B. High scores indicate that a company is a power-user of best practices, while low scores signal minimal or ineffective adoption of best practices. C. The company with the lowest score has the lowest-cost value chain. D. The company with the lowest score has the strongest net competitive advantage over its rivals. E. High scores indicate which rivals are most vulnerable to competitive attack.

a

While low-cost providers are champions of frugality, they: A. seldom hesitate to spend aggressively on resources and capabilities that promise to drive costs out of the business. B. are never hesitant to eliminate costs so as to remain the low-cost provider. C. are not blinded by cost reduction, preferring product differentiation strategies that reflect cost-reductions rather than buyer needs and wants. D. are also champions of profitability by having prices lower than costs to gain volume gains. E. always anticipate negative feedback from stakeholders because of their spending habits.

a

Why do companies decide to enter a market? A. To capture economies of scale in product development, manufacturing, or marketing. B. To raise input costs through greater pooled purchasing power. C. To increase the rate at which they disperse experience and move up the learning curve. D. To concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere. E. To exploit the natural resources found within its home market.

a

With its focus on value-creating activities, the value chain: A. is an ideal tool for examining how a company delivers on its customer value proposition. B. preserves cost structure advantages. C. provides identification of customer differentiation shortfalls. D. is a recognized method for classifying the relevant support activities that are relevant to operations tasks. E. is crucial in understanding cost disadvantages and economies of scale and scope shortfalls.

a

34. Mergers and acquisitions: A. are nearly always successful in achieving their desired purpose. B. frequently do not produce the hoped-for outcomes. C. are generally less effective than forming alliances or partnerships with these same companies. D. are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. E. are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

b

46. A route to take in developing a differentiation advantage includes: A. incorporating product attributes and user features that raise the buyer's overall costs, but keep the price minimal. B. incorporating tangible features that add functionality, increase customer satisfaction with the product specifications, functions, and styling. C. signaling value by targeting sophisticated buyers. D. incorporating intangible features that enhance buyer satisfaction in economic ways. E. emphasizing high quality and performance of products through a standard and simple, no-fuss packaging.

b

80. In doing SWOT analysis, which one of the following is NOT an example of a potential resource weakness or competitive deficiency that a company may have? A. Less productive R&D efforts than rivals B. Having a single, unified functional strategy instead of several distinct functional strategies C. Lack of a strong brand image and reputation (as compared to rivals) D. Higher overall unit costs relative to rivals E. Too narrow a product line relative to rivals

b

A "think global, act global" approach to strategy-making is preferable to a "think local, act local" approach when: A. a big majority of the company's rivals are pursuing localized multidomestic strategies. B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. C. plants need to be scattered across many countries to avoid high shipping costs. D. market growth rates vary considerably from country to country. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

b

A "think-local, act local" multidomestic strategy entails: A. a narrow product line aimed at serving buyers in the same segments of country markets worldwide. B. giving local managers considerable strategy-making latitude and often producing different product versions for different countries. C. aggressive efforts to locate facilities in those country markets that have superior resources. D. pursuing strong product differentiation and competing in many buyer segments. E. extensive efforts to transfer a company's competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.

b

A productive input or competitive asset that is owned or controlled by a company is termed a: A. resource, which is the source of everything enjoyed by the firm. B. resource, and there are different types of resources at the firm's disposal that vary not only in kind but in quality as well. C. resource, which is common to the firm's strategy of facilitating and replicating what they do best. D. resource, and it can be tangible or intangible or both and provide substantial benefits to the firm's asset growth. E. All of these.

b

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world: A. is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real. B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real. E. is unaffected by changes in the valuation of foreign currencies against the Brazilian real—all that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

b

A broad differentiation strategy generally produces the best results in situations where: A. buyer brand loyalty is low. B. few rival firms are following a similar differentiation approach. C. new and improved products are introduced only infrequently. D. most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E. price competition is vigorous.

b

A company that does a first-rate job of managing its value chain activities relative to competitors: A. is likely to have more distinctive competencies than rivals. B. stands a good chance of profiting from its competitive advantage. C. is almost certainly going to have a longer and more profitable value chain. D. usually has strong proficiencies in activity-based costing and benchmarking. E. usually has the fewest primary activities and the lowest costs in the industry.

b

A company's biggest vulnerability in employing a best-cost provider strategy is: A. relying too heavily on outsourcing. B. getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies. C. getting trapped in a price war with low-cost leaders. D. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E. not having a sustainable distinctive competence in cost reduction.

b

A company's competitive strength scores pinpoint its strengths and weaknesses against rivals and: A. suggest the company use its strengths to exploit its own competitive liabilities. B. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities. C. point directly to the company to use its weaknesses as offensive moves to challenge rivals' weaknesses. D. suggest receptivity for astute companies to drive their operating practices if the strength scores are very low. E. point directly to accepting the competitive strength scores on face value.

b

A company's resources and capabilities represent: A. the firm's net working capital and related determinants for measuring operating performance and capabilities. B. the firm's competitive assets, which are considered big determinants of its competitiveness and ability to succeed in the marketplace. C. whether the firm has the industry's most efficient value chain. D. management's source of funding of new strategic initiatives. E. All of these.

b

A company's strengths are important because: A. they pave the way for establishing a low-cost advantage over rivals. B. they represent the quality of its competitive assets that enhance its competitiveness in the marketplace. C. they provide extra muscle in helping lengthen the company's value chain. D. they give it competitive protection against the industry's driving forces. E. they provide extra organizational muscle in turning a core competence into a key success factor.

b

A company's value chain identifies: A. the steps it goes through to convert its net income into value for shareholders. B. the primary activities and related support activities it performs in creating customer value. C. the series of steps it takes to get a product from the raw materials stage into the hands of end users. D. the activities it performs in transforming its competencies into distinctive competencies. E. the competencies and competitive capabilities that underpin its efforts to create value for customers and shareholders.

b

A global strategy allows for: A. the leading companies to compete for the biggest share of the world market, but only occasionally compete head to head in different countries. B. the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked. C. a company's overall market strength to be the sum of its market shares in each country market where it has a presence. D. the industry leaders to be foreign companies, while domestic companies are relegated to runner-up status. E. a firm's overall competitive advantage to be determined by the size of the competitive advantage it has in each of its profit sanctuaries.

b

A linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities and closely integrated competitive assets is termed: A. organizational assets. B. a resource bundle. C. a resource capability. D. functional method compilation. E. integrated asset advantage

b

A low-cost leader translates its low-cost advantage over rivals into superior profit performance by: A. cutting its price to levels significantly below the prices of rivals. B. either using its lower-cost edge to under-price competitors and attract price-sensitive buyers in great enough numbers to increase total profits or maintain the present price, and using the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising total profits and overall return on investment. C. going all out to use its cost advantage to capture a dominant share of the market. D. spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry it can, and then using this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long term. E. out-producing rivals and thus having more units available to sell.

b

A low-cost provider's product does NOT have to always: A. contain enough attributes to be attractive to prospective buyers. B. suggest that a low price, by itself, is not always that appealing to buyers. C. a signal value to buyers. D. provide high margins per unit sold to bring in enough unit sales. E. be valuable and appealing to a wide range of buyers.

b

Entering into strategic alliances and collaborative partnerships can be competitively valuable because: A. working closely with outsiders is essential in developing new technologies and new products in virtually every industry. B. cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology. C. they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages. D. they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations. E. they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

b

Focusing carries several risks, one of which is: A. the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. the chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market. C. the potential for the segment to be highly vulnerable to economic cycles. D. the potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. All of these.

b

For a best-cost provider strategy to be successful, a company must have: A. excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/features incorporated in its product. B. resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C. access to greater learning/experience curve effects and scale economies than rivals. D. one of the best-known and most respected brand names in the industry. E. a short, low-cost value chain.

b

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company: A. must first be a proficient manufacturer. B. must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C. must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. D. needs to have a wide product line, so it can supply parts and components for many products. E. should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

b

How are a company's organizational capabilities developed and enabled? A. By strengthening the traditions that company executives are committed to maintaining B. Through deployment of a company's resources or some combination of its resources C. By talking openly about the problems of the present company and determining how new behaviors will improve performance D. By shifting from decentralized to centralized decision-making E. By urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing

b

Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because: A. without a precise fix on what problems/issues a company confronts, managers cannot know what the industry's key success factors are. B. the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook. C. without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark. D. the "worry list" helps company managers clarify their thinking about how best to modify the company's value chain. E. these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue.

b

Identifying the strategic issues and problems that merit front-burner managerial attention: A. is accomplished solely by analyzing the company's internal working environment. B. helps set management's agenda for taking actions to improve the company's performance and business outlook. C. is done solely by evaluating the company's own internal situation—its resources and competitive position—to help come up with a "worry list" of "how to...," "whether to...," and "what to do about..." D. is done solely as a basis for drawing conclusions about whether to stick with a company's present strategy or to modify it. E. None of these.

b

In a weighted competitive strength assessment, the sum of the weights should add up to: A. 100%. B. 1.0 C. 10. D. 100. E. None of these.

