Business Strategy Midterm

If you were advising Hilton Hotels, what three main approaches would you suggest to rectify any weaknesses in this company's customer value proposition?

1. Pressure distributors, dealers, and other supply chain partners to reduce their costs and markups. 2. Collaborate with these partners to identify win-win opportunities that derive higher added value (such as entry into the boutique hotel segment) to reduce costs. 3. Change to a more economical reservations and customer loyalty system.

Identify the company with a low-cost provider strategy.

A baby products retailer sells unassembled baby furniture produced in China.

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 deliberate strategy is best exemplified by a(n)

The consumer goods companies listed below all pursue the same business model with the exception of

Acer laptops.

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.The use of strategies by these three companies accurately can be analyzed by saying that

All three companies employ deliberate strategies.

Choose the best example of a women's fashion retailer that uses cost drivers effectively to manage its value chain activities.

Bowdon Designs uses just-in-time inventories and produces made-to-order products as and when customer demand rises.

From the list below, identify the company that is not the lowest-cost provider in its industry.

CNN

As general manager of a local restaurant chain, you have been asked to develop defensive moves to protect your company's market position and restrict any challenger's options for initiating a competitive attack. You would present all but ONE of the following strategic options to your executive team.

Challenge struggling runner-up restaurants that are on the verge of going under.

Based on your analysis of the ease of entry into the pizza segment of the restaurant industry, your friends have decided to move forward with their plan to open a pizza parlor and delivery service within walking distance of your campus. Before they finalize the product mix for their restaurant, they have asked you to identify the competitive pressures stemming from the threat of substitutes for the pizza segment of the restaurant industry. What would your report to them include?

Companies in an industry or industry segment are vulnerable to competitive pressure from the actions of companies in a closely adjoining industry, at least whenever buyers view the products of the two industries or segments as close substitutes. Before assessing the competitive pressures coming from substitutes, however, company managers must first identify the substitutes, which is less easy than it sounds since it involves (1) determining where the industry boundaries lie and (2) figuring out which other products or services can address the same basic customer needs as those produced by industry members. For instance, the purveyors of pizza face competitive pressures from other quick-service restaurants as well as from supermarkets offering prepared foods for take-out, as well as from do-it-yourselfers who make pizza at home. Three factors determine whether the competitive pressures from substitute products are strong or weak. Competitive pressures are stronger when: 1. Good substitutes are readily available and attractively priced—moderate to strong in the pizza restaurant industry 2. Buyers view the substitutes as comparable or better in terms of quality, performance, and other relevant attributes—moderate to high, for pizza 3. The costs that buyers incur in switching to the substitutes—low, for pizza. Taken together, it is apparent that competitive pressures stemming from the threat of substitutes for pizza are moderate to strong.

Consider the following five companies and their situations.• Company A is an established online fantasy sports gaming company that has been accused of game-rigging, bribes and kickbacks.• Company B, a ride share company, has delayed its planned initial public offering due to reports of having an inhospitable workplace characterized by sexual harassment and discrimination.• Company C, a pharmaceutical manufacturer, charges higher prices for life-saving drugs in some countries than it charges in others.• Company D, a manufacturer and marketer of high-end consumer electronics, has a strict Code of Conduct that requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing.• Company E, a pizza delivery business, is a being boycotted by customers and losing sponsored tie-ins with professional sports due to racist comments by its founder and CEO.Which of the above companies is distinguished by an ethical strategy as opposed to an unethical or flawed strategy?

Company D

A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons as a gimmick when its bathtubs did not sell. The bubble foam became famous among some women and led to a line of exclusive bath products for women. The manufacturer established shops in various regional locations and hired celebrities to market its products to enhance sales. Now its products are sold through retail outlets and online sites throughout the world. Which of the following is accurate?

Creating a subbrand that offered exclusive bath products for women was an emergent strategy.

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

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

A superior example of a company vision that is short, specific, memorable, clearly articulated, and forward-looking is

Google's vision "to organize the world's information and make it universally accessible and useful."

The best example of forward vertical integration is

Harley-Davidson and Ducati's own-branded stores that sell motorcycles and related memorabilia.

A potato chip manufacturer purchases a potato farm. Which of the following regarding its strategy is true?

The manufacturer has effectively used vertical integration to increase its bargaining position and reduce transaction costs.

A mobile phone manufacturing and marketing company acquires an overseas display manufacturing company to gain a strong market position. Which of the five generic strategies has the mobile phone manufacturer used to gain competitive advantage?

