Chapter 1

A company's business model a: determines whether its strategy will be ethical or not. b: is management's story line for how the strategy will result in achieving sustainable competitive advantage. c: (1) specifies a customer value proposition and (2) develops a profit formula. d: identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader. e: sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.

c: (1) specifies a customer value proposition and (2) develops a profit formula.

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

d: how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence.

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

d: the need to respond to short-term swings in the stock market.

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

a: is a company's most reliable ticket to above-average profitability.

Which one of the following is not related to actions and approaches that comprise a company's strategy? a: proving to shareholders that the company's business model is viable b: achieving a low-cost provider strategy c: seeking a broad differentiation strategy d: concentrating on a focused low-cost strategy e: pursuing a best-cost provider strategy

a: proving to shareholders that the company's business model is viable

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? a: sticking with an outdated business model b: focusing on a narrow market niche within an industry c: striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals d: developing an advantage based on offering more value for the money e: creating a differentiation-based advantage over rivals

a: sticking with an outdated business model

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because a: how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company. b: crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. c: a competitive advantage is what enables a company to achieve its strategic objectives. d: without a competitive advantage a company cannot become the industry leader. e: without a competitive advantage a company is likely to fall into bankruptcy.

b: crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance.

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

b: is the actions and moves to gain a competitive edge over rivals in the marketplace.

When evaluating proposed or existing strategies managers should a: evaluate the firm's business model at least every three years. b: scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. c: ensure core capabilities are incorporated synergistically for establishing a competitive advantage. d: align existing strategies with new strategies to emphasize incremental gains. e: initiate new strategies even though they don't seem to match the company's internal and external situation.

b: scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance.

A company's strategy consists of the action plan that management executes in order to a: compete against rivals and achieve sustainable profitability. b: stake out a unique market position and compete differently. c: develop a more appealing business model than rival firms. d: become better than the leader in one particular area that counts heavily with buyers. e: identify a strategic mission, vision, and goals.

b: stake out a unique market position and compete differently.

Strategies that yield sustainable competitive advantage are important because a: a competitive advantage is what enables a company to achieve its strategic objectives. b: these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. c: competitive advantage forms the underpinnings of a company's strategic vision. d: increases in shareholder value are contingent on a sustainable competitive advantage. e: None of these choices are correct.

b: these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage.

When can a company achieve sustainable competitive advantage? a: whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors b: when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors c: when it is able to produce better products for fewer costs than its rivals d: when it consistently achieves both its long-term and short-term strategic and financial objectives e: if it can translate its vision, mission, and values into a well-crafted strategy

b: when elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors

Which of the following statements about a company's realized strategy is true? a: A company's realized strategy is usually kept secret. b: A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. c: A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. d: A company's realized strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. e: A company's realized strategy is developed mostly on a day-to-day basis because of the constant efforts of managers to keep rival companies at a disadvantage.

c: A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements.

In answering the question "How well does the strategy fit the company's situation," management must be willing and ready to address such issues as a: developing a sound business model and customer base. b: emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. c: changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. d: determining where the company is now and where does the company want to go. e: how to develop copy-cat strategies.

c: changing market conditions, development of internal capabilities and competencies, and allocation of financial resources.

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

d: Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage, and resulting in a better company performance?

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

d: fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance.

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

e: adhering to abandoned strategy elements

Granville Transportation, a designer and manufacturer of self-driving buses and streetcars, is working on developing the next generation of electric vehicles. Granville has chosen to focus on a narrow buyer segment of medium-sized cities with populations between 100,000 and 1,000,000, and is outcompeting rivals by manufacturing its vehicles at a lower cost via artificial intelligence-guided robots. Which of the five basic strategic approaches has Granville Transportation decided upon? a: broad differentiation b: focused differentiation c: focused low-cost provider d: low-cost provider e: best-cost provider

e: best-cost provider

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

e: blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions.

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

e: the best test of managerial excellence and the best recipe for making a company a standout performer.