b

In doing SWOT analysis and trying to identify a company's market opportunities, which of the following is NOT an example of a potential market opportunity that a company may have? A. Serving additional customer groups or market segments B. Growing buyer preferences for substitutes for the industry's product C. Acquiring rival firms or companies with attractive technological expertise or capabilities D. Expanding into new geographic markets E. Openings to win market share away from rivals

b

In which of the following circumstances is it advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage? A. When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others. B. When a company has competitively superior patented technology that it can license to foreign partners. C. When there is a steep learning or experience curve associated with performing an activity in a single location. D. When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. When there are significant scale economies in performing the activity.

b

Merger and acquisition strategies: A. are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. B. may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C. are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy. D. seldom are a superior strategic alternative to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. is one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

b

Vertical integration can lower costs by: A. expanding supplier power. B. facilitating the coordination of production flows and avoiding bottlenecks. C. establishing the framework for operating. D. creating control factors across the value chain. E. All of these.

b

Multidomestic competition refers to situations where: A. no domestic companies have very large market shares and each national market has many competitors. B. competition in one national market is independent of competition in other national markets, and as a consequence, there is—strictly speaking—no "international or world market." C. domestic rivals pursue focused or market niche strategies and do not compete internationally. D. domestic companies have a competitive disadvantage in competing with foreign rivals that operate in many different countries. E. most competitors operate in more than 2 country markets but rarely in more than 20.

b

One of the most telling signs of whether a company's market position is strong or precarious is: A. whether its product is strongly or weakly differentiated from rivals. B. whether its prices and costs are competitive with those of key rivals. C. whether it has a lower stock price than key rivals. D. the opinions of buyers regarding which seller has the best product quality and customer service. E. whether it is in a bigger or smaller strategic group than its closest rivals.

b

Outsourcing strategies can offer such advantages as: A. increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy. B. obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure. C. speeding a company's entry into foreign markets. D. permitting greater use of strategic alliances and collaborative partnerships. E. giving a firm more direct control over the costs of value chain activities.

b

Perceived value and signaling value are often an important part of a successful differentiation strategy because: A. of the diversity of buyer needs and preferences. B. buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be. C. buyer satisfaction can be enhanced by clever ads that signal value that relates to the buyer. D. differentiation is all about smoke and mirrors. E. there are no other ways to differentiate a commodity product.

b

Profit sanctuaries are found to differ by a company's strategy, such that: A. A domestic-only company has access to many profit sanctuary locations worldwide. B. An international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share. C. A globally competitive company generally has a profit sanctuary outside its home market in countries where it is a market leader and enjoys a strong competitive position. D. A transnational company has profit sanctuaries in every country where it operates. E. All of these.

b

Quantitative measures of a company's competitive strength: A. signal which competitor has the most distinctive competencies and which competitor has the fewest. B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival. C. reveal which competitors are in the best and worst strategic groups. D. show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities. E. pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces.

b

Resource analysis is a tool: A. based on cross-department combinations of intellectual capital and expertise. B. for identifying a company's superior resources and capabilities, and such value can only be assessed objectively after they are employed. C. based on a standalone resource strength such as technological expertise. D. for analyzing a company's most efficiently executed value-chain activity. E. for identifying industry key success factors that can provide a company with a core competence that rivals cannot effectively imitate.

b

Resource and capability analysis is designed to: A. ascertain the internal market place of non-distinct divisions of the company. B. ascertain which of a company's resources and capabilities are competitively valuable. C. stimulate demand for a product. D. ascertain to what extent a competitor can sustain a competitive advantage. E. stimulate economic growth for companies within the industry.

b

SWOT analysis is a simple but powerful tool for: A. gauging whether a company has a cost-competitive value chain. B. sizing up a company's resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being. C. evaluating whether a company is in the most appropriate strategic group. D. determining a company's competitive strength vis-à-vis close rivals. E. identifying the market segments in which a company is strongly positioned and weakly positioned.

b

Sharing and transferring resources and capabilities across borders may also contribute to the development of broader or deeper competencies and capabilities thereby helping a company achieve A. control over its resource capabilities. B. dominating depth in some competitively valuable area C. intensity of resource diversification. D. precision and compliance in resource agility and responsiveness E. All of these.

b

Sluggish performance results relative to rivals are a reliable warning sign that the company has either a weak strategy or poor strategy execution or both. The best way to identify a well-conceived, well-executed strategy is to determine whether the company is experiencing: A. a strengthening of its image and reputation among shareholders. B. a desirable growth rate in new customer acquisition and favorable customer retention efforts for establishing a strong customer experience. C. movement in its operating profit margin, satisfactory returns on investable liquid assets, and elimination of credit access restrictions. D. positive trends with the relevant cultural factors related to buyer's choices and product modifications. E. All of these.

b

Strategic alliances: A. are the cheapest means of developing new technologies and getting new products to market quickly. B. are collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective. C. are a proven means of reducing the costs of performing value chain activities. D. are best used to insulate a company from the impact of the five competitive forces. E. help insulate a firm from the adverse impacts of industry driving forces.

b

The difference between a merger and an acquisition is that: A. a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. B. a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired). C. in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D. a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies. E. a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

b

The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as: A. horizontal scale. B. vertical scope. C. outsourcing scope. D. cooperative scaled scope. E. focal scope.

b

The marketing emphasis of a company pursuing a broad differentiation strategy usually is to: A. under price rival brands with comparable features. B. tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features. C. out-advertise rivals and make frequent use of discount coupons. D. emphasize selling directly to end-users and promoting personalized customer service. E. communicate the product's ability to serve the customer's every need.

b

The most difficult part of benchmarking is: A. the decision of whether to do it at all. B. how to gain access to information regarding rivals' practices and costs. C. when to initiate the process. D. what information to utilize in the analysis process. E. when to stop the process and move forward with strategy.

b

The primary purpose of value chain analysis is to: A. segregate the company's operations into different types of functions. B. facilitate a comparison activity-by-activity of how effectively and efficiently a company delivers value to its customers, relative to its competitors. C. eliminate unproductive and obsolete functionality in the firm's operating strategy. D. compare cost structure efficiency with the operating effectiveness of rivals to determine the strategy content of rival firms. E. All of these.

b

The risks of a focused strategy based on either low-cost or differentiation include: A. the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. B. the potential for the preferences and needs of niche members to shift over time toward product attributes desired by buyers in the mainstream portion of the market. C. the potential for the segment to be highly vulnerable to economic cycles. D. the potential for segment growth to race beyond the production or service capabilities of incumbent firms. E. All of these.

b

The two big drivers of outsourcing are: A. an increased ability to cut R&D expenses and an increased ability to avoid the problems of strategic alliances. B. that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies). C. a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities. D. the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences. E. that a smaller in-house workforce and a low investment in intellectual capital will produce cost savings.

b

The value chains of rival companies: A. tend to be essentially the same—any differences are typically minor. B. can differ substantially, reflecting differences in the evolution of each company's own particular business, differences in strategy, and differences in the approaches being used to execute strategy. C. are fairly similar or fairly different, depending on how many activities are performed internally and how many are outsourced. D. can be either fairly similar or fairly different, depending on the extent to which each company's primary and support activities are comprised of fixed-cost activities and variable cost activities. E. are fairly similar except when rival companies have quite different product designs.

b

There are several basic approaches to competing successfully and gaining a competitive advantage over rivals, such as: A. finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. B. delivering more value to its customers than rivals or delivering value more efficiently than rivals (or both). C. getting in the best strategic group and establishing a dominating role. D. entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward. E. All of these.

b

To use location to build competitive advantage when competing in both domestic and foreign markets, a company must: A. scatter its production plants across many different country markets to minimize shipping costs to its distribution centers and/or to wholesalers/retail dealers. B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations, and (2) in which countries to locate particular activities. C. concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies. D. disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments. E. avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.

b

Understanding where the company is competitive requires: A. determining whether a company has a cost-effective value chain. B. developing quantitative strength ratings for the company and key rivals on each industry key success factor and each pivotal resource, capability, and value chain activity. C. identifying a company's core competencies and distinctive competencies (if any). D. analyzing whether a company is well positioned to gain market share and be the industry's profit leader. E. developing quantitative measures of a company's chances for future profitability.

b

When a company operates in the markets of two or more different countries, its foremost strategic issue is: A. whether to use strategic alliances to help defeat its rivals. B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries. C. whether to maintain a national (one-country) manufacturing base and export goods to the other countries. D. choosing which foreign companies to team up with via strategic alliances or joint ventures. E. whether to test the waters with an export strategy before committing to some other competitive approach.

b

Which of the following is NOT a component of evaluating a company's resources and competitive position? A. Evaluating how well the present strategy is working B. Scanning the environment to determine a company's best and most profitable customers C. Assessing whether the company's cost structure and customer value proposition are competitive D. Evaluating whether the company is competitively stronger or weaker than key rivals E. Evaluating if the company is able to seize market opportunities and overcome external threats to its future well-being

b

Which of the following is NOT a typical reason for companies to expand into the markets of foreign countries? A. To gain access to new customers, especially when a company encounters dwindling growth opportunities in its home market. B. To strengthen its capability to employ vertical integration strategies, especially those that involve partial integration (building positions in selected stages of the industry's value chain). C. To achieve lower costs and enhance the firm's competitiveness. D. To capitalize on company competencies and capabilities. E. To spread business risk across a wider geographic market base.

