MAN Chapt 7, Chapt 3, Chapt 4, Test 2 Concept Cards, Ch. 7 Strategies for Competing in International Markets, Test 1 General Cards, Chapter 5. The Five Generic Competitive Strategies, Chapt 1, Test 1 General Cards (2), MAN Test 2 Concept Cards, Chapt...

List the 2 Key Advantages of Strategic Alliances:

1.The increased ability to exercise control over the partners' activities. 2. A greater commitment and willingness of the partners to make relationship-specific investments as opposed to arm's-length outsourcing transactions.

Improving Supplier-Related Value Chain Activities

Just in time delivery, finding suppliers with better quality products, mutual cost-saving opportunity (example: using company warehouse to store products), integrating supplier in quality process

What is a weakness (or competitive deficiency)?

Something a firm lacks or does poorly (in comparison to others) or a condition that puts it at a competitive disadvantage in the marketplace.

What is corporate parenting?

The role that a diversified corporation plays in nurturing its component businesses through the provision of top management expertise, disciplined, control, financial resources, and other types of generalized resources and capabilities such as long term planning systems, business development skills, management development processes, and incentive systems.

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

When to make a strategic move is often as crucial as....

What move to make

What is a resources fit?

When a diversified businesses add to a company's overall resource strengths and have matching resource requirements and/or when the parent company has adequate corporate resources to support its businesses' needs and add value.

Because of First-Mover Advantage and Disadvantage, competitive advantage can spring from....

When a move is made as well as from what move is made

When should a company pass on a particular market opportunity?

When it has or can acquire the competencies needed to capture it.

A company's cost competitiveness depends not only on ______ but also on _____.

-not only on the costs of internally performed activities (its own value chain) -but also on costs in the value chains of its suppliers and distribution channel allies

In a Full Integration:

A firm participates in all stages of the vertical activity chain.

Vertical Integration

A firm that performs value chain activities along more than one stage of an industry's overall value chain

spinoff

A spinoff is an independent company created when a corporate parent divests a business either by selling shares to the public via an initial public offering or by distributing shares in the new company to shareholders of the corporate parent.

Offensive moves makes good sense when a company that leads in terms of size and market share is NOT...

A true leader of serving the market well

Why is it important for company managers to develop a worry list of strategic issues and problems that they need to address and to resolve? Why can't managers just skip this step and go directly to the task of choosing what strategy to employ?

A worry list is used to identify the specific issues/proboems that management needs to address, not to figure out what specific actions to take. Deciding what to do-which strategic actions to take and which strategic moves to make-comes later, i.e. when it is time to craft a company's strategy and choose form among various strategic alternatives.

VRIN test for sustainable competitive advantage

ask if the resource is: Valuable (if not = competitive disadvantage) Rare (if not = competitive parity) Inimitable (hard to copy) (if not = temporary competitive advantage) Non-substitutable (if not = temporary competitive advantage)

competitive strength assessment is

make a list of the industry's key success factors and other telling measures of competitive strength or weakness (6 to 10 measures usually suffice). Step 2 is to assign weights to each of the measures of competitive strength based on their perceived importance. (The sum of the weights for each measure must add up to 1.) Step 3 is to calculate weighted strength ratings by scoring each competitor on each strength measure (using a 1-to-10 rating scale, where 1 is very weak and 10 is very strong) and multiplying the assigned rating by the assigned weight. Step 4 is to sum the weighted strength ratings on each factor to get an overall measure of competitive strength for each company being rated. Step 5 is to use the overall strength ratings to draw conclusions about the size and extent of the company's net competitive advantage or disadvantage and to take specific note of areas of strength and weakness.

Companywide restructuring involves:

making major changes in a diversified company by divesting some businesses and/or acquiring others, so as to put a whole new face on the company's business lineup.

rivalry becomes more intense as the diveristy

of competitors increase in terms of long-term directions, objectives, strategies, and countries of origin.

rivalry intensifies as the number

of competitors increases and they become more equal in size and capability.

supplier power is stronger when industry members are incapable

of integrating backward to self-manufacture items they have been buying from suppliers

rivalry increases as the products

of rival sellers become less strongly differentiated

force driving industry change: diffusion

of technical know-how across companies and countries

A company's vision and mission, as well as its objectives, strategy, and approach to strategy execution are never final; managing strategy is an ______.

ongoing process

Leverage ratio - Times interest earned (or coverage) ratio

operating income / interest expenses -Measures the ability to pay annual interest charges. Lenders usually insist on a minimum ratio of 2.0, but ratios above 3.0 signal progressively better creditworthiness.

force driving industry change: entry..

or exit of major firms

Profitability ratio - Return on Stockholders Equity (ROE)

profits after taxes / total stockholders equity -the return stockholders are earning on their capital investment in the enterprise. 12 - 15% is average

2 biggest discussing numbers on the income statement

sales and net income (good for comparing to other companies)

buyer bargaining power is stronger when buyers have discretion

to delay their purchases or perhaps even not make a purchase at all.

The Value Chain

- Identifies the primary internal activities that create and deliver customer value and the requisite related support activities - Permits a deep look at the firm's cost structure and ability to offer low prices - Reveals the emphasis that a firm places on activities that enhance differentiation and support higher prices

activity ratios

- days of inventory - inventory turnover - average collection period

Barriers of entry are high where there are strong

"network effects" in customer demand.

List the six actions and qualities of a strong, independent board of directors.