The mobile phone manufacturing company has employed a backward integration strategy to gain more market share and also to manufacture a key component of its products at a lower cost. It has employed a low-cost provider strategy that allows it to achieve a cost-based advantage over rivals. The chapter describes how Wal-Mart and Southwest Airlines earned strong market positions because of the low-cost advantages they have achieved over their rivals. Low-cost provider strategies can produce a durable competitive edge when rivals find it hard to match the low-cost leader's approach to driving costs out of the business.

An established manufacturer and marketer of apparel and equipment for competitive sports is fast losing market share to companies that not only offer similar products, but also are upgrading their research and development capabilities to produce better products. List a few general actions and approaches that would help the established company revive its position.

The organization might employ various approaches to revive its positions: actions to, strengthen market standing and competitiveness by acquiring or merging with other companies; actions, to strengthen competitiveness via strategic alliances and collaborative partnerships; actions, to upgrade, build, or acquire competitively important resources and capabilities; actions to gain sales and market share via more performance features, more appealing design, better quality or customer service, wider product selection; or other such actions.

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

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

The primary difference between a company's mission statement and the company's strategic vision is that

The primary difference between a company's mission statement and the company's strategic vision is that

An example of a company that does not use blue-ocean market strategy is

Walmart's logistics and distribution in the retail industry.

Ben Weprin is founder and CEO of Graduate Hotel, a growing chain of boutique hotels situated near college campuses and designed to cater to the nostalgia and local boosterism that are part of the culture of university towns. (Room keys are imprinted with the names of famous alumni, and public spaces are decorated with historical photos of campus life, vintage art and other collegiate artifacts.) Mr. Weprin and his company are trying to create a brand that will find year-round business by catering to more than just alumni coming back for once-a-year football weekends or 10-year anniversaries of their graduating classes. What is the major question that Mr. Weprin and his team need to ask about his company's strategy?

What must managers do, and do well, to make a company a winner in the marketplace?

____________________ cannot determine how effective a company's current strategy is working.

Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product

When SunPower's managers engage in the process of developing a list of questions to evaluate their company's internal situation, which question does not address the task of evaluating SunPower's resources and competitive position?

Which are SunPower's least and most profitable geographic market segments?

Angela and Jeff are co-owners of five specialty cupcake baking stores in their region. Which of the following questions would nothelp them to predict the next strategic moves and countermoves of their rivals?

Which mode of transport does the rival's supplier use?

A good example of blue-ocean type of offensive strategy is

a company like Australian winemaker Casella Wines that created a Yellow Tail brand designed to appeal to a wider market, one that also includes consumers of other alcoholic beverages.

Amy's Drive-Thru, a fast food facility, offers healthy, sustainably grown veggie and vegan fast food at higher prices than its competitors in the market and has a drive-through and indoor seated casual dining operation. What strategy is Amy's Drive-Thru using to gain competitive advantage?

a differentiation strategy

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 a guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage?

a focused differentiation strategy

According to the value-price-cost framework, deploying a differentiation strategy involves costs that might well exceed those of the average competitor, but with a successful differentiation strategy, that disadvantage is more than made up for by

a rise in the perceived value of the differentiated good, giving the differentiator a clear competitive advantage over the average rival.

Corporate governance failures at Volkswagen included all of the following except

a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions.

A superior indicator of how sound W.L. Gore's strategy is and whether or not the strategy signals strong execution is

achieving its stated financial and strategic objectives via improvements in its internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity.

Success with a best-cost provider strategy designed to outcompete high-end differentiators requires

achieving significantly lower costs in providing the upscale features.

A search engine giant specializes in all types of search items; provides a free translation feature for 80 different languages; stores all passwords for commonly visited sites in encrypted form; allows users to view ads on previously made related searches; provides suggestive search items to assist the user; allows users to view a collection of related web pages users might want to visit; and provides a faster load time and more accurate hits than its rivals. This search engine company uses a profit formula that primarily consists of

allowing users to view ads on previously made related searches.

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

becoming dependent on other companies for essential expertise and capabilities.

Volta Motors, a manufacturer of self-driving delivery trucks, is working on developing its next-generation electric vehicles. It has decided on a strategy of focusing on a narrow buyer segment and outcompeting rivals by offering buyers customized autonomous, self-driving electric vehicles at a lower cost than rivals. What basic strategic approach has Volta Motors decided upon?

best-cost provider

As a manager at the French discount retailer Carrefour, you could derive a competitive advantage from

building organizational expertise in performing Carrefour's competitively important value chain activities.

A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through

bundled resources that enable superior performance of cross-functional capabilities that can be leveraged to support its business model and strategy.

Perceived value and signaling value are often an important part of a successful differentiation strategy because

buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.