b

Which of the following is NOT an example of a threat to a company's future profitability and well-being? A. The likely entry of potent new competitors B. The lack of a well-known brand name with which to attract new customers and help retain existing customers C. Shifts in buyer needs and tastes away from the industry's product D. Costly new regulatory requirements E. Growing bargaining power on the part of the company's major customers and major suppliers

b

Which of the following is NOT one of the pitfalls of a low-cost provider strategy? A. Overly aggressive price-cutting B. Setting the industry's price ceiling to capture volume gains and achieve economies of scale C. Relying on an approach to reduce costs that can be easily copied D. Becoming too fixated on cost reduction E. Having the basis for the firm's cost advantage undermined by cost-saving technological breakthroughs that can be readily adopted by rival firms

b

Which of the following is the most unlikely element of a "think global, act global" approach to crafting a global strategy? A. Minimal responsiveness to buyer tastes, cultural traditions, and market conditions in each country market. B. Scattering plants across many countries, with each plant producing product versions for local area markets. C. Utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. D. Requiring local managers in host countries to stick close to the chosen global strategy. E. Selling much the same products under the same brand names worldwide.

b

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT accurate? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country can be undermined when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

b

Which of the following statements regarding multidomestic competition is false? A. One of the features of multidomestic competition is that buyers in different countries are attracted to different product attributes. B. With multidomestic competition, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets. C. One of the features of multidomestic competition is that industry conditions and competitive forces in each national market differ in important respects. D. One of the features of multidomestic competition is that the mix of competitors in each country market varies from country to country. E. With multidomestic competition, rivals battle for national championships, and winning in one country market does not necessarily signal the ability to fare well in other countries.

b

Which one of the following is NOT a reliable measure of how well a company's current strategy is working? A. Whether the company's sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product C. The firm's image and reputation with its customers D. Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals E. How well the firm stacks up against rivals on technology, product innovation, customer service, product quality, price, speed in getting newly developed products to market, and other relevant factors on which buyers base their choice of which brand to purchase

b

Which one of the following is NOT part of conducting a SWOT analysis? A. Identifying a company's resource strengths and competitive assets B. Benchmarking the company's resource strengths and competitive capabilities against industry key success factors C. Identifying a company's market opportunities D. Drawing conclusions about the company's overall business situation—what is attractive and what is unattractive about the company's circumstances E. Translating the results of the analysis into actions for improving the company's strategy and market position

b

Which one of the following is NOT something that can be learned from doing a competitive strength assessment? A. The factors on which a company is competitively strongest and weakest vis-à-vis key rivals B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain C. Which of the rated companies is competitively strongest and what size competitive advantage it enjoys D. Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (with the size of the advantage/disadvantage being indicated by the differences among the companies' competitive strength scores) E. Which rival company is competitively weakest and the areas where it is most vulnerable to competitive attack

b

Which one of the following is inaccurate as concerns a distinctive competence? A. A distinctive competence is a competitively important activity that a company performs better than its rivals. B. A distinctive competence is typically less restrictive for rivals to copy than a core competence. C. A distinctive competence can be a basis for sustainable competitive advantage. D. A distinctive competence qualifies as a superior internal strength. E. A distinctive competence enables delivering stand-out value to customers (in the form of lower prices, better product performance, or superior service).

b

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another involves: A. whether a company can build a brand name and an image that buyers trust. B. whether a company's target market is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation. C. whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader role. D. finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. E. getting in the best strategic group and establishing a dominating role.

b

A "think local, act local" multidomestic type of strategy: A. is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods. B. is usually defeated by a "think global, act global" type of strategy. C. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions. D. is generally an inferior strategy when one or more foreign competitors are pursuing a global low-cost strategy. E. can defeat a global strategy if the "think local, act local" multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.

c

A European manufacturer that exports goods made at its European plants to the United States: A. is competitively disadvantaged when the euro declines in value against the U.S. dollar. B. is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It would, however, be affected if its plants were in the U.S. C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar. D. becomes more competitive in European markets when the euro declines in value against the U.S. dollar. E. has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

c

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world: A. is competitively disadvantaged when the euro declines in value against the Brazilian real. B. is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the euro appreciates in value against the Brazilian real. E. has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

c

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to: A. discourage rival companies from merging with or acquiring the very companies that it is partnering with. B. reduce overall business risk and raise entry barriers into the newly emerging industry. C. help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry. D. help defeat competitors that are employing broad differentiation strategies. E. enhance its chances of achieving global low-cost leadership.

c

A company requires a dynamically evolving portfolio of resources and capabilities to: A. assist the strategic planning team in overall direction. B. sustain complex manufacturing systems as a strategic recall. C. sustain its competitiveness and help drive improvements in its performance. D. sustain benefits of high market share as an interest in growth strategies. E. transform knowledge into a management style supporting competition in a globally diverse world.

c

A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a: A. long-term derivative strategy. B. cash flow feasibility analysis. C. competitive advantage over other companies. D. resource deployment strategic plan. E. cost underestimation and benefit overestimation.

c

A company's resource and capability analysis: A. represent its core competencies. B. are the most important parts of the company's value chain. C. signal whether it has the wherewithal to be a strong competitor in the marketplace. D. give it an excellent ability to insulate itself against the impact of the industry's driving forces. E. combine to give it a distinctive competence.

c

A company's value chain consists of two broad categories of activities: A. consists of the primary activities that it performs in seeking to deliver value to shareholders in the form of higher dividends and a higher stock price. B. depicts the internally performed activities associated with creating and enhancing the company's competitive assets. C. consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities. D. concerns the basic process the company goes through in performing R&D and developing new products. E. consists of the series of steps a company goes through to develop a new product, get it produced and distributed into the marketplace, and then start collecting revenues and earning a profit.

c

A competitive strategy predicated on low-cost leadership tends to work best when: A. there are widely varying needs and preferences among the various buyers of the product or service. B. there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C. price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D. buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E. buyers have high switching costs and there is considerable diversity in how buyers use the product.

c

A focused differentiation strategy aims at securing competitive advantage: A. by providing niche members with a top-of-the-line product at a premium price. B. by catering to buyers looking for an upscale product at an attractively low price. C. with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D. by developing product attributes that no other company in the industry has. E. by convincing a narrow, well-defined group of buyers that the company has a truly world-class product.

c

A good example of vertical integration is: A. a global public accounting firm acquiring a small local or regional public accounting firm. B. a large supermarket chain getting into convenience food stores. C. a crude oil refiner purchasing a firm engaged in drilling and exploring for oil. D. a hospital opening up a nursing home for the aged. E. a railroad company acquiring a trucking company specializing in long-haul freight.

c

A higher company's overall weighted strength rating does not signal: A. greater implied net competitive advantage B. stronger overall competitiveness versus rivals. C. weaker overall competitiveness versus rivals. D. the possession of a competitive advantage. E. None of these.

c

A strategy of vertical integration can have substantial drawbacks, including: A. whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities. C. the environmental costs of coordinating operations across vertical chain activities. D. the ease to manage a set of skills and capabilities needed to operate in another stage of the vertical chain. E. the difficulties faced in entering outside vertical and horizontal markets.

c

A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when: A. there are many ways to achieve product differentiation that buyers find appealing. B. buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C. the offerings of rival firms are essentially identical, standardized, commodity-like products. D. entry barriers are high and competition from substitutes is relatively weak. E. the market is composed of many distinct segments with varying buyer needs and expectations.

c

A think-global, act-global strategic theme puts emphasis on: A. executing a global domination strategy that focuses the company's resource strengths on entry strategies across all country boundaries. B. ensuring that value chain activities are defined by country-specific attributes to capitalize on economies of scale. C. building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another. D. elevating resources and capabilities developed on a country-by-country basis so as to capitalize on a country's uniqueness. E. All of these.

c

Achieving a cost advantage over rivals entails: A. concentrating on the primary activities portion of the value chain and outsourcing all support activities. B. being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C. performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether. D. minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E. producing a standard product, redesigning the product infrequently, and having minimal advertising.

c

Activity-based cost accounting aims at: A. making cross-company comparisons of the costs of each value chain activity. B. dividing all company expenses into two categories: activities whose costs are variable and activities whose costs are fixed. C. determining the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost. D. determining the costs of each strategic action a company initiates. E. None of these.

c

Activity-based costing is used to evaluate a company's cost-competitiveness and: A. determine whether the value chains of rival companies are similar or different. B. benchmark the costs of primary value chain activities against the costs of the support value chain activities. C. determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and makeup of a company's internal cost structure. D. determine the costs of each strategic action a company initiates. E. None of these.

c

An export strategy is vulnerable except when an exporter is: A. exposed to higher manufacturing costs in the home country than in foreign countries where rivals have plants. B. subject to the relatively high costs associated with shipping the product to distant foreign countries. C. affected by adverse shifts occurring in currency exchange rates. D. dependent on the importing countries' enforcement of tariffs or other trade barriers. E. affected by both production and shipping costs remaining competitive with rivals.

c

Backward vertical integration can produce: A. a full integration when activities remain the domain of key suppliers. B. a tapered integration if the firm consolidates all activities in-house. C. a differentiation-based competitive advantage when activities enhance the performance of the final product. D. a focused differentiation strategy when the market is broad and the product is a commodity. E. All of these.