(1) Is well informed about the company's performance (2) Guides and judges the CEO and other top executives (3) Has the courage to curb management actions it believes are inappropriate or unduly risky (4) Certifies to shareholders that the CEO is doing what the board expects (5) Provides insight and advice to management (6) Is intensely involved in debating the pros and cons of key decisions and actions

The three best indicators of how well a company's strategy is working are

(1) whether the company is achieving its stated financial and strategic objectives, (2) whether its financial performance is above the industry average, and (3) whether it is gaining customers and gaining market share.

profitability ratios

- gross margin - operating profit margin - net profit margin - total return on assets - net return on total assets - return on equity - return on invested capital

Tangible resource

(Financial, physical, technological (patents), organizational (workstation, communication satellite))

Profitability ratio - Gross profit margin

(Sales revenues - cost of goods sold) / sales revenues -shows the percentage of revenues available to cover operating expenses and yield a profit

seriousness to threat of entry depends on

* The expected reaction of incumbent firms * barriers to entry

Signs of A Firm's Competitive Strength

- Its prices and costs are in-line with rivals - Its customer-value proposition is competitive and cost effective - Its bundled capabilities are yielding a sustainable competitive advantage

Steer resources to business units...

...with the brightest profit and growth prospects and solid strategic and resource fit.

In Michael Porter's Framework for Competitor Analysis, what are the 4 indicators of a rival's strategic moves and countermoves?

1. A rival's current strategy 2. A rival's objectives 3. A rival's capabilities 4. A rival's assumptions

What are profitable best cost strategies contingent on:

1. A superior value chain that eliminated or minizes activities that dont add value 2. unmatched efficiency in managing essential value chain activities 3. core competencies that allow differentiating attributes to be incorporated at a low cost.

List 3 ways to diversify into a new business.

1. Acquisition of an existing business 2. Internal new venture (start-up) 3. Joint venture

THE DRAWBACKS OF UNRELATED DIVERSIFICATION

1. Demanding Managerial Requirements - Monitoring and maintaining the parenting advantage 2. Limited Competitive Advantage Potential - Potential lack of cross-business strategic-fit benefits

What are the 8 common weapons for competing with rivals?

1. Price discounting, clearance sales. 2. Couponing, advertising items on sale. 3. Advertising product or service characteristics, using ads to enhance a company's image. 4. Innovating to improve product performance and quality. 5. Introducing new or improved features, increasing the number of styles to provide greater product selection. 6. Increasing customization or product or service. 7. Building a bigger, better dealer network. 8. Improving warranties, offering low-interest financing.

Managers should be able to explain a strategic vision to company personnel and outsiders in ______.

5 to 10 minutes.

Strategic Options for Allocating Company Financial Resources

>Invest in ways to strengthen/grow existing businesses >Make acquisitions to establish positions in new industries or to complement existing businesses >Fund long-range R&D ventures aimed at opening market opportunities in new or existing businesses

Acquisition

A combination in which one company, the acquirer, purchases and absorbs the operations of another, the acquired

Which of the following are characteristics of an effectively-worded strategic vision statement? A. Graphic, directional and focused B. Challenging, competitive and "set in concrete" C. Balanced, responsible and rational D. Realistic, customer-focused and market-driven E. Achievable, profitable and ethical

A

Which of the following conditions acts to weaken buyer bargaining power? A. When buyers are unlikely to integrate backward into the business of sellers B. When buyers purchase the item frequently and are well-informed about sellers' products, prices and costs

A

What is a balanced scorecard?

A balanced scorecard is a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.

______________ are a hybrid of low-cost provider and differentiation strategies that aim that providing more desirable attributes (quality, features, performance, service) while beating rivals on price.

A best-cost provider strategy

Seeking to differentiate the company's product offering from rivals' products by offering superior attributes that will appeal to a broad spectrum of buyers.

A broad differentiation strategy

What is a business strategy?

A business strategy is a strategy at the single-business level, concerning how to improve the performance or gain a competitive advantage in a particular line of business.

When does a company achieve a competitive advantage?

A company achieves a competitive advantage when it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost to the firm.

Example of Chanel Conflict:

A company competing against itself: Online retailing vs. distribution allies

Perceived Value and the Importance of Signaling Value?

A differentiation strategy's price premium reflects the value actually delivered to the buyer and the value perceived by the buyer. It is important to signal value when: -The nature of differentiation is subjective. -Buyers are making a first-time purchase. -Repurchase is infrequent. -Buyers are unsophisticated.

parenting advantage

A diversified firm has a parenting advantage when it is more able than other firms to boost the combined performance of its individual businesses through high-level guidance, general oversight, and other corporate-level contributions.

Define cost driver.

A factor that has a strong influence on a company's costs.

Strategic Alliance

A formal agreement between two or more companies to work cooperatively toward some common objective

What is a strategic alliance?

A formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective.

Striving to achieve lower overall costs than rivals on comparable products that attract a broad spectrum of buyers, usually by under pricing rivals.

A low-cost provider strategy

What is a core competence?

A proficiently performed internal activity that is central to a firm's strategy and competitiveness.

What are uniqueness drivers?

A set of factors that are particularly effective in creating differentiation.

What is the purpose of a strategic plan?

A strategic plan lays out a company's future direction, performance targets, and strategy.

What is the purpose of a strategic vision?

A strategic vision describes managements's aspirations for the future and delineates the company's strategic course and long-term direction.

Explain the difference between a strategic vision and a mission statement.

A strategic vision portrays a company's aspirations for its future ("where we are going"), whereas a company's mission describes its purpose in its present business ("who we are, what we do, and why we are here").

Define strategic group mapping

A technique for displaying the different market or competitive positions that rival firms occupy in the industry.

Identifying Market Opportunities

Absolute "must pursue" market: Represents much potential but is hidden in "fog of the future." Marginally interesting market: Presents high risk and questionable profit potential. Unsuitable\mismatched market: Is best avoided as the firm's strengths are not matched to market factors

One of the best and quickest ways to expand a company's geographic coverage is to.....

