Learnsmart 4

Mark has completed a SWOT analysis of his business. What should he do with his list of strengths, weaknesses, opportunities, and threats?

Attempt to reach a broad understanding of the company's overall competitive situation. Identify actions that allow the firm to use its strengths to pursue market opportunities. Draw conclusions about external threats to develop strategies to lessen their impact.

A company's "worry list" could include

external threats and challenges within the industry. problems throughout the value chain that require immediate attention. internal weaknesses that need fixing.

In doing a SWOT analysis, which of the following is the best example of a market opportunity?

falling trade barriers in attractive foreign markets

A company's competitive strength ratings offer guidelines

for offensive and defensive strategies the company could pursue to outcompete rivals.

Exercise equipment manufacturer Heavyweight, Inc. has experienced disappointing financial results due to the costs associated with shipping its products to wholesalers. This is an example of a(n) ______ cost disadvantage.

forward channel ally

As part of a SWOT analysis, which of the following is the best example of an external threat?

growing bargaining power of customers or suppliers

A company's competitive strength scores indicate

whether the company is at a net advantage or disadvantage relative to competitors.

Why is it important for managers to understand a company's resources and capabilities?

A company's business model and strategy must be compatible with its existing resources and capabilities. Evaluating a company's resources and capabilities helps identify their potential for giving the company a lasting competitive edge over rivals. Deficient resources and capabilities are unlikely to create customer value.

True or false: One of the first steps in evaluating a company's internal situation is to create a "worry list" of strategic problems and challenges that management needs to address.

False

As part of a SWOT analysis, which of the following is the best example of an internal weakness?

Higher overall unit costs relative to competitors

Which of the following strategic approaches can be used to remedy internal cost disadvantages?

Relocate manufacturing to geographic areas with lower costs. Invest in productivity-enhancing equipment or technology. Detour around the activities or items where costs are high. Outsource internally performed activities to vendors who can do them more cheaply.

A ______ is a tool for evaluating a company's internal strengths and competitive deficiencies, emergent market opportunities, and external threats.

SWOT analysis

Which of the following is an example of an intangible company resource?

Talented employees

Which of the following is NOT true about the capabilities of a company?

They rely on tangible resources of the company only.

A ______ evaluates the sustainable competitive advantage provided by a company resource or capability.

VRIN test

The purposes of ______ are to identify which companies are best at performing particular activities and emulate those best practices to improve the cost and effectiveness of the company's own internal activities.

benchmarking

Acme Inc. sends some of its managers on a field trip to another company in the industry to observe their practices and processes. This is an example of

benchmarking.

A resource-based strategy

can be achieved by exploiting resources that are competitively valuable, rare, and hard to imitate by rivals.

Substitute resources

can make a rivals competitively valuable resources and capabilities less of an advantage

Benchmarking involves

comparing the value chain activities of a company to those of competing firms.

A ______ is performed by answering the questions (1) How does the company rank relative to competitors on important factors that determine market success? and (2) Does the company have a net advantage or disadvantage versus competitors?

competitive strength assessment

The first step of a competitive strength assessment is to

determine all of the industry factors that contribute to a firm's competitive strength or weakness.

Which of the following are techniques for reducing costs associated with supplier-related value chain activities?

directly negotiating lower prices increased coordination with suppliers finding cheaper substitute inputs or producing inputs in-house

Which of the following is an example of a tangible company resource?

distribution centers

A company possessing a ______ is proficient in altering and adjusting its resources and capabilities to remain competitive.

dynamic capability

A SWOT analysis is used to

evaluate a company's ability to pursue market opportunities and defend against threats. evaluate the strengths and weaknesses of a company's resources.

A company that consistently fails to achieve financial objectives and ______ likely has a poor strategy or lackluster strategy execution.

performs poorly relative to competitors

These are all indicators of how well a company's strategy is working, but which two are the best indicators?

improvement in competitive strength and market standing gains in financial strength and profitability

Industry value chains

include both suppliers and forward channel partners

Which of the following are common methods of gathering information for benchmarking?

interviewing knowledgeable analysts or market participants such as customers or suppliers direct observation of competitors' activities consulting information published by trade groups and industry research firms

ABC Manufacturing wishes to reduce labor costs associated with manufacturing all of its products in-house. Which of the following are potential remedies?

investing in robotics or other technologies that improve efficiency redesigning its products to require fewer manufacturing steps outsourcing some or all of the manufacturing process to lower-cost producers

Comparing a company's advantages and disadvantages as well as its likelihood of market success to those of rival firms

is an important part of understanding the company's overall competitive strength.

Which of the following are methods of addressing a cost disadvantage in the forward portion of an industry value chain?

look for mutual cost-saving opportunities absorb some or all of the forward channel activities into the firm's internal activities pressure forward channel allies to reduce their own internal costs

A company that lacks a competitively powerful stand-alone resource

may attempt to develop a competitive advantage through resource bundling.

In doing a SWOT analysis, "using existing company technology to enter a new business" would be a(n)

opportunity.

A company's value chain consists of

primary activities that create value for customers. secondary activities that support the performance of primary activities.

The outcome of a competitive strength assessment is to

reach an informed and specific understanding of the company's competitive advantages or disadvantages relative to other firms in the industry.

In doing a SWOT analysis, which of the following is the best example of an internal strength?

recognizable branding and outstanding company reputation

In order for a company to sustain the competitive power of its resources and capabilities, it must

stay vigilant for opportunities to develop new capabilities. refresh, modify, or possibly phase out outdated or underperforming resources and capabilities. broaden and deepen resources and capabilities to pursue emergent opportunities.

In doing a SWOT analysis, "better product quality than rivals" would be a

strength.

Sweet Tooth Baking has experienced eroding profit margins due to the rising cost of inputs such as flour and sugar. This is an example of a(n) ______ cost disadvantage.

supplier-related

A capability is ______.

the capacity of the company to perform an internal activity

"Is a company's resource competitively valuable?" is one of the tests of

the competitive power of a resource or capability.

The most important "payoff" from conducting a SWOT analysis is

the strategy suggestions that emerge from a thorough analysis of the results.

As part of a SWOT analysis, "costly new regulatory requirements" would be a

threat.

An accurate assessment of a company's cost structure and customer value proposition requires that managers

understand the value system for the entire industry.

A ______ consists of all activities a company performs in order to design, produce, market, deliver, and support their products or services.

value chain

As part of a SWOT analysis, "lack of management depth" would be a

weakness