c

Being the overall low-cost provider in an industry has the attractive advantage of: A. building strong customer loyalty and locking customers into its product (because customers have such high switching costs). B. giving the firm a very appealing brand image. C. putting a firm in the best position to win the business of price-sensitive customers, set the floor on market price, and still earn a profit. D. putting the company in a strong position to be more profitable than companies pursuing a differentiation strategy. E. greatly reducing the strong bargaining power of key suppliers.

c

Companies often implement a transnational strategy because: A. it combines flexible coordination with the pursuit of conflicting objectives simultaneously. B. it provides an easy mode of operating to transfer and share resources and capabilities across borders. C. it is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner. D. it is the least complex and easiest to implement of all the strategy choices. E. All of these.

c

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to: A. combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. B. help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers. C. get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. D. help wage price wars against foreign competitors. E. exercise better control over efforts to revamp the global industry value chain.

c

The approach of a firm using a "think global, act local" version of a global strategy entails: A. producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B. little or no strategy coordination across countries. C. pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D. selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so buyers in each country market will think they are buying a locally made brand. E. selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country), but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

c

The basic strategy options for local companies in competing against global challengers include: A. best-cost provider and focused low-cost provider and low-cost leadership strategies. B. export strategies, licensing strategies, and cross-border transfer strategies. C. utilizing understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals. D. franchising strategies, multidomestic strategies keyed to product superiority, global low-cost leadership strategies, and cross-border coordination strategies. E. focused differentiation and broad differentiation strategies.

c

The best quantitative evidence of whether a company's present strategy is working well is: A. whether the company has more competitive assets than it does competitive liabilities. B. whether the company is in the industry's best strategic group. C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. whether the company has a shorter value chain than close rivals. E. whether the company is in the Fortune 500.

c

The big danger or risk of a best-cost provider strategy is: A. that buyers will be highly skeptical about paying a relatively low price for upscale attributes/features. B. not establishing strong alliances and partnerships with key suppliers. C. that rivals, with low-cost provider strategies will be able to steal away some customers on the basis of a lower price, and high-end differentiators will be able to steal away customers with the appeal of better product attributes. D. that it will be unable to achieve top-notch quality at a rock-bottom cost. E. becoming too highly integrated and not relying enough on outsourcing.

c

The big issue an acquisition-minded firm must consider is whether strategically: A. to acquire the firm at a price that is prohibitive—in other words, a price that cannot recapture the investment. B. to require the acquired firm's resources and management capability to sustain the on-going struggling operation. C. to pay a premium price for a successful local company or to buy a struggling firm at a discount price. D. to pay a price that builds in all the synergistic advantages to the acquired firm. E. to pay a very high premium price that sends a signal to the market that the new firm has arrived.

c

The biggest and most important differences among the competitive strategies of different companies boil down to: A. how they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider. B. the different ways those companies try to cope with the five competitive forces. C. whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation. D. the kinds of actions companies take to improve their competitive assets and reduce their competitive liabilities. E. the relative emphasis they place on offensive versus defensive strategies.

c

The competitive advantage of a best-cost provider is: A. having the best value chain in the industry. B. its brand name reputation. C. its capability to incorporate upscale or attractive attributes into its product offering at lower costs than rivals. D. a distinctive competence in delivering top-notch quality and customer service. E. a distinctive competence in supply chain management.

c

The competitive objective of a best-cost provider strategy is to: A. outmatch the resource strengths of both low-cost providers and differentiators. B. position the company outside the competitive arena of low-cost producers and differentiators. C. meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D. deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E. identify and concentrate on those differentiating features that are inexpensive to incorporate.

c

The difference between a core competence and a distinctive competence is that: A. a distinctive competence refers to a company's strongest resource or competitive capability, while a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity. B. a core competence usually resides in a company's base of intellectual capital, whereas a distinctive competence stems from the superiority of a company's physical and tangible assets. C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms. D. a core competence represents a resource strength, whereas a distinctive competence is achieved by having more resource strengths than rival companies. E. a core competence usually resides in a company's technology and physical assets, whereas a distinctive competence usually resides in a company's know-how, expertise, and intellectual capital.

c

Which of the following is NOT one of the ways that a company can achieve a cost advantage by revamping its value chain? A. Bypassing the activities and costs of distributors and dealers by selling direct to customers B. Replacing certain value chain activities with faster and cheaper online systems C. Increasing production capacity and then striving hard to operate at full capacity D. Relocating facilities so as to curb the cost for shipping and handling activities E. Streamlining operations by eliminating low value-added or unnecessary work steps and activities

c

The essential difference between a "think global, act global" and a "think global, act local" approach to strategy-making is that: A. a "think global, act global" approach entails extensive strategy coordination across countries and a "think global, act local" approach entails little or no strategy coordination across countries. B. the former aims at implementing the same business model worldwide, whereas the latter aims at implementing customized business models to better match local market circumstances. C. the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions. D. a "think global, act global" approach involves selling a mostly standardized product worldwide, whereas a "think global, act local" approach entails selling products that are highly differentiated from country to country. E. a "think global, act global" approach involves selling under a single brand name worldwide, whereas a "think global, act local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

c

The external market opportunities which are MOST relevant to a company are the ones that: A. can increase market share. B. are reinforced by the overall business strategy and where the business model is appropriate. C. match up well with the firm's competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage. D. qualify to correct its internal weaknesses and resource deficiencies. E. are relevant for defending against the external threats to its well-being.

c

The generic types of competitive strategies include: A. market share growth provider, sales revenue leader strategy, and market share retention strategy. B. offensive strategies, defensive strategies and counter maneuvers strategies. C. low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation strategies. D. low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E. price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies.

c

The production emphasis of a company pursuing a broad differentiation strategy usually involves: A. eliminating cost reduction and decreasing quality and essential features to boost profitability. B. strong efforts to be a leader in manufacturing process innovation. C. emphasis on building differentiating features that buyers are willing to pay for and includes wide selection and many product variations. D. the aggressive pursuit of economies of scale and experience-curve effects. E. developing a distinctive competence in zero-defect manufacturing techniques.

c

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when: A. new industry or market segments are yet to be developed and create altogether new consumer demand. B. fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. C. the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. D. entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. E. there are nearly always big advantages to being a slow mover rather than an early mover, especially in regards to avoiding the "mistakes" of first or early movers.

c

The three main areas in the value chain where significant differences in the costs of competing firms can occur include: A. age of plants and equipment, number of employees, and advertising costs. B. operating-level activities, functional area activities, and line of business activities. C. the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies. D. human resource activities (particularly labor costs), vertical integration activities, and strategic partnership activities. E. variable cost activities, fixed cost activities, and administrative activities.

c

To build a competitive advantage by out-managing rivals in performing value chain activities, a company must: A. position itself in the industry's more favorably situated strategic group. B. develop resource strengths that will enable it to pursue the industry's most attractive opportunities. C. develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost-efficient in how it performs value chain activities such that it has a low-cost advantage. D. outsource all of its value chain activities to world-class vendors and suppliers. E. eliminate its resource weaknesses.

c

To use location to build competitive advantage, a company that operates transnationally or globally must: A. employ either an export strategy or a franchising strategy. B. scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C. consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities. D. locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E. concentrate all of its value chain activities in a single country—the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.

c

Two analytical tools useful in determining whether a company's prices and costs are competitive are: A. SWOT analysis and key success factor analysis. B. SWOT analysis and benchmarking. C. value chain analysis and benchmarking. D. competitive position assessment and competitive strength assessment. E. driving forces analysis and SWOT analysis.

c

Which of the following is NOT part of the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. Analyzing the company's external environment B. Evaluating the company's own resources and competitive position C. Surveying a company's board members, managers, select employees, and key investors regarding what strategic issues they think the company faces D. Developing a "worry list" of "how to...," "whether to...," and "what to do about..." E. Assessing what challenges the company must overcome to be financially and competitively successful in the years ahead

c

What are two drawbacks of a "think local, act local" multidomestic strategy? A. The especially high vulnerability to fluctuating exchange rates and the fact it can usually be defeated by companies employing cross-border coordination techniques. B. The excessive vulnerability and exposure that exists to fluctuating exchange rates and the need to craft a separate strategy for each country market in which the company competes. C. The hindering of a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and that it does not promote the building of a single unified competitive advantage in all country markets where a company competes. D. The greater exposure to both increases in tariffs and restrictive trade barriers and the added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments. E. Not being able to export products manufactured in one country to markets in other countries and the fact that the strategy is largely unsuitable for competing in the markets of emerging countries.

c

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack? A. To alleviate their fears by committing to reduce the costs of value chain activities. B. To cause the challenger to begin the attack instead of waiting. C. To dissuade challengers from attacking or diverting them into using less threatening options. D. To create collaborative relationships with challengers. E. To insulate other firms from adverse impacts resulting from the challenge.

c

When a company has a proficiency in performing a strategically and competitively important value chain activity better than its rivals, it is said to have: A. a company competence. B. a core competence. C. a distinctive competence D. a key value chain proficiency. E. a competitive advantage over rivals.

c

When a company performs a particular competitively important activity truly well in comparison to its rivals, it is said to have: A. a company competence. B. a strategic resource. C. a distinctive competence. D. a core competence. E. a key success factor.