Acquire rivals with operations in desired locations

A firm can pursue Vertical Integration by starting its own operations in other stages of the vertical activity chain by....

Acquiring a company already performing the activities it wants to bring in house

_______ can be a quicker and more potent way to broaden a company's product line than introducing a company's own new product to fill the gap

Acquisition

A Focused Low-Cost Strategy

Aims at securing a competitive advantage by serving buyers in the target market niche at a lower cost and a lower price than rival competitors -out managing rivals in keeping costs low and bypassing or reducing nonessential activities.

An internal capital market:

Allows a diversified company to add value by shifting capital from business units generating free cash flow to those needing additional capital to expand and realize their growth potential.

Differentiation

Allows: 1. Commanding a premium price 2. Increase in unit sales (due to differentiating features) 3. Gain buyer brand loyalty

Define company strategy

An action plan for outperforming its competitors and achieving superior profitability.

What is a competence?

An activity that a firm has learned to perform with proficiency—a capability.

The Attractiveness Test:

Are the industry's profits and return on investment as good or better than present business(es)?

THE PATH TO GREATER SHAREHOLDER VALUE THROUGH UNRELATED DIVERSIFICATION - Actions taken by upper management to create value and gain a parenting advantage

Attractiveness test- Diversify into businesses that can produce consistently good earnings and returns on investment Cost of entry test- Negotiate favorable acquisition prices Better off test- Provide managerial oversight and resource sharing, financial resource allocation and portfolio management, and restructure underperforming businesses

) Driving forces analysis A. Involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces B. Identifies which strategic group is the most powerful

B

What gives the company its best chance for market success?

Basing a company's strategy on its most competitively valuable resource and capability strengths.

No matter which of the 5 generic competitive strategies a company employs, there are times when a company should...

Be aggressive and go on the offense

potent tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing their "best practices."

Benchmarking Benchmarking the costs of company activities against those of rivals provides hard evidence of whether a company is cost-competitive.

Best-Cost provider strategies

Best-cost provider hybrid approach (value conscious buyer) differentiation: providing desired quality, features, performance, service attributes low cost provider: charging a lower price than rivals with similar caliber product offerings

Intangible resource

Brand, relationship, human resource, company culture, human and intellectual capital

Delivering Superior Value via a Broad Differentiation Strategy:

Broad Differentiation: Offering Customers something that rivals cannot 1. Incorporate product attributes and user features that lower buyer's overall costs of using firm's product (B2B, making specific products on value chain) 2. Incorporate tangible features (e.g. styling) that increase customer satisfaction with the product, ease of use 3. Incorporate intangible features (e.g. buyer image) that enhance buyer satisfaction in noneconomic ways (green products) 4. signal value of firm's product offering to buyers (e.g. price, packaging, placement, advertising)

Partial Integration

Building positions in selected stages of the vertical integration

A company that has competitive assets which are central to company strategy and superior to rival firms creates a A. long-term derivative strategy. B. cash flow feasibility analysis. C. competitive advantage over other companies. D. resource deployment strategic plan. E. cost underestimation and benefit overestimation.

C. competitive advantage over other companies.

What is the question asked by the Competitive Advantage Test?

Can the strategy help the company achieve a sustainable competitive advantage?

_______ and ______ cause a company's strategy to evolve over time

Changing circumstances and ongoing management efforts to improve the strategy

What is synergy?

Creating added value for shareholders via diversification requires building a multi-business company where the whole is greater than the sum of its parts

synergy

Creating added value for shareholders via diversification requires building a multibusiness company in which the whole is greater than the sum of its parts; 1 + 1= 3 effects

Low-Cost Advantage

Cumulative costs across the overall value chain must be lower than competitors' cumulative costs.

) Which of the following is not generally a "driving force" capable of producing fundamental changes in industry and competitive conditions? A. Changes in the long-term industry growth rate B. Increasing globalization of the industry C. Product innovation and technological change D. Ups and downs in the economy and in interest rates

D

The best strategy options for a local company in competing against global challengers include A. locating buyer related activities, such as sales, advertising, or technical assistance, close to buyers. B. export strategies, entering into alliances and/or joint ventures with one or more foreign companies having globally competitive strengths, and/or cross-border transfer strategies. C. export strategies, licensing strategies, franchising strategies, and cross-market coordination strategies. D. using understanding of local customer preferences to create customized products or services, transferring the company's expertise to cross-border markets, and/or using acquisitions and rapid growth strategies to defend against expansion-minded multinationals. E. offensives aimed at the global challengers' strengths, promoting anti-dumping legislation, and/or launching some type of guerilla warfare strategy.

D. using understanding of local customer preferences to create customized products or services, transferring the company's expertise to cross-border markets, and/or using acquisitions and rapid growth strategies to defend against expansion-minded multinationals.

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. whether the profits of suppliers are relatively high or low. B. the number of suppliers that each seller/industry member purchases from on average. C. how aggressively rival industry members are trying to differentiate their products. D. whether demand for supplier products is high and they are in short supply. E. whether the prices of the items being furnished by the suppliers are rising or falling.

D. whether demand for supplier products is high and they are in short supply.

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of A. whether the profits of suppliers are relatively high or low. B. the number of suppliers that each seller/industry member purchases from on average. C. how aggressively rival industry members are trying to differentiate their products. D. whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry. E. whether the prices of the items being furnished by the suppliers are rising or falling.

D. whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry.

One of the biggest strategic challenges to competing in the international arena include A. how to avoid the risks of shifting exchange rates. B. whether to charge the same price in all country markets. C. how many foreign firms to license to produce and distribute the company's products. D. whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers. E. whether to pursue a global strategy or an international strategy.

D. whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.

A balanced scorecard for measuring company performance A. Entails putting equal emphasis on financial and strategic objectives B. Entails putting balanced emphasis on profit and non-profit objectives C. Prevents the drive for achieving financial objectives from overwhelming the pursuit of strategic objectives D. Prevents the drive for achieving strategic objectives from overwhelming the pursuit of financial objectives E. Entails creating a set of objectives that is "balanced" in the sense of including both financial and strategic objectives

E

A company's strategy evolves over time as a consequence of: A) the need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations. B) the proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy. C) the need to abandon some strategy features that are no longer working well. D) the need to respond to the newly initiated actions and competitive moves of rival firms. E) All of these.

E) All of these.

Broad Differentiation

Differentiating the firm's product offering from rivals' with attributes that appeal to a broad spectrum of buyers

Explain the Broad Differentiation competitive strategy

Differentiating the firm's product offering from rivals' with attributes that appeal to a broad spectrum of buyers.

Successful Approaches to Sustainable Differentiation

Differentiation that is difficult to duplicate or imitate like company reputation long-standing relationships with buyers a unique product or service image Differentiation that creates substantial switching costs that lock in buyers: patent-protected product innovation relationship-based customer service

Checking a diversified company's business portfolio for the competitive advantage potential of cross-business strategic fits does not involve ascertaining A) the extent to which sister business units have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs. B) the extent to which sister business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another. C) the extent to which sister business units have opportunities to share use of a well-respected brand name. D) the extent to which sister business units have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources. E) which business units are cash cows and which ones are cash hogs.

E) which business units are cash cows and which ones are cash hogs.

Buyer bargaining power is stronger when: A. winning the business of certain high-profile customers offers a seller important market exposure or prestige. B. the extent and importance of collaborative partnerships and alliances between particular sellers and buyers is credible. C. buyers cannot integrate backward into the product market of sellers. D. sellers' products are differentiated, making it easy and inexpensive for buyers to switch to competing brands. E. the industry's products are standardized or undifferentiated.

E. the industry's products are standardized or undifferentiated.

The contrasting features of the five generic competitive strategies: a summary

Each generic strategy: positions the firm differently in its market establishes a central theme for how the firm intends to outcompete rivals creates boundaries or guidelines for strategic change as market circumstances unfold entails different ways and means of maintaining the basic strategy

Cost Drivers: Keys to reducing company costs

Economies of scale Learning and experience Capacity utilization Supply chain efficiencies Input costs Production technology and design Communication systems and information technology Bargaining Power Outsourcing or vertical integration Incentive systems and culture

Broad Differentiation Strategies

Effective Differentiation Approaches: Carefully study buyer needs and behaviors, values and willingness to pay for a unique product or service. Incorporate features that both appeal to buyers and create a sustainably distinctive product offering. Use higher prices to recoup differentiation costs. Advantages of Differentiation: Command premium prices for the firm's products Increased unit sales due to attractive differentiation Brand loyalty that bonds buyers to the differentiating features firm's products

How to achieve low cost leadership?

Eliminating and/or curbing "nonessential" activities and/or outmanaging rivals in performing essential activities. 1. Perform essential value chain activities more cost-effectively than rivals. 2. Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities altogether.

Strategic offenses should be grounded in a company's competitive assets and strong points should be aimed at....

Exploiting competitor weaknesses

Value Chain Analysis

Facilitates a comparison, activity-by-activity, of how effectively & efficiently a firm delivers value to its customers, relative to its competitors

T/F In a competitive market, only some firms are subject to offensive challenges from rivals

False ALL firms are subject

T/F Defensive strategies enhance a firm's competitive advantage

False They do NOT enhance a firm's competitive advantage

Step 4: Checking for Resource Fit

Financial resource fit -State of the internal capital market - Using the portfolio approach: - Cash hogs need cash to develop. - Cash cows generate excess cash. - Star businesses are self-supporting. Success sequence: Cash hog > Star > Cash cow Nonfinancial resource fit - Does the firm have (or can it develop) the specific resources and capabilities needed to be successful in each of its businesses? - Are the firm's resources being stretched too thin by the resource requirements of one or more of its businesses?

Improving Value Chain Activities of Distribution Partners

Finding cheaper channels, pressure distributor, mutual cost saving like shipping in bulk

Successful low-cost leaders, who have the lowest industry costs, are exceptionally good at...

Finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable.

THE EFFECTS OF CROSS-BUSINESS FIT

Fit builds more value than owning a stock portfolio of firms in different industries Strategic-fit benefits are possible only via related diversification The stronger the fit, the greater its effect on the firm's competitive advantages Fit fosters the spreading of competitively valuable resources and capabilities specialized to certain applications and that have value only in specific types of industries and businesses

PURSUING RELATED DIVERSIFICATION

Generalized resources and capabilities: Can be deployed widely across a broad range of industry and business types Can be leveraged in both unrelated and related diversification situations Specialized resources and capabilities: Have very specific applications which restrict their use to a narrow range of industry and business types Can typically be leveraged only in related diversification situations

Good Strategy + Good Strategy Execution = _______

Good Management

Good Management = _____ + ______

Good Strategy + Good Strategy Execution

better off test

How much synergy (stronger overall performance) will be gained by diversifying into the industry?

What is the question asked by the Fit Test?

How well does the strategy fit the company's situation?

A Tapered Integration:

Involves a mix of in-house and outsourced activity in any stage of the vertical chain.

What is competitive intelligence?

