Exam 1 Q&A's

Whether buyers are able to exert strong competitive pressures on industry members depends on

(1) the degree to which buyers have bargaining power and (2) the extent to which buyers are price-sensitive.

Conditions that create first-mover advantages include all of the following except

the costs of pioneering are high relative to the benefits accrued.

In making an overall assessment of a company's competitive strength, the answer to which questions are of particular interest?

(1) How does the company rank relative to the competitors on each important market success factor? and (2) Does the company have a net competitive advantage or disadvantage versus major competitors?

Two of the three best indicators as to how well a company's strategy is working are

(1) whether the company is achieving its stated financial and strategic objectives, and (2) whether it is gaining customers and increasing its market share.

The two pivotal factors that distinguish one competitive strategy from another boil down to

(1) whether the company's market target is broad or narrow, and (2) whether the company is pursuing a competitive advantage linked to lower costs or differentiation.

What is not considered to be among the major risks of outsourcing value chain activities presently performed in-house?

A company may farm out the wrong types of activities and thereby hollow out its own capabilities.

How would you best characterize the definitive difference between a vision and a mission?

A mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going."

A strategy to achieve and maintain sustainable competitive advantage is never associated with

actions taken by companies to gain sales and market share irrespective of product prices and costs.

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

CNN

When is outsourcing not beneficial?

when internal control over an activity is deemed essential

A company's profit formula consists of the following basic elements:

P, the price charged to customers, minus C, the company's costs.

A ________ is a powerful analytical tool to size up Apple Inc.'s competitive assets in order to determine whether or not those assets can provide the foundation necessary for its competitive success in the marketplace.

VRIN test

Which of the following strategic approaches becomes most appealing when a market is not important to industry leaders?

a focused strategy

Which is not a hallmark of a cleverly crafted and well-executed strategy?

a strategy that provides direction only in terms of what the company should do

Which are the primary components of a strategic plan?

a vision of where it is headed, a set of performance targets, and a strategy to achieve them

Merger and acquisition strategies

are often driven by such strategic objectives as to expand a company's geographic coverage or extend its business into new product categories.

The key success factors in an industry

are those competitive factors that most affect industry members' ability to prosper in the marketplace.

Why does a company's strategy tend to be a "work in progress" and evolve over time?

because of changing circumstances and ongoing management efforts to improve the strategy

A company achieves low-cost leadership when it

becomes the industry's lowest-cost provider rather than just being one of several competitors with comparatively low costs.

You are the owner of the Voracious Vegetarian, a single-business healthy fast-food restaurant. Your strategy-making hierarchy would most likely consist of

business strategy, functional strategies, and operating strategies.

Rivalry among competing sellers increase when

buyer demand is growing slowly or declining.

The process of crafting and executing a company's strategy primarily consists of all of the following except

choosing employees who can support the strategy execution and strive for change.

Strategic alliances are more likely to be long-lasting when they involve

collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

Sonia, the owner of a local consulting business that provides small and medium-sized organizations with hardware and software and support for information systems, has asked you to explain the five forces model of industry attractiveness to her. What would not be considered one of the five forces?

competitive pressures stemming from incremental innovations within the information systems industry

Company managers need to address and resolve a comprehensive set of strategy-related issues and problems EXCEPT

diversification moves of corporations competing in similar industries.

An analysis of driving forces does not normally involve

evaluating increasing efforts on the part of industry members to collaborate closely with their suppliers.

A single-business company's strategy involves all of the following EXCEPT

efforts to build on its strengths and avoid partnerships and alliances with other enterprises within its industry.

Unanticipated developments and fresh market conditions require a[n] _______ strategy.

emergent

Why would managers not consider drastically modifying their company's strategy?

employee demands for better working conditions

Vertical integration does not involve

expanding a firm's range of product and service segments within its product or service market.

An effectively worded mission statement does not

express that making a profit is the company's true business purpose.