Due to impending labor strife over planned layoffs in its Silicon Valley headquarters, a social networking company has decided to outsource its programming operations to an emerging market, India, to obtain cheaper labor. Since then, this social networking company has encountered criticism that has diminished its current market position and staff productivity. You have been retained by this company to develop an appropriate reactive (emergent) strategy that would begin by

cancelling the job cuts till the market situation and entry operations stabilize.

Which of the following does not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?

changes in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration

The process of benchmarking SunPower's value chain activities against its rivals in the solar power industry would not entail

constructing a company value chain and identifying which activities are primary and which are support activities.

Microsoft's alliance with immuno-sequencing company Adaptive Biotechnologies can be called "strategic" because it serves all of the following strategic purposes except

contracts out certain value chain activities by both parties to outside vendors.

Under Armour, a multinational sports apparel company plans entry into a new geographical location, Vietnam, considered an emerging market, with its established and best-selling product line: women's running shorts. How should Under Armour not craft a strategy to enhance future profits in Vietnam?

create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs

The leadership challenges that top executives face in making corrective adjustments when things are not going well include

deciding when adjustments are needed and what adjustments to make.

If you were tasked with identifying the strategic issues and problems that merit front-burner managerial attention at SunPower, you would most likely not begin by

drawing up a list of strategic issues and problems that SunPower faces first.

The potential advantages of Tesla's backward vertical integration strategy include

enhancement of Tesla's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

Troopline Inc., an online laptop retailer, sells laptops of similar range and features as other online laptop retailers. Which of the value propositions would not benefit the company?

establishing a comparison feature tab that allows customers to compare offerings from other online retailers

An approach that is UNLIKELY to help a company's low-cost provider strategy succeed is

evolving the capabilities to simultaneously deliver lower cost and higher-quality/differentiated features.

Vanguard, one of the world's largest investment management companies, has attained cost leadership via

ferreting out cost-saving opportunities in every part of the value chain.

The task of top executives when the company faces disruptive changes in its environment is to not only raise questions about the appropriateness of its direction and strategy, but also to

figure out the causes and decide when adjustments are needed and what adjustments are needed for improved performance and operating excellence.

The strategic impetus for Tesla's forward vertical integration into dealerships and charging stations is

gaining better access to Tesla's end users and better market visibility.

Trader Joe's biggest vulnerability in employing a best-cost provider strategy is

getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.

Market conditions and factors that tend not to favor first movers include

growth in demand that depends on the development of complementary products or services that are not currently available and new-industry infrastructure that is needed before buyer demand can surge.

For all types of generic strategies, a company's success in sustaining its competitive edge depends on

having resources and capabilities that rivals have trouble duplicating and for which there are no good substitutes.

The benefit of a vivid, engaging, and convincing strategic vision is NOT its ability to

help company personnel understand the logic of the company's business model.

If you were a consultant to SunPower, one of the largest solar power companies in the United States, you would not recommend this activity to remedy high internal costs relative to its rivals.

implementing aggressive strategic resource mapping to permit across-the-board cost reduction

Strategic objectives for lululemon inc. do not include

improving employee job satisfaction.

The best example of a well-stated, specific financial objective is to

increase earnings per share by 15 percent annually.

Potential entrants are more likely to be deterred from actually entering an industry when

incumbent firms are willing and able to be aggressive in defending their market positions against entry.

For John Sidanta, CEO and founder of Primaplast, a manufacturer of biodegradable plastic drinking straws made from recycled material, crafting and executing a strategy is a top-priority managerial task because it

is Primaplast management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance, especially in light of impending community and some food service outlets' bans on conventional plastic drinking straws.

A competitive environment where there is strong rivalry among sellers, low entry barriers, strong competition from substitute products, and considerable bargaining leverage on the part of both suppliers and customers

is competitively unattractive from the standpoint of earning good profits.

The competitive advantage of a best-cost provider like Trader Joe's is

its capability to incorporate upscale or attractive attributes into its product offerings at lower costs than rivals.

An emergent strategy is best exemplified by a(n)

microbrewer that invests in building community water wells during a drought.

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

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

The difference between the concept of a company mission statement and the concept of a strategic vision is that 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.

A "repeatedly evolving strategy" best applies to a

mobile phone company, established in a saturated market, that plans its research and development activities to allow for quarterly releases of new products that match or overtake features of rivals' mobile phones.

A pharmaceutical company selling prescription drugs in France for the past 10 years has had moderate sales in a crowded market, as its rivals manufacture and market drugs of similar efficacy and having similar safety precautions, but that have superior market share. This particular pharmaceutical company's greatest challenge is to increase French doctors' prescribing their drugs. What would be the most effective strategy to improve sales performance in the existing market?

modifying marketing communication to increase brand familiarity within key physician segments

If you were asked to develop a low-cost provider strategy for a startup passenger air carrier business, what would you most likely not recommend?

offer low prices on long-distance flights and maintain long service times for aircraft between flights

The market opportunities most relevant to a low-cost provider of mobile phones are those that

offer the best prospects for growth and profitability in emerging markets.