Information about rivals that is useful in anticipating their next strategic moves.

Blue Ocean Strategies seeks to gain a dramatic and durable competitive advantage by....

Inventing new industry segments that create new demand

What is a cost driver?

Is a variable, such as the level of activity or volume that casually affects costs over a given time span? An activity is an event, task or unit of work with a special purpose-for example, designing products, setting up machines, or testing products.

Nonsubstitutable

Is it invulnerable to the threat of substitution from different types of resources and capabilities? Even resources that are competitively valuable, rare, and costly to imitate may lose much of their ability to offer competitive advantage if rivals possess equivalent substitute resources

cost of entry test

Is the cost of overcoming entry barriers so great as to long delay or reduce the potential for profitability?

WHEN TO ENGAGE IN A JOINT VENTURE

Is the opportunity too complex, uneconomical, or risky for one firm to pursue alone? Does the opportunity require a broader range of competencies and know-how than the firm now possesses? Will the opportunity involve operations in a country that requires foreign firms to have a local minority or majority ownership partner?

Focused Differentiation Strategy

Keyed to offering carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers (as opposed to a broad differentiation strategy aimed at many buyer groups and market segments).

What is the danger of an unsound best-cost provider strategy>?

Losing at both ends of the market. (low cost and differentiation)

Successful Competitive Strategies Are Resource Based

Low-Cost Providers ---Must have the resources and capabilities to keep their costs below those of their competitors. ---Must have expertise to cost-effectively manage value chain activities better than rivals. Differentiators ---Must have the resources and capabilities to incorporate unique attributes that a broad range of buyers will find appealing and worth paying for Narrow Segment Focusers ---Must have the capability to do an outstanding job of satisfying the needs and expectations of niche buyers. Best Cost Providers ---Must have the resources and capabilities to incorporate upscale product or service attributes at a lower cost than rivals.

A low-cost provider's basis for competitive advantage is

Lower overall costs than competitors

Where do masterful strategies come from?

Masterful strategies come from doing things differently from competitors where it counts—out-innovating them, being more efficient, being more imaginative, adapting faster—rather than running with the herd.

A competitive advantage requires what?

Meeting customer needs either more effectively (with products or services that customers value more highly) or more efficiently (by providing products or services at lower cost).

A company should NOT perform any value chain activity internally that can be performed...

More efficiently or effectively by outsiders

Vertically Integrated firms is one that performs value chain activities along ___________ stage of an industry's overall value chain

More than one

Best-cost provider strategies a hybrid of low-cost provider and differentiation strategies that aim at providing more desirable attributes (quality, features, performance, service) while beating rivals on price

More value for the money

When a Best-Cost Provider Strategy Works Best

Must have capability to incorporate upscale attributes into its product offering at a lower cost than rivals appealing features target market = value conscious buyers It is really a combination of the 3 strategies (?)

What are objective?

Objectives are an organization's performance targets—the specific results management wants to achieve.

What are strategic objectives?

Objectives that relate to target outcomes that indicate a company is strengthening its market standing, competitive vitality and future business prospects

What are operating strategies?

Operating strategies are strategies that concern the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales.

Involves contracting out certain value chain activities to outside specialists and strategic allies is:

Outsourcing

______ can be used to assess the strategic relevance of the six principal components of the macro-environment: political, economic, social, technological, environmental, and legal forces.

PESTEL (stands for the six principal components of macro-environment: political, economic, social, technological, environmental, and legal forces)

Full Integration

Participating in all stages of the vertical chain

MISGUIDED REASONS FOR PURSUING UNRELATED DIVERSIFICATION - Poor Rationales for Unrelated Diversification

Poor Rationales for Unrelated Diversification 1. Seeking a reduction of business investment risk 2. Pursuing rapid or continuous growth for its own sake 3. Seeking stabilization to avoid cyclical swings in businesses 4. Pursuing personal managerial motives

Value Drivers: the keys to creating a differentiation advantage

Product features and performance (should appeal to wide range of buyers) customer services (delivery, repair & returns etc.) Production R&D (making multiple models) Technology and innovation (first mover advantage) Pursue continuous quality improvement (extend life of product) Input quality Employee skill, training, experience (HR management activities should improve these) Sales and marketing (customer loyalty) Quality control processes

What makes being a first mover strategically important is NOT being the first company to do something, but rather, being the first company to...

Put together the precise combination features, customer value, and sound revenue/cost economics that gives it an edge over rivals in the battle in market leadership

Relative market share

Relative market share is the ratio of a business unit's market share to the market share of its largest industry rival as measured in unit volumes, not dollars. Using relative market share to measure competitive strength is analytically superior to using straight-percentage market share.

Because small firms typically have limited expertise and resources, a challenger with broader capabilities is well positioned to...

Raid their biggest and best customers

STEP 5: RANKING BUSINESS UNITS AND ASSIGNING A PRIORITY FOR RESOURCE ALLOCATION

Ranking factors - Sales growth - Profit growth - Contribution to company earnings - Return on capital invested in the business - Cash flow Steer resources to business units with the brightest profit and growth prospects and solid strategic and resource fit

Pitfalls to avoid in pursuing a differentiation strategy

Relying on product attributes easily copied by rivals Introducing product attributes that don't evoke enthusiastic buyer response - value added not worth price Eroding profitability by overspending on efforts to differentiate firm's product offering Offering only trivial improvements in quality, service, or performance features compared to products of rivals over-differentiating product quality, or service levels exceeds the needs of most buyers Charging too high a price premium

What are 3 sources of benchmarking information?

Reports, trade groups, analysts and customers Visits to benchmark companies Data from consulting firms

What are generalized resources and capabilities?