An effectively worded strategic vision statement is?

flexible, focused, and directional

A business strategy

focuses on crafting responses to changing market circumstances and initiating actions to develop strong competitive capabilities in a particular line of business.

The primary factors that determine whether competitive pressures from substitute products are strong, moderate, or weak include

good substitutes are readily available and attractively priced substitutes have comparable or better performance features, and buyers have low costs in switching to substitutes.

Companies like Anheuser-Busch, Coors, and Heinz have increased bargaining power because they

have integrated backward into the business of packaging suppliers.

Good competitive intelligence

helps managers construct up-to-date strategic profiles of rivals.

Developing and analyzing a strategic group map would not help you

identify which competitors can or cannot engage in joint lobbying efforts to improve your industry's trade association.

A potential market opportunity for a company does NOT include

increased trade barriers in attractive foreign markets

The competitive pressures from potential new entrants tend to be weaker when

industry members are willing and able to contest new entries.

Supplier bargaining power is weaker when

industry members have the potential to integrate backward and self-manufacture their own requirements.

Improving both the efficiency and effectiveness of internally performed value chain activities does NOT involve

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.

Nike's vision, "to bring innovation and inspiration to every athlete in the world,"

is a short slogan to illuminate the organization's direction and purpose.

The heart and soul of a company's strategy-making effort

is the actions and moves in the marketplace that managers take to gain a competitive advantage over rivals.

You have been asked to evaluate Kampus Kombucha's mission statement, "to heal and refresh everyone we touch." You would most likely observe that Kampus Kombucha's mission statement

is vague, fairly uninformative, and blurs the essence of this company's business activities.

Although senior managers have _________________________ for crafting and executing a company's strategy, it is the duty of a company's board of directors to exercise strong oversight and ensure that the five tasks of strategic management are conducted in a manner that is in the best interests of shareholders and other stakeholders.

lead responsibility

Which strategic approach works best when price competition among rival sellers is vigorous, the market is large, and there are few ways to achieve product differentiation?

low-cost provider strategy

The primary objective of deploying a defensive strategy is to

lower the risk of being attacked, to weaken the impact of any attack that occurs, and to influence challengers to aim their efforts at other rivals.

The best targets for offensive-minded firms to challenge are

market leaders that are vulnerable.

Apple's strategic approach to setting the company apart from rivals, building strong customer loyalty, and winning a competitive advantage includes

outcompeting rivals on the basis of differentiating features, such as higher quality, wider product selection, added performance, value-added services, more attractive styling, and technological superiority.

Compared to vertical integration or horizontal mergers/acquisitions strategies, the principal advantages of joint venture partnerships and alliances include

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

Best-cost provider strategies work best when

product differentiation is the norm and there is an attractively large number of value-conscious buyers.

Including product attributes and user features that lower the buyer's costs is one way of delivering superior value via a differentiation strategy. This option does not primarily include which of the following?

providing financing options

Cost-cutting methods that demonstrate an effective use of cost drivers include all of the following except

pursuing production R&D activities.

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 the following value drivers except

seeking out low-quality inputs.

For a resource or capability to be competitively superior it

should be competitively valuable.

Resource and capability analysis is 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.

The most widely encountered barriers entry candidates must overcome include all of the following, except

small market size and special customer requirements.

A company's strategy

tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective.

Andrea, the COO of a wine country luxury tourist train business, has been asked to present her company with an evaluation of strong prospects for attractive profits. What would she normally not include in her analysis?

the industry's opportunities for international expansion

PESTEL analysis involves an evaluation of

the six principal components of strategic significance in the macro-environment: political, economic, sociocultural, technological, environmental, and legal forces.

Strategic offensives should be based on

those areas of strength where the company has its greatest competitive advantage over targeted rivals.

The strategic target of a best-cost provider is

value-conscious buyers in a middle-market range.

When can a company achieve sustainable competitive advantage?

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 shows the cash available for a firm's day-to-day operations?

working capital