Chapter 6 Organizational Strategy

_____ are companies that do not follow a consistent adaptive strategy but instead respond to changes in the external environment after they occur.

Reactors

_____ are usually the poorest performers among all the four kinds of industry-level adaptive strategies.

Reactors

Gemini Inc. has decided to decrease its product prices to respond to its competitor's strategy. To achieve this, the company needed to lower its manufacturing costs. However, the managers at Gemini have been buying expensive raw materials and hiring many employees. Which of the following best illustrates the situation at Gemini?

Strategic dissonance

According to Michael Porter, which of the following industry forces determines industries' overall attractiveness and potential for long-term profitability?

The bargaining power of suppliers

BallGame manufactures premium golf balls and prices these balls at twice the price of ordinary golf balls. The premium balls sell exceptionally well because customers believe that its patented three-layer construction is capable of increasing the ball's drive. None of the other golf ball manufacturers can produce the same quality. The patent on these golf balls gives BallGame _____.

a sustainable competitive advantage

According to Porter's industry forces, _____ is a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs.

bargaining power of suppliers

Companies following a _____ would most likely try to improve the way in which they sell the same goods or services to the same customers.

stability strategy

The main purpose of a retrenchment strategy is to:

turn around very poor company performance by shrinking the size or scope of the business.

Funk Booster, a company that manufactures vehicle boosters, launched a new product, NOS3. This launch was aimed at occupying the shares held by Funk Booster's competitor, Fly-Wagon's, product, NOS-A. To prevent Funk Booster from occupying their shares, Fly-Wagon launched a new product, NOS-X, which was an advanced version of NOS-A. Which of the following strategies was used by Fly-Wagon to defend its market share?

A response strategy

Floortree, a company that manufactures floor tiles, offers customized lightweight and high-strength tiles in different colors and shapes to compete with its rival company's high-strength tiles. In this scenario, which of the following strategies is FloorTree using to reduce its rival's market share?

An attack strategy

Widget Corp. has five strategic business units (SBUs)—informatics, shipping, third-party logistics, structural materials, and oil exploration. The third-party logistics unit is quite profitable in spite of operating in a slow-growing market. It provides funds for the operation of the other business units as well. In the context of the BCG matrix, which of the following categories of SBUs best describes the third-party logistics unit?

Cash cows

Aries Inc. is a computer manufacturer that has been in the market for several years. Many other companies have started manufacturing compact, and portable gadgets that are easier to use than desktop computers. Aries, however, has been reluctant to adopt new strategies because it thinks that its desktops were selling well when it first started and will continue to sell the same way even if new competitors and better products enter the market. Which of the following concepts is illustrated in this scenario?

Competitive inertia

_____ refers to a reluctance to change strategies or competitive practices that have been successful in the past.

Competitive inertia

CLM is a leading cable operator. The company has recently declared bankruptcy and its needs to restructure its processes to attain more flexibility and allow it to raise capital. Since CLM has identified its need for strategic change, what would be CLM's next step in the strategy-making process?

Conducting a situational analysis

____ are the central companies in a strategic group

Core firms

____ is the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other's strategic actions.

Direct competition

According to Porter's industry forces, which of the following is likely to occur when new companies can enter an industry easily?

Industry attractiveness is likely to decrease

In the context of corporate-level strategies, which of the following exemplifies diversification?

Owning stocks in a variety of companies in different industries

AB Cutters has five strategic business units (SBUs)—marine terminals, trucking, third-party logistics, energy, and oil exploration. Because of a small market share, the company is not making much profit in the trucking sector, which otherwise is a fast-growing market. In the context of the BCG matrix, which of the following categories of SBUs best describes the trucking sector?

Question marks

Crossmart Inc. has been trying to protect itself from the negative effects of industry-wide competition by producing products at consistently lower prices than its competitors. However, it has not compromised on the quality of its products and the products are good enough to be sustained in the market. In the context of Porter's positioning strategies, which of the following strategies has been adopted by Crossmart?

The cost leadership strategy

Which of the following is an important condition that a firm must meet in order to gain a sustainable competitive advantage?

The firm's resources must be imperfectly imitable.

A sustainable competitive advantage is achieved when:

a firm's competitors cannot duplicate the value offered by the firm to its customers.

Sivinch is a manufacturer and marketer of cosmetics. To ensure that its products stand out from other similar brands, Sivinch focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions to their skin and hair problems. This has helped Sivinch _____.

achieve a competitive advantage

GlycoAll, a company that produces energy drinks, has started manufacturing and selling energy bars for the American market. The products turn out to be a huge success. Inspired by GlycoAll's success, Keith & Sons, a producer of energy drinks in the U.K., starts to sell energy bars for the European market. In the context of adaptive strategies, Keith & Sons would most likely be categorized as a(n) _____.

analyzer

In any organization, _____ are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs.

core capabilities

WindWings is a company that manufactures and markets flutes, a product with a steady demand rate. It is so successful at what it does that the company controls 85 percent of the world's flute industry. In terms of adaptive strategies, WindWings would most likely be categorized as a(n) _____.

defender

SpokedWheels Inc. has introduced a specialized mountain bike in the market. Two-thirds of its profits come from the sale of mountain bikes. The company is recognized worldwide for its ability to design and produce superior mountain bikes that are tougher, more durable, and more reliable than its competitors'. This ability of producing superior mountain bikes is the company's _____.

distinctive competence

Amanda Industries has five strategic business units (SBUs)—online retail, shipping, third-party logistics, structural materials, and oil exploration. The oil exploration unit is costing the company a huge amount of money. It is neither making any profit at present nor will it make any profit in the future as the oil fields are diminishing and the company has a small share in this market. In the context of the BCG matrix, which of the following categories of SBUs best describes the oil exploration unit?

dogs

MCRS Toys manufactures learning toys and games exclusively for children in the age group of one to six years. In this scenario, the company is most likely using a(n) _____.

focus strategy

A(n) _____ is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use.

grand strategy

The BCG matrix starts by recommending that while the substantial cash flows from cash cows last, they should be reinvested in stars to:

help them grow even faster and obtain even more market share.

The _____ is a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.

portfolio strategy

Ace Glue is a global innovation company. It manufactures a number of imaginative products which ranges from health care to office products. Its products are being sold in more than 100 countries and it continuously keeps searching for new market opportunities. It has also doubled its investment to market its products. In the context of adaptive strategies, Ace Glue is most likely to be categorized as a(n) _____.

prospector

In the context of sustainable competitive advantage, _____ are those resources that are not controlled or possessed by many competing firms.

rare resources

MilchMaan, a German dairy cooperative, covers an area of 500 acres. The organization is one of the best dairy cooperatives in the country. It recruits its employees from various top universities in the country and uses good quality equipment. In this scenario, the organization's processes, its employees, and its equipment are examples of its:

recources

____ are best defined as the assets, capabilities, processes, employee time, information, and knowledge that an organization uses to improve its effectiveness and efficiency.

resources

Companies are more likely to adopt a(n) _____ when market commonality is large, and companies have overlapping products, services, or customers in multiple markets?

response strategy

According to strategic reference point theory, the _____ aims to protect an existing competitive advantage.

risk-avoiding strategy

A _____ is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.

situational analysis

Libra Travels regularly checks the prices at which other travel agencies sell their services to evaluate its position and make changes, if needed. Libra Travels uses the prices of other travel agencies as a:

strategic reference point to measure its competencies.