Resources and capabilities that can be widely applied and can be deployed across a broad range of industry and business types.

Lower prices can produce market share gains if competitors offering similarly performing products do NOT....

Respond with price cuts of their own

The most frequently employed approach to defending a company's present position involves actions to...

Restrict a competitive attack by a rival

Revamping the Value Chain System to Lower Costs

Sell direct to consumers and bypass the activities and costs of distributers, streamline operations by eliminating low value-added or unnecessary work steps/activities, reducing materials handling and shipping costs by having suppliers locate their plants/warehouses close to the company

Blue Ocean Strategies provide a company with a great opportunity in the _______ run

Short

Two factors that inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities:

Social complexity (company culture, interpersonal relationships among managers or R&D teams, trust-based relations with customers or suppliers) Causal ambiguity (the fact that it is hard to figure out how a complex resource contributes to competitive advantage and therefore exactly what to imitate)

What is a competitive strategy?

Specifics of management's game plan for competing successfully and security a competitive advantage over rivals in the market place

What are the 3 steps in using the five-forces model of competition?

Step 1: For each of the five forces, identify the different parties involved, and the specific factors that bring about competitive pressures. Step 2: Evaluate how strong the pressures stemming from each of the five forces are (strong, moderate, or weak). Step 3: Determine whether the collective strength of all five competitive forces is conducive to earning attractive profits in the industry.

_______ is a formal agreement between two or more companies to work cooperatively toward some common objective

Strategic Alliance

OPPORTUNITY FOR DIVERSIFYING

Strategic diversification possibilities 1. Expand into businesses whose technologies and products complement present business(es). 2. Employ current resources and capabilities as valuable competitive assets in other businesses. 3. Reduce overall internal costs by cross-business sharing or transfers of resources and capabilities. Extend a strong brand name to the products of other acquired businesses to help drive up sales and profits of those businesses.

_______ reveal which companies are close competitors and which are distant competitors.

Strategic group maps

What is strategic intent?

Strategic intents is relentlessly pursuing an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective

Distinguishing Features: Focused differentiation

Strategic target: A narrow market niche where buyer needs and preferences are distinctively different Basis of competitive strategy: attributes that appeal specifically to niche members Product line: Features and attributes tailored to the tastes and requirements of niche members Production emphasis: small-scale production or custom-made products that match the tastes and requirements of niche members Marketing emphasis: Communicate how product offering does the best job of meeting niche buyers' expectations Keys to maintaining the strategy: Stay committed to serving the niche better than rivals; don't blur firm's image by entering other market segments or adding other products to widen market appeal Resources and capabilities required: Capabilities to meet the highly specific needs of niche members (custom production, close customer relations)

Distinguishing Features: Focused low-cost provider

Strategic target: A narrow market niche where buyer needs and preferences are distinctly different Basis of competitive strategy: Lower overall cost than rivals in serving niche members Product line: Features and attributes tailored to tastes and requirements of niche members Production emphasis: a continuous search for cost reduction for products that meet basic needs of niche members Marketing emphasis: Communicate attractive features of a budget-priced product offering that fits niche buyers' expectations Keys to maintaining the strategy: Stay committed to serving the niche at the lowest overall cost, don't blur the firm's image by entering other market segments or adding other products to widen market appeal Resources and capabilities required: lower costs on niche goods (lower input costs for specific product desired by niche, batch production capabilities

THE KEYS TO BEING A SUCCESSFUL LOW-COST PROVIDER

Success in achieving a low-cost edge over rivals comes from out-managing rivals in finding ways to perform value chain activities faster, more accurately, and more cost-effectively by: -Spending aggressively on resources and capabilities that promise to drive costs out of the business. -Carefully estimating the cost savings of new technologies before investing in them. -Constantly reviewing cost-saving resources to ensure they remain competitively superior.

Explain the difference between tangible and intangible resources.

Tangible resources can be physically touched or quantified. They include physical resources, financial resources, technological assets, and organizational resources. Intangible resources cannot be physically touched or quantified. They include human assets, intellectual capital, brands, company image, reputational assets, relationships, company culture, and a company's incentive program.

What is vertical scope?

The extent to which a firm's internal activities encompass one, some, many or all of the activities that make up an industry's entire value chain system, ranging from raw-material production to final sales and service activities.

What is a company's macro-environment?

The macro-environment encompasses the broad environmental context in which a company is situated

What are driving forces?

The major underlying causes of change in industry and competitive conditions.

What is horizontal scope?

The range of product and service segments that a firm serves within its focal market.

What are Key Success Factors (KSFs)?

The strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that are necessary for competitive success by any and all firms in an industry.

The biggest danger of outsourcing is that a company will farm out...

The wrong types of activities - leads to a reduction in the firm's strategic competitiveness and long-run success in the marketplace

How to improve cost of internal value chain activities

They can implement best practices throughout the company, particularly for high-cost activities. They can redesign the product and/or some of its components to eliminate high-cost components or facilitate speedier and more economical manufacture or assembly. They can relocate high-cost activities (such as manufacturing) to geographic areas where they can be performed more cheaply or outsource activities to lower-cost vendors or contractors.

______ is especially important when First-Mover Advantage or Disadvantage exists

Timing

List 5 reasons for integrating forward.

To lower overall costs by increasing channel activity efficiencies relative to competitors. To increase bargaining power through control of channel activities. To gain better access to end users. To strengthen and reinforce brand awareness. To increase product differentiation

Strategic fit opportunities

Transferring specialized expertise, technological know-how, or other resources and capabilities from one business's value chain to another's Sharing costs by combining related value chain activities into a single operation Exploiting common use of a well-known brand name Sharing other resources (besides brands) that support corresponding value chain activities across businesses Engaging in cross-business collaboration and knowledge sharing to create new competitively valuable resources and capabilities

Ongoing introductions of new/improved products can put rivals under...