c

When can companies gain competitive advantage over those rivals with plants in countries where costs are high? A. When companies have production facilities that carry input costs (especially labor) much higher than that found in low-cost countries. B. When companies meet government regulations that favor the local business climate and environmental regulations. C. When companies can build production facilities in low-cost countries (or source their products from contract manufacturers in these countries). D. When unique natural resources are easily extracted and carry very high export/tariffs or quotas. E. All of these.

c

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether: A. many buyers view the product's differentiating features as having value. B. most buyers have similar needs and use the product in the same ways. C. most buyers accept the customer value proposition as unique and the product can command a higher price or produce sufficiently bigger unit sales to cover the added costs of achieving the differentiation. D. buyer switching costs are low and customer loyalty to any one brand is low. E. buyers are prone to shop the market for sellers having the best price.

c

Which of the following are NOT generic strategy options for competing in foreign markets? A. A multidomestic strategy. B. Global strategies keyed either to low-cost or differentiation. C. Cross-border transfer strategies and home-field advantage strategies. D. Using strategic alliances and joint ventures with foreign competitors as the primary vehicles for entering and competing in foreign markets. E. A transnational strategy.

c

Which of the following does NOT represent a company resource? A. A company's brand B. A productive input that is owned by the firm C. Marketing and brand management D. R&D teams E. A productive input that is controlled by the firm

c

Which of the following is NOT a good example of a company's resources? A. More intellectual capital and better e-commerce capabilities than rivals B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance C. Having higher earnings per share and a higher stock price than key rivals D. A well-known brand name and enjoying the confidence of customers E. A lower-cost value chain than rivals

c

Which of the following is NOT a good option for trying to remedy high internal costs vis-à-vis rivals' firms? A. Finding ways to detour around activities or items where costs are high B. Redesigning the product or some of its components to permit more economical manufacture or assembly C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction D. Outsourcing high-cost activities to vendors or contractors who can perform them more economically E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin America or Eastern Europe) where they can be performed more cheaply

c

Which of the following is NOT a strategic disadvantage of vertical integration? A. Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later. B. Vertical integration backward into parts and components manufacturing can impair a company's operating flexibility when it comes to changing out the use of certain parts and components. C. Vertical integration reduces the opportunity for achieving greater product differentiation. D. Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses. E. Vertical integration poses all kinds of capacity-matching problems.

c

Which of the following is NOT one of the objectives of benchmarking? A. To identify the best practices in performing various value chain activities B. To learn how best practice companies achieve lower costs or better results in performing benchmarked activities C. To help construct a company value chain and identify which activities are primary and which are support activities D. To develop cross-company comparisons of the costs of performing specific value chain activities E. To take actions to improve a company's cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what other companies have achieved

c

Which of the following is NOT pertinent in identifying a company's present strategy? A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing B. Management's planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on) C. The company's mission, strategic objectives, and financial objectives D. Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions E. The strategic role of its collaborative partnerships and strategic alliances with others

c

Which of the following is a clear representation of a company's capability? A. A company's brand B. A productive input that is owned or controlled by the firm C. The capacity of a firm to perform some activity D. An alliance or collaboration with another firm E. All of these.

c

Which of the following is false as concerns use of an export strategy to compete in foreign markets? A. One advantage of an export strategy is the ability to test the international waters before having to commit substantial sums to establishing operations in foreign countries—the amount of capital required to begin exporting is frequently quite minimal. B. Exporting carries the risk of being vulnerable to adverse shifts in currency exchange rates. C. An export strategy is especially well suited to accommodating the different needs and preferences of buyers in different countries. D. An export strategy may allow a company to gain additional scale economies from centralizing production in one or several giant plants. E. An export strategy is disadvantageous when costs in the country where the goods are being manufactured for export are higher than the costs in those locations where rivals have their plants.

c

Which of the following is typically the strategic impetus for forward vertical integration? A. Being able to control the wholesale/retail portion of the industry value chain. B. Fewer disruptions in the delivery of the company's products to end users. C. Gaining better access to end users and better market visibility. D. Broadening the company's product line. E. Allowing the firm access to greater economies of scale.

c

Which of the following ways are employed by defending companies to fend off a competitive attack? A. Remain steadfast to current product features, models, and warranty terms to ensure resources are not diverted toward unproductive efforts. B. Exclude volume discounts or better financing terms from the strategic response in order to maintain current profitability levels. C. Gain product line exclusivity to force competitors to use other distributors. D. Discourage buyers from leaving by offering expensive training and customer support services that highlight the quality of the product. E. All of these.

c

Which one of the following is NOT a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A. Whether to focus on building competitive advantages. B. Whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for. C. Whether to employ a market share leadership strategy. D. Whether to display a strong bias for swift, decisive, and overwhelming actions to overpower. E. Whether to create and deploy company resources to cause rivals to defend themselves.

c

Which one of the following is NOT a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products? A. To improve access to new markets. B. To expedite the development of promising new technologies or products. C. To enable greater opportunities for employee advancement. D. To improve supply chain efficiency. E. To overcome disadvantages of small production volumes that limit scale economies and low production costs.

c

60. Which of the following does NOT represent a potential core competence? A. Skills in manufacturing a high-quality product at a low cost B. Know-how in creating and operating systems for cost-efficient supply chain management C. The capability to fill customer orders accurately and swiftly D. Having a wider product line than rivals E. The capability to speed new or next-generation products to the marketplace

d

A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets: A. is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. B. is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in foreign countries. C. becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting. D. becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. E. has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.

d

A blue-ocean strategy: A. is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B. involves an unexpected (out-of- the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

d

A broad differentiation strategy improves profitability when: A. it is focused on product innovation. B. differentiating enhances product performance and quality. C. the differentiating features appeal to sophisticated and prestigious buyers. D. the higher price the product commands exceeds the added costs of achieving the differentiation. E. the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

d

A company's strategic options for remedying cost disadvantages in internally performed value chain activities do not include: A. revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities). B. implementing the use of best practices, particularly for high-cost activities. C. investing in productivity-enhancing, cost-saving technological improvements. D. switching to activity-based costing. E. outsourcing the performance of high-cost activities to vendors that can perform them more cheaply.

d

A competitive strategy of striving to be the low-cost provider is particularly attractive when: A. buyers are not very brand-conscious. B. most rivals are trying to be best-cost providers. C. there are many ways to achieve product differentiation that have value to buyers. D. most buyers use the product in much the same ways, with user requirements calling for a standardized product. E. most rivals are pursuing focused low-cost or focused differentiation strategies.

d

A competitive strategy to be the low-cost provider in an industry works well when: A. price competition among rival sellers is especially sluggish. B. there are numerous ways to achieve product differentiation that have no value to buyers. C. buyers incur high costs in switching their purchases from one seller/brand to another. D. industry newcomers use introductory low prices to attract buyers and build a customer base. E. industry newcomers use high introductory prices to let buyers know they have a superior product to build a customer base.

d

A core competence: A. retracts from a company's arsenal of competitive capabilities and competitive assets and is not a resource strength considered to be genuine. B. is typically results-based, residing in a company's tangible physical assets on the balance sheet. C. is often grounded in a single department's set of knowledge and expertise. D. is an activity that a firm performs proficiently that is also central to its strategy and competitive success.

d

A firm pursuing a best-cost provider strategy: A. seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B. tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C. tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D. seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes). E. seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

d

A low-cost leader's basis for competitive advantage is: A. meaningfully lower prices than rival firms. B. using a low cost/low price approach to gain the biggest market share. C. high buyer switching costs. D. meaningfully lower overall costs than rivals on comparable products. E. higher unit sales than rivals.

d

What is the primary target market for a best cost-provider? A. Value hunting buyers B. Price-conscious buyers C. Best-price driven buyers D. Value-conscious buyers E. Brand-conscious buyer

d

Companies that compete internationally can pursue competitive advantage in world markets (or offset domestic disadvantages) by: A. using a differentiation-based competitive strategy in those country markets with superior resources. B. deliberately choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D. locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination. E. employing a multidomestic strategy instead of a global strategy.

d

Companies that seize opportunities in the marketplace are usually those that have been: A. actively waiting, staying alert with diligent market reconnaissance and preparing internally to capitalize on potential opportunities. B. the market winners in the past, because they have a proven record and are the best competitively. C. adopting every opportunity for understanding that not all opportunities will be successful and rewarded commensurately. D. first movers willing to accept business risk. E. All of these.

d

Costs and price differences among competing companies can have origins in activities performed by: A. the company's internally performed activities (its own value chain) compared to the cost structure of the internally performed activities of rival companies. B. value chains of the company's suppliers. C. value chains of a company's distributors and retail dealers and forward channel allies. D. the company's internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies. E. whether the company has a longer or shorter value chain than its close rivals.

d

Experience indicates that strategic alliances: A. are generally successful. B. work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. C. work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies. D. can suffer culture clash and integration problems due to different management styles and business practices. E. are rarely useful in helping a company win the race for global industry leadership.

d

External threats may pose various degrees of adversity upon the company and can surface from many sources and examples, EXCEPT for: A. the surfacing of cheaper or better technologies. B. the entry of lower-cost foreign competitors and restrictive foreign trade policies. C. new burdensome regulations. D. demographic shifts that can curtail product innovation. E. rising prices on key inputs (such as energy costs).