A salsa manufacturing company that enjoys the lest bargaining power with its suppliers would most likely be

offering high-cost specialized salsas that could be consumed only by customers with specific food allergies.

A differentiation-based competitive advantage

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.

Based on an analysis of the five competitive forces, in which of the following industries is profitability likely to be lowest?

pizza restaurants

A deliberate strategy is best exemplified by a(n)

popular downtown theater that has been staging plays and showing films decides to begin booking rock and roll acts.

The risks of a focused strategy for a company like Canada Goose are 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.

Driving-forces analysis has

practical value and is basic to the task of thinking strategically about where the industry is headed and how to prepare for the changes ahead.

You have been asked to advise Waltham Furniture, a company that seeks to serve a target middle-class customer demographic obsessed with the quality and price of products. Your proposed value proposition for this company to offer to its customers would be to

provide comparable quality furniture at a much lower price than your rivals but leave the final assembly of purchased furniture to customers accompanied by an easy-to-follow assembly guide.

The hallmarks of Tesla's vertical integration strategy do not include

research and development and rapid deployments of Tesla's control integration systems (creating control factors across its entire value chain).

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

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

Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do so, you would conduct an assessment of Starbucks'

resources and functions.

Increasing globalization of the ride-share industry can be a driving force because

ride-share companies need to spread their operating reach into more and more country markets to meet emerging consumer demand and take advantage of available operating opportunities.

Hilton Hotels has diversified its lodging brands by adding Curio Collection, Tapestry Collection, and Canopy by Hilton, properties that offer stylish, distinctive decors and personalized services that appeal to young professionals seeking distinctive lodging alternatives. Managers can enhance the differentiation of these new brands based on all of these value drivers except

seeking out low-quality inputs.

Which of the following driving forces would have the least impact on the attractiveness of the automobile industry?

shifts in who buys the product and how the product is used

A healthy fast-casual restaurant that offers only vegetarian and vegan meals insists on portraying organic ingredients in its advertisements, charges a higher price for its meals, and has a rigorous quality control process to insure the cleanliness of its facilities. What strategy is the manufacturer using to deliver superior value to customers?

signaling value by targeting sophisticated buyers

Whole Foods has invested heavily into a system for gathering competitive intelligence about the strategic direction and likely moves of key rivals in the supermarket industry. Doing so allows Whole Foods to determine which rivals are pursuing all of the following, except

similar competitive approaches.

Equifax, a credit-reporting agency, disclosed that it had suffered a massive data breach affecting as many as 143 million people. Hackers had gained unauthorized access to sensitive personal data—Social Security numbers, birth dates, and home addresses—for nearly half of the United States. The company also faced multiple federal investigations including hearings at the U.S. Congress over its handling of the hack and reports that its executives had sold an unusual amount of stock before the breach was publicly disclosed. Effective corporate governance requires Equifax's board of directors to

strengthen its oversight of the company's strategic direction, evaluate the caliber of senior executives' skills, handle executive compensation, and oversee financial reporting practices.

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?

supply chain efficiencies

Pinpointing the strategic issues that SunPower's management needs to address ordinarily would not include

surveying SunPower's board members, managers, select employees, and key investors regarding what strategic issues they think the company faces.

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

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

What makes the marketplace a competitive battlefield?

the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals

The homebuilding industry is not affected by such macro-influences as

the distinctive competences of incumbent firms.

The three main areas in the value chain where significant differences in the costs of competing firms can occur include

the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies.

The stronger the collective impact of competitive pressures associated with the five competitive forces,

the stronger are the industry's driving forces.

An evolving strategy for a ride-share business like Uber or Lyft is not likely to be triggered by

their need to respond to short-term swings in the stock market that impact timing of an initial public offering (IPO).

When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous

there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers.

How can a capital-intensive company achieve a cost advantage by revamping its value chain?

via higher rates of capacity utilization to allow depreciation and other fixed costs to be spread over a larger unit volume, thereby lowering fixed costs per unit

Based on an analysis of the five competitive forces, in which of the following industries is profitability likely to be highest?

video streaming services

Conducting a competitive strength assessment does not involve an analysis of

whether a company should correct its weaknesses by adopting best practices and/or revamping the makeup of its value chain.

A generic strategy to become an industry's overall low-cost provider would not be particularly well-matched to a customer-market characterized by

widely varying buyers' needs and special requirements, and the prices of substitute products are relatively high.