Tremendous pressure, especially when rivals' new-product development capabilities are weak

T/F Quite possibly, a company may stand to lose more sales by offending its dealers then its gains from its own online sales effort

True

Identifying Threats

Types: - Normal course-of-business threats - Sudden-death threats Identify the threats to the firm's future prospects and evaluate what strategic actions can be taken to neutralize or lessen their impact

The Four Tests of a Resource's Competitive Power - VRIN Testing

VRIN Testing -Valuable (be directly relevant to the company's strategy, making it an effective competitor - improves customer value proposition/profit formula) -Rare (something that rivals lack) -Inimitable (hard to copy, more difficult and costly for competitors = sustainable competitive advantage, unique, built over time, large scale operations) ** Social complexity and Casual ambiguity - hard to figure out how a complex resource contributes to competitive advantage and therefore what to imitate -Nonsubstitutable (invulnerable to the threat of substitution from different types of resources and capabilities)

A ________ firm is one that performs value chain activities along more than one stage of an industry's overall value chain

Vertical Integration

Extends a firm's competitive advantage and operating scope within the same industry

Vertical Integration

The best potential for being able to reduce costs via backward integration strategy exists in situations where suppliers have _______ profit margins

Very large

Identifying capability

Virtually all organizational capabilities are knowledge-based, residing in people and in a company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge looking over the firm's resources and considering whether (and to what extent) the firm has built up any related capabilities. managers to survey the various functions a firm performs to find the different capabilities associated with each function.

Identifying Weaknesses:

Weakness: Is something a firm lacks or does poorly (in comparison to others) or a condition that puts it at a competitive disadvantage in the marketplace Types: - Inferior skills, expertise, or intellectual capital - Deficiencies in physical, organizational, or intangible assets - Missing or competitively inferior capabilities in key areas

How can someone takeover a First-Mover?

When the market is slow to accept an innovative product

When the same companies compete against one another in multiple geographic markets, the threat of cross-border counterattacks may be enough to deter aggressive competitive moves and encourage ______ amongst international rivals

When the same companies compete against one another in multiple geographic markets, the threat of cross-border counterattacks may be enough to deter aggressive competitive moves and encourage mutual restraint amongst international rivals mutual restraint

What makes a move preemptive is its one-of-a-kind nature -

Whoever strikes first to acquire competitive assets that rivals can't readily match

What is a greenfield venture?

a subsidiary business that is established by setting up the entire operations from the ground up

A core competence A. Gives a company competitive capability and is a genuine company strength and resource B. Typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company's balance sheet C. Usually is grounded in the technological expertise of a particular department or work group

a

A distinctive competence

a capability that enables a company to perform a particular set of activities better than its rivals.

Strategic implications of competitive strength and assessments

a company's competitive strength scores pinpoint its strengths and weaknesses against rivals and point directly to the kinds of offensive and defensive actions it can use to exploit its competitive strengths and reduce its competitive vulnerabilities

Offensive strategies should, as a general rule, be based on:

a company's strongest competitive assets.

Resource

a competitive asset that is owned or controlled by a company

buyer bargaining power is stronger when buyers pose

a credible threat of integrating backward into the business of sellers

uniqueness driver

a factor that can have a strong differentiating effect

The industry outlook is fundamentally unattractive if ______.

a firm's profit prospects are unappealingly low.

What is international strategy?

a strategy for competing in two or more countries simulataneously

High weighted competitive strength ratings signal:

a strong competitive position and possession of competitive advantage

High-weighted competitive strength ratings signal

a strong competitive position and possession of competitive advantage; low ratings signal a weak position and competitive disadvantage.

Low ratings of competitive strength signal:

a weak position and competitive disadvantage.

buyer bargaining power is stronger when buyers are well informed

about the seller's products, prices, and cost

Activity ratio - average collection period

accounts receivable / (total sales/365) OR accounts receivable / average daily sales -Indicates the average length of time the firm must wait after making a sale to receive cash payment. A shorter collection time is better

Economies of scale

accrue from a larger-size operation. Accrue when unit costs are reduced due to the increased output of larger-size operations of a firm

Core competence

activity that a company performs proficiently and that is also central to its strategy and competitive success unique strengths that are embedded within a firm that allows the firm to differentiate its products/services built through the interplay of resources and capabilities

A core competence

activity that a company performs proficiently and that is also central to its strategy and competitive success.

A competence is

an activity that a company has learned to perform with proficiency.

Dynamic Capability

an ongoing capacity of a company to modify its existing resources and capabilities or create new ones

The role of dynamic capabilities

an ongoing capacity of a company to modify its existing resources and capabilities or create new ones -ability to modify, deepen, or augment in the company's existing resources and capabilities.

A dynamic capability is

an ongoing capacity of a company to modify its existing resources and capabilities or create new ones.

Dynamic capability

an ongoing capacity of a company to modify, deepen, or augment its existing resources and capabilities or create new ones/ strengthen the company's competitive position

buyer bargaining power is stronger when buyers are large

and few in number relative to the number of sellers

Barriers of entry are high when patents

and other forms of intellectual property protection are in place.

Dividend yield on common stock

annual dividends per share / current market price per share -A measure of the return that shareholders receive in the form of dividends. A "typical" dividend yield is 2%-3%. The dividend yield for fast-growth companies is often below 1%; the dividend yield for slow-growth companies can run 4%-5%.