d

Greenfield ventures, like all market entry strategies can pose serious problems to achieving foreign market entry success. What is not deemed a barrier to success? A. Such ventures can require costly capital investments and are the slowest entry route for building the business. B. Such ventures can have a tendency to divert valuable resources from current business. C. Such ventures really need well-functioning strong markets as well as well established institutions to ensure protection of foreign investor rights. D. Such ventures require managerial talent experienced in getting new subsidiaries up and running. E. Such ventures can be costlier than making an acquisition.

d

How much attention a company should devote to defending against external threats hinges on primarily on: A. whether offensive moves are feasible, cost-effective, and represent the best use of company resources. B. how serious, relevant, and timely the threats are to the company. C. the degree of vulnerability the company has to the threat. D. the compatibility of the pending threats to the company's competitive assets. E. None of these.

d

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by: A. building a state-of-the-art facility to fully capture scale economies via an export strategy. B. using export, licensing, or franchising strategies so as to minimize risk and capital investment. C. locating buyer-related activities in all countries where it sells its product. D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets. E. avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets it enters.

d

In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise? A. When the costs of pioneering are much higher than being a follower and only negligible learning/experience benefits accrue to the pioneer. B. When the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. C. When the pioneer's products are somewhat primitive and are easily bested by late movers. D. When opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand. E. When technological change is rapid and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own.

d

In which of the following circumstances is a strategy to be the industry's overall low-cost provider NOT particularly well-matched to the market situation? A. When the offerings of rival firms are essentially identical and readily available from many eager sellers. B. When there are few ways to achieve differentiation that have value to buyers. C. When price competition among rival sellers is especially vigorous. D. When buyers have widely varying needs and special requirements, and the prices of substitute products are relatively high. E. When the majority of industry sales are made to a few, large-volume buyers.

d

In which of the following instances is being a first-mover NOT particularly advantageous? A. When moving first with a preemptive strike makes imitation difficult or unlikely. B. When first-time buyers remain strongly loyal to pioneering firms in making repeat purchases. C. When early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals. D. When markets are slow to accept the innovative product offering of a first-mover, and fast followers possess sufficient resources and marketing muscle to overtake a first mover. E. When being a pioneer helps build a firm's image and reputation with buyers.

d

The advantages of manufacturing goods in a particular country and exporting them to foreign markets: A. are largely unaffected by fluctuating exchange rates. B. are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders. C. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

d

The advantages of using a licensing strategy to participate in foreign markets include: A. being especially well-suited to achieve scale economies. B. being able to charge lower prices than rivals. C. enabling a company to achieve first-mover advantages quickly and easily. D. being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets. E. being able to achieve higher product quality and better product performance than with an export strategy.

d

The best indicator of how well a company's strategy is working is whether the company: A. is achieving its stated financial objectives, its financial performance equates to the industry average, and market share gains reflect short-term preferences for capacity maximization. B. is attentive to its poor execution in functional areas, business goals are stretch, and the value proposition has a product focus. C. is geared to initiatives designed to build market share and to promote corporate responsibility. D. is achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing market share. E. All of these.

d

The best strategy options for a local company in competing against global challengers include: A. locating buyer-related activities, such as sales, advertising, or technical assistance, close to buyers. B. export strategies, entering into alliances and/or joint ventures with one or more foreign companies having globally competitive strengths, and/or cross-border transfer strategies. C. export strategies, licensing strategies, franchising strategies, and cross-market coordination strategies. D. using an understanding of local customer preferences to create customized products or services, transferring the company's expertise to cross-border markets, and/or using acquisitions and rapid growth strategies to defend against expansion-minded multinationals. E. offensives aimed at the global challengers' strengths, promoting anti-dumping legislation, and/or launching some type of guerilla warfare strategy.

d

The company with the highest rating on a given measure has an implied competitive edge on that specific measure, with the size of its edge: A. providing the company with an overall net competitive score that is reduced by the weighted measure. B. signaling a weak position and competitive disadvantage. C. reflecting the difference between its weighted rating and rivals' weighted ratings. D. reflecting an area of potential improvement in order to achieve a sustainable competitive advantage. E. requiring reevaluation of the weighted measure.

d

The competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making: A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versions for different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.

d

The difference between a company competence and a core competence is that: A. a company competence refers to a company's best-executed functional strategy, while a core competence refers to a company's best-executed business strategy. B. a company competence refers to a company's strongest resource, whereas a core competence refers to a company's lowest-cost and most efficiently performed value chain activity. C. a company competence is a competitively relevant activity that a firm performs especially well relative to other internal activities, whereas a core competence is an activity that a company has learned to perform proficiently. D. a company competence represents real proficiency in performing an internal activity, whereas a core competence is a competitively and strategically relevant activity. E. a core competence usually resides in a company's technology and physical assets, whereas a company competence usually resides in a company's human assets and intellectual capital.

d

The four tests of a resource's competitive power are often referred to as: A. the SCIR test, which asks if a resource is sustainable, competitive, internalized, and reproducible. B. the competitive advantage sustainable method test. C. the reliability resources simulation. D. the VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable. E. the organizational capability metric analysis.

d

The key questions stemming from the SWOT listings that can reveal relevant substance about the company's overall situation are as follows, except for: A. Are the company's internal strengths and competitive assets sufficiently strong to enable it to compete successfully? B. Does the company have attractive market opportunities that are well suited to its strengths? C. Does the company have threats that are overpowering the firm's competitive assets? D. Are the company's activities and dynamic capabilities adequate for capitalizing on the opportunities? E. All of these.

d

The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to: A. tout the company's lower prices. B. tout the lack of frills and extras. C. out-advertise rivals and make frequent use of discount coupons. D. communicate the attractive features of a budget-priced product offering that fits niche members' expectations.

d

The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as: A. whether the company's present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend payout ratio, and average annual increase in the common stock price. B. whether the company's key success factors are more dominant than the key success factors of close rivals. C. whether the company has the industry's most efficient and effective value chain. D. what are the company's resource strengths and weaknesses and its external opportunities and threats. E. what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

d

The two best reasons for investing company resources in vertical integration (either forward or backward) are to: A. expand into foreign markets and/or control more of the industry value chain. B. broaden the firm's product line and/or avoid the need for outsourcing. C. gain a first-mover advantage over rivals in revamping the industry value chain. D. add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability. E. achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.

d

The value of doing competitive strength assessment is to: A. determine how competitively powerful the company's core competencies are. B. learn if the company's market opportunities are better than those of its rivals. C. learn whether a company has a distinctive competence. D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals. E. determine whether a company's resource strengths are sufficient to allow it to earn bigger profits than rivals.

d

There are a number of advantages to executing a global strategy, but there are also drawbacks that can make the strategy difficult to execute. A primary drawback of a global strategy is that it: A. allows firms to address local needs as precisely as locally based rivals can. B. permits firms to be more responsive to changes in local market conditions, either in the form of new opportunities or competitive threats. C. provides for lower transportation costs and also may involve higher tariffs. D. involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise. E. All of these.

d

To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to: A. sell a product with the best cost at the best price. B. have the best cost (as compared to rivals) for each activity in the industry's value chain. C. provide buyers with the best attributes at the best cost. D. incorporate attractive or upscale attributes into its product offering at a lower cost than rivals. E. do a better job than rivals of adopting the best operating practices.

d

To succeed with a low-cost provider strategy, company managers have to: A. pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage. B. move the performance of most all value chain activities to low-wage countries. C. sell direct to users of their product or service and eliminate the use of wholesale and retail intermediaries. D. do two things: (1) perform value chain activities more cost-effectively than rivals, and (2) act proactively in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities. E. outsource the biggest majority of value chain activities.

d

Two important parts of SWOT analysis are: A. pinpointing the company's competitive assets and pinpointing its competitive liabilities. B. identifying the company's resource strengths and identifying the company's best market opportunities. C. identifying the external threats to a company's future profitability and pinpointing how many market opportunities it has. D. drawing conclusions from the SWOT listings about the company's overall situation and translating these into strategic actions to better match the company's strategy to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats. E. making accurate lists of the company's strengths, weaknesses, opportunities, and threats, and then using these lists as a basis for ascertaining how well the company's strategy is working.

d

What can happen when international rivals compete against one another in multiple-country markets? A. Businesses create attractive industries that would have otherwise badly deteriorated. B. It could produce a business lineup consisting of too many slow-growth, declining, low-margin, or competitively weak businesses. C. It could create a greater diversity in the types of value chain activities between each business. D. It could initiate a deterrence effect that encourages mutual restraint in taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war. E. It could increase shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

d

What does the scope of the firm refer to? A. The range of activities the firm performs externally and its social responsibility activities B. To gain competitive advantage based on where it locates its various value chain activities C. The firm's capability to employ vertical integration strategies D. 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 E. To prevent foreign competition from affecting the market

d

What is a primary drawback of a localized multidomestic strategy? A. It hinders the use of cross-border coordination of a company's activities and increases a company's vulnerability to adverse shifts in currency exchange rates. B. It makes it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods. C. It makes it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. D. It hinders the transfer of a company's competencies and resources across country boundaries and hinders the pursuit of a single, uniform competitive advantage in all country markets where a company operates. E. It is unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company's business model to compete on the basis of low price.

d

When is a think-local, act-local approach to strategy making appropriate? A. When the need for local responsiveness is minimal and when potential efficiency gains from standardization is unrestricted by cross-country opportunities. B. When the local manager is intellectually savvy. C. When the local market provides strong opportunity for growth and profitability. D. When the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited. E. When the need for centralized decision making is relevant due to various macroeconomic and market conditions.

d

Which of the following BEST describes the market opportunities that tend to be most relevant to a particular company? A. Those market opportunities that provide avenues for taking market share away from close rivals and enhance a company's image as a leader in product innovation and product quality B. Those market opportunities that offer the company a chance to raise entry barriers C. Those market opportunities that help promote greater diversification of revenues and profits D. Those market opportunities that match up well with the firm's competitive assets, offer the best prospect for growth and profitability, and present the most potential for competitive advantage E. Those market opportunities that help correct a company's biggest weaknesses and competitive deficiencies

d

Which of the following does NOT accurately characterize the differences between a localized multidomestic strategy and a global strategy? A. A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries. B. A global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments). C. A global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country. D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries. E. A global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

d

Which of the following is NOT a potential advantage of backward vertical integration? A. Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity). B. Reduced risks of disruptions in obtaining crucial components or support services. C. Reduced costs. D. Reduced business risk because of controlling a bigger portion of the overall industry value chain. E. Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

d

Which of the following is NOT a potential benefit of cross-border strategic alliances or other cooperative arrangements between foreign and domestic companies? A. Gaining wider geographic coverage and access to attractive country markets through the foreign partner's familiarity with the market. B. Gaining better access to scale economies in production and/or marketing. C. Filling competitively important gaps in their technical expertise and/or knowledge of local markets. D. A greater ability to employ a global strategy (as opposed to a multicountry strategy). E. Sharing distribution facilities and dealer networks, thus mutually strengthening their access to buyers.

d

Which of the following is NOT a typical host government requirement that affects the operations of foreign companies? A. Establishing local content requirement on goods made inside their borders by foreign companies. B. Having rules and policies that protect local companies from foreign competition. C. Placing restrictions on exports to ensure adequate local supplies. D. Requiring foreign companies to use vertical integration to support operations of local companies. E. Imposing burdensome tax structures and regulatory requirements upon foreign companies doing business within their borders.

d

Which of the following is NOT a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A. Prepare to compete on the basis of low price. B. Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). C. Try to change the local market to better match the way the company does business elsewhere. D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly. E. Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances.

d

Which of the following is NOT a typical reason that many alliances prove unstable or break apart? A. Diverging objectives and priorities. B. An inability to work well together. C. The emergence of more attractive technological paths. D. Disagreement over how to divide the profits gained from joint collaboration. E. Changing conditions that render the purpose of the alliance obsolete.

d

Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions? A. To gain quick access to new technologies or other resources and capabilities. B. To create a more cost-efficient operation out of the combined companies. C. To expand a company's geographic coverage. D. To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy. E. To extend a company's business into new product categories.

d

Which one of the following is NOT something that can be gleaned from a company's SWOT? A. How to improve a company's strategy by using company strengths and capabilities as cornerstones for its strategy B. Which market opportunities are best suited to a company's strengths and capabilities C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats D. How to turn a core competence into a distinctive competence E. Whether any of the company's resource strengths can be used to help lessen the impact of external threats

d

Which of the following is NOT accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. It entails drawing upon the results and conclusions from analyzing the company's external environment. B. It entails drawing on the results and conclusions from evaluating the company's own resources and competitive position. C. It entails developing a "worry list" of "how to...," "whether to...," and "what to do about..." D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment. E. Developing a list of issues and problems that management need to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company's position and prospects.

d

Which of the following is NOT an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)? A. Change to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets B. Enhance differentiation through activities such as cooperative advertising) at the forward end of the value chain C. Pressure distributors/dealers and other forward-channel allies to reduce their costs and markups D. Insisting 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 E. Collaborate with forward channel allies to identify win-win opportunities to reduce costs

d

Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house? A. Streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace. B. Allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best. C. Helps the company assemble diverse kinds of expertise speedily and efficiently. D. Enables a company to gain better access to end users and better market visibility. E. Improves a company's ability to innovate.

d

Which of the following is NOT one of the four basic routes to achieving a differentiation-based competitive advantage? A. Delivering value to customers via the company's resources, competencies, and value chain activities that rivals don't have or can't afford to match and are well-matched to the requirements of the strategy B. Incorporating tangible features that raise product performance and increase customer satisfaction with the product C. Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D. Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes E. Incorporating features that enhance buyer satisfaction in intangible or non-economic ways

d

Which of the following is NOT one of the problems and risks of cross-border alliances between domestic and foreign firms? A. Overcoming language and cultural barriers. B. The amount of time required to build trust, effective communication, and coordination between allies. C. Developing mutually agreeable ways of dealing with key issues or differences. D. Making it harder to pursue a multidomestic strategy as compared to a global strategy. E. Suspicions about whether allies are being forthright in exchanging information and expertise.

d

Which of the following is not an analytical tool for revealing a company's competitiveness and for helping to match the strategy to the company's own particular circumstances? A. Resource and capability analysis B. SWOT analysis C. Value chain analysis D. Bench-pressing analysis E. Competitive strength analysis

d

Which of the following is one of the four conditions that make an internal startup strategy appealing over an acquisition? A. When an internal startup is more costly. B. When adding production capacity has a significant impact on supply-demand balancing. C. When an internal startup has the inability to gain distribution access advantages. D. When the internal startup will have the necessary scale and resource strengths to compete with rivals. E. All of these

d

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

d

Which of the following statements regarding global competition is false? A. In global competition, rivals vie for worldwide market leadership. B. In globally competitive industries, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets. C. In global competition, a firm's overall competitive advantage (or disadvantage) grows out of its entire worldwide operations. D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails. E. In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a strong global position in the industry.

d

Which one of the following is NOT a reason why a company decides to enter foreign markets? A. To spread business risk across a wider geographic market base. B. To capitalize on company competencies and capabilities. C. To achieve lower costs through economies of scale, experience, and increased purchasing power. D. To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation. E. To gain access to more buyers for the company's products/services.

d

31. The competitiveness of any company's facilities in any country is partly dependent upon: A. whether exchange rate changes over time have a favorable or unfavorable cost impact. B. exchange rate movements, which are unpredictable, swinging, first one way and then another way. C. the government's currency growing weaker in relation to the currencies of the countries where the lower-cost imports are being made. D. a weak currency. E. All of these

e

71. Which of the following is NOT an example of an external threat to a company's future profitability? A. The lack of a distinctive competence B. New legislation that entails burdensome and costly government regulations C. Slowdowns in market growth D. More intense competitive pressures E. The introduction of restrictive trade policies in countries where the company does business

e

79. The payoff of doing a thorough SWOT analysis is: A. identifying whether the company's value chain is cost-effective vis-à-vis the value chains of rivals. B. helping strategy-makers benchmark the company's resource strengths against industry key success factors. C. enabling a company to assess its overall competitive position relative to its key rivals. D. revealing whether a company's market share, measures of profitability, and sales compare favorably or unfavorably vis-à-vis key competitors. E. assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

e

A "think global, act global" approach to crafting a global strategy involves: A. pursuing the same basic competitive strategic theme (low cost, differentiation, best cost, and focused) in all countries where the firm does business. B. selling much the same products under the same brand names everywhere and expanding into most, if not all, nations where there is significant buyer demand. C. integrating and coordinating the company's strategic moves worldwide. D. utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. E. All of these.

e

A "think local, act local" multidomestic strategy works particularly well when: A. host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards. B. there are significant country-to-country differences in customer preferences and buying habits. C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country to country. D. there are significant country to country differences in distribution channels and marketing methods. E. All of these.

e

A differentiation-based competitive advantage: A. nearly always is attached to the quality and service aspects of a company's product offering. B. most usually is the result of highly effective marketing and advertising to enhance the brand, raise awareness, and build consistent customer experience. C. requires developing at least one distinctive competence that buyers consider valuable. D. hinges on a company's success in developing top-of-the-line product features that will command the highest price premium in the industry. E. often hinges on incorporating features that raise the performance of the product or lower the buyer's overall costs of using the company's product, or enhances buyer satisfaction in intangible or non-economic ways, or delivers value to customers by differentiating on the basis of competencies and capabilities that rivals can't match.

e

A distinctive competence: A. is a competitively important activity that a company performs better than its rivals. B. gives a company a competitively valuable capability that is unmatched by rivals. C. is a basis for sustainable competitive advantage. D. qualifies as a superior internal strength. E. All of these.

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A focused low-cost strategy can lead to attractive competitive advantage when: A. buyers are looking for the best value at the best price. B. buyers are looking for a budget-priced product. C. buyers are price sensitive and are attracted to brands with low switching costs. D. demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies. E. a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

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A focused low-cost strategy seeks to achieve competitive advantage by: A. outmatching competitors in offering niche members an absolute rock-bottom price. B. delivering more value for the money than other competitors. C. performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D. dominating more market niches in the industry via a lower cost and a lower price than any other rival. E. serving buyers in a narrow piece of the total market (target market niche) at a lower cost and lower price than rivals.

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A focused strategy aimed at securing a competitive edge and which is based either on low cost or differentiation becomes more attractive when: A. it is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers. B. the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities. C. industry leaders do not see that having a presence in the niche is crucial to their own success. D. the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche. E. the target market niche is small enough to limit profitability and the outlook is ripe for differentiating.

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A global strategy is one in which a company: A. employs the same basic competitive approach in all countries where it operates. B. sells much of the same products everywhere. C. strives to build global brands. D. coordinates its actions worldwide with strong headquarters control represents a think-global, act-global approach. E. All of these.

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A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is: A. competitive strength analysis. B. activity-based costing. C. resource cost mapping. D. SWOT analysis. E. benchmarking.

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A strategy of vertical integration can have both important strengths and weaknesses and depends on: A. whether it can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. the impact on investment costs, flexibility, and response times. C. the administrative costs of coordinating operations across more vertical chain activities. D. how difficult it will be for the company to acquire the set of skills and capabilities needed to operate in another stage of the vertical chain. E. All of these.

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Achieving a differentiation-based competitive advantage can involve: A. incorporating product attributes and user features that lower a buyer's overall cost of using the product. B. incorporating features that raise the performance a buyer gets from using the product. C. incorporating features that enhance buyer satisfaction in non-economic or intangible ways. D. delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match. E. All of these.

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All firms are subject to offensive challenges from rivals. The intent of the best defensive move is to: A. lower the risk of being attacked. B. weaken the impact of any attack that occurs. C. pressure challengers to aim their efforts at other rivals. D. help protect a competitive advantage. E. All of these.

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An alliance becomes "strategic" as opposed to just a convenient business arrangement when it serves strategic purposes such as when designed to help: A. build, sustain, or enhance a core competence or competitive advantage. B. block a competitive threat. C. increase the bargaining power of alliance members over suppliers or buyers. D. open up important new market opportunities. E. All of these.

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An option for NOT remedying an internal cost disadvantage includes: A. investing in productivity-enhancing, cost-saving technological improvements. B. redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly. C. implementing the use of best practices throughout the company, particularly for high-cost activities. D. eliminating some cost-producing activities altogether by revamping the value chain. E. investing in best practices.

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An outsourcing strategy: A. is nearly always a more attractive strategic option than merger and acquisition strategies. B. carries the substantial risk of raising a company's costs. C. carries the substantial risk of making a company overly dependent on its suppliers. D. increases a company's risk exposure to changing technology and/or changing buyer preferences. E. involves farming out certain value chain activities presently performed in-house to outside vendors.

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Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is: A. to be the first mover. B. to be a fast follower. C. to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer—first-mover disadvantages usually overwhelm first-mover advantages). D. to be the last-mover—playing catch-up is usually fairly easy and almost always is much cheaper than any other option. E. to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

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Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when: A. pioneering helps build up a firm's image and reputation and creates strong brand loyalty. B. buyers remain strongly loyal to pioneering firms because of incentives and switching costs barriers. C. there is a steep learning curve and when learning can be kept proprietary. D. moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E. market uncertainties make it difficult to ascertain what will eventually succeed.

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Capturing the benefits of strategic alliances is not easy, but success generally is a function of six factors, except when: A. being sensitive to cultural differences. B. managing the learning process and allowing for emerging circumstances. C. picking a good partner with good chemistry. D. recognizing that the alliance must benefit both sides. E. ensuring the division of work is directly apportioned to appropriate skill sets.

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Companies operating in an international marketplace have to respond to: A. whether to customize their offerings in each different country market to match the tastes and preferences of local buyers. B. whether to pursue a strategy of offering a mostly standardized product worldwide. C. how much to customize their offerings in each different country market to match the tastes and preferences of local buyers. D. the tensions between market pressures to localize a company's product offerings country by country and the competitive pressures to lower costs through greater product customization. E. All of these.

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Competing in the markets of foreign countries entails dealing with such factors as: A. fluctuating exchange rates, country-to-country parallels in host government restrictions and requirements, and country-to-country variations in cultural, demographic, and market conditions. B. important country-to-country differences in consumer buying habits and buyer tastes and preferences. C. whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide. D. the fact that product designs suitable for one country are sometimes inappropriate in another. E. All of these.

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Competing in the markets of foreign countries generally does NOT involve which of the following? A. Country-to-country differences in consumer buying habits and buyer tastes and preferences. B. Country-to-country variations in host government restrictions and requirements and fluctuating exchange rates. C. Whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide. D. In which countries to locate company operations for maximum locational advantage, given country-to-country variations in wage rates, worker productivity, energy costs, tax rates, and the like. E. Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market.

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Determining whether a company's overall prices and costs are competitive requires an entire value chain analysis, which typically demands: A. looking at the costs of a company's competitively relevant suppliers and forward channel allies (distributors/dealers). B. considering the costs of a company's internally performed activities. C. the use of benchmarking the costs in a company's value chain system (the costs of its suppliers, its internally performed activities, the costs of its distributors/dealers) against the costs of the value chain systems employed by rival firms. D. the use of activity-based cost accounting. E. All of these.

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Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous except when A. buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers. B. buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations. C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D. there are diseconomies of scale in trying to operate from a single location. E. there are reasons to decouple buyer-related activities in favor of locational advantages.

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Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A. when high transportation costs make it expensive to operate from central locations. B. whenever buyer-related activities are best performed in locations close to buyers. C. if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions or (3) adverse political developments. E. All of these.

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First-mover disadvantages (or late-mover advantages) rarely ever arise when: A. the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own. C. the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D. the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E. the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

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For a company to create a home country advantage and become competitively strong in a foreign market, it should base its strategy around which of the following factors? A. The proximity of suppliers, end users, and complementary industries. B. Different styles of management and organization and the degree of local rivalry. C. The availability and relative prices of inputs. D. Demand conditions in the industry's home market, including size and growth potential and the nature of domestic buyers' needs and wants. E. The level of rivalry existing in the foreign market.

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Identifying the strategy-related issues and problems that company managers need to address and resolve for the company to be more financially and competitively successful entails all of the following EXCEPT: A. drawing on the results of both industry analysis and the evaluations of the company's own competitiveness. B. drawing on the evaluations of the company's own resources, internal circumstances, and competitiveness. C. locking in on what challenges/obstacles/roadblocks the company has to overcome in order to be financially and competitively successful in the years ahead. D. developing a "worry list" of "how to...," "whether to...," and "what to do about..." E. developing a competitive strength assessment that details the strategic moves and countermoves necessary for ensuring the company's financial future.

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In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when: A. there are significant scale economies in performing an activity. B. the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C. when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D. certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. All of these.

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Multidomestic competition is best characterized as a situation where: A. the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole. B. competition is mainly among the domestic companies of a few neighboring countries (five countries at most). C. there are extensive trade restrictions, sharply fluctuating exchange rates, and high tariff barriers in many country markets that work against the formation of a true world market. D. competition among domestic companies predominates and foreign competitors are a minor factor. E. there is no international or global market, just a collection of mostly self-contained country markets.

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Obtaining cost information is a primary difficulty associated with benchmarking. The following are typical sources for collecting information, except: A. from published reports, industry research firms, and trade groups. B. from talking to knowledgeable industry leaders. C. from field trips to the facilities of competitors or non-competing firms. D. from independent firms and consulting firms to gather best practices and comparative cost data without identifying competing firms. E. All of these.

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Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices, such as: A. whether to focus on building competitive advantages. B. whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for. C. whether to display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. D. whether to create and deploy company resources to cause rivals to defend themselves. E. All of these.

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One of the big risks of competing in foreign markets is: A. the extent to which the advantages of exporting goods from a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing much weaker relative to the currencies of the countries to which the goods are being exported. B. whether the economies of foreign countries will continue to grow at double-digit rates. C. the fact that some countries have lower wage rates than others. D. the potential for local government officials to reduce tariffs on the imports of its goods into their country. E. the extent to which the advantages of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing stronger relative to the currencies of the countries where the output is being sold.

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One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets includes: A. Trying to change the local market to better match the way the company does business elsewhere. B. Being prepared to modify aspects of the company's business model to accommodate local circumstances. C. Preparing to compete on the basis of low price. D. Staying away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances. E. All of these.

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Strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to: A. enter additional country markets and compete on a more global scale while still preserving their independence. B. gain better access to scale economies in production and/or marketing. C. fill competitively important gaps in their technical expertise and/or knowledge of local markets. D. share distribution facilities and dealer networks, thus mutually strengthening their access to buyers. E. All of these.

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Success in achieving a low-cost edge over rivals comes from: A. strong efforts to be a leader in manufacturing process innovation. B. communicating the product's ability to serve the customer's every need. C. employing an aggressive offense to gain market share or a conservative defense to D. protecting its market position. E. out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost efficiently.

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The business strategy is made up of key "functional" strategies except: A. R&D, technology, and product design strategies. B. Production and information technology and supply chain management strategies. C. Human resource and finance strategies. D. Sales, marketing, and distribution strategies. E. Alliance and partnerships as well as merger and acquisition growth strategies.

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The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following Except: A. being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions. B. being in better position to choose where and how to challenge rivals. C. shortening delivery times to customers by having geographically scattered distribution facilities. D. locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers. E. centralizing value chain activities to foster just-in-time inventory activities.

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