Dividend payout ratio

annual dividends per share / earnings per share -indicates the percentage of after tax profits payout out in the form of dividends

A rivals strategic moves and countermoves

are both enabled and constrained by the set of resources and capabilities the rival has at hand

Successful low-cost leaders:

are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service buyers find acceptable.

supplier power is stronger when good subistutes

are not available for supplier's prodcuts

supplier power is stronger when industry members

are not major customer's of suppliers.

buyer bargaining power is stronger when industry goods

are standardized or differentiation is weak

driving forces

are the major underlying causes of change in industry and competitive conditions

complementors

are the producers of complementary products, which are products that enhance the value of the focal firms products when they are used together

key success factors

are the strategy elements, product and service attributes, operational approaches, that are essential to surviving and thriving in the industry

A company that does a first-rate job of managing its value chain activities relative to competitors A. Is likely to have more distinctive competencies than rivals B. Stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost

b

A company's resource strengths are important because A. They pave the way for establishing a low-cost advantage over rivals B. They represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace C. They provide extra muscle in helping lengthen the company's value chain

b

A company's value chain identifies A. The steps it goes through to convert its net income into value for shareholders B. The primary activities it performs in creating value for its customers and the related support activities

b

In a weighted competitive strength assessment, the sum of the weights should add up to A. 100% B. 1.0

b

Which one of the following is not part of conducting a SWOT analysis? A. Identifying a company's resource strengths and competitive capabilities B. Benchmarking the company's resource strengths and competitive capabilities against industry key success factors C. Identifying a company's market opportunities

b

Which one of the following is not something that can be learned from doing a competitive strength assessment? A. The factors on which a company is competitively strongest and weakest vis-à-vis key rivals B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain

b

Rivalry is stronger when high exit

barries keep unprofitable firms from leaving the industry

The essence of a _______________ is to offer unique product attributes that a wide range of buyers find appealing and worth paying for.

broad differentiation strategy

force driving industry change: shifts in

buyer demographics

supplier power is stronger when the supplier industry is dominated

by a few large companies and it is more concentrated than the industry it sells to

A company's resource strengths A. Represent its core competencies B. Are the most important parts of the company's value chain C. Signal whether it has the wherewithal to be a strong competitor in the marketplace or whether its capabilities and competitive strengths are modest, thus relegating it to a trailing position in the industry

c

A company's value chain A. Consists of the primary activities that it performs in seeking to deliver value to shareholders in the form of higher dividends and a higher stock price B. Depicts the internally performed activities associated with creating and enhancing the company's competitive assets C. Consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities

c

Which of the following is not a good example of a company strength? A. More intellectual capital and better e-commerce capabilities than rivals B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance C. Having higher earnings per share and a higher stock price than key rivals

c

Which of the following is not a good option for trying to remedy high internal costs vis-à-vis rivals firms? A. Investing in productivity-enhancing, cost-saving technological improvements B. Redesigning the product or some of its components to permit more economical manufacture or assembly C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction

c

PESTEL analysis

can be used to assess the strategic relevance of the six principal components of the macro-environment

Suppliers with strong bargaining power

can erode industry profitability by charging industry members higher prices

force driving industry change: increasing..

globalization

barrier of entry are high when these requirements are high

capital requirements

force driving industry change: technological..

change and manufacturing process innovation

In most companies, crafting and executing strategy is a ______.

collaborative team effort. Crafting and executing strategy is rarely something that only high-level managers do.

to succeed in predicting competitors next move

company strategist need to have a good understanding of each rivals current strategy

Performing value chain activities with capabilities that permit the company to either outmatch rivals on differentiation or beat them on costs will give the company a

competitive advantage.

Because of first-mover advantages and disadvantages:

competitive advantages can spring from when a move is made as well as from what move it made

A company's resources and capabilities represent its

competitive assets and are determinants of its competitiveness and ability to succeed in the marketplace.

Related businesses possess:

competitively valuable cross-business value chain and resource matchups.

Outsourcing involves:

contracting out certain value chain activities to outside vendors.

force driving industry change: changes in

cost and efficiency

A _____________ is a factor that has a strong influence on a company's costs.

cost driver

Economies of scope

cost reductions that flow from operating in multiple businesses (a larger scope of operation). Are cost reductions that flow from cross-business resource sharing in the activities of the multiple businesses of a firm

What are economies of scope?

cost reductions that flow from operating in multiple businesses, whereas economies of scale accrue from a larger size operation.

A company's cost-competitiveness depends

costs of internally performed activities (its own value chain) but also on costs in the value chains of its suppliers and distribution-channel allies.

What are profit sanctuaries?

country markets that provide a company with substantial profits because of a strong or protected market position

Which of the following is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)? A. Shifting to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets B. Trying to make up the difference by cutting costs earlier in the value chain C. Pressuring distributors-dealers and other forward channel allies to reduce their costs and markups so as to make the final price to buyers more competitive with the prices of rivals D. 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

d

Competitive assets

determinants of its competitiveness and ability to succeed in the marketplace

the strongest of the five forces

determine the extent of the downward pressure on any industry profitability

supplier power is stronger when suppliers provide

differential inputs that enhance the performance of industry's product.

Unrelated businesses have:

dissimilar value chains and resource requirements, with no competitively important cross-business relationships at the value chain level.

A company resource strength can concern A. A skill, specialized expertise or competitively important capability B. Valuable human assets and intellectual capital C. An achievement or attribute that puts the company in a position of market advantage D. Competitively valuable alliances or cooperative ventures E. All of these

e

A company resource weakness or competitive deficiency A. Represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace B. Causes the company to fall into a lower strategic group than it otherwise could compete in C. Prevents a company from having a distinctive competence D. Usually stems from having a missing link or links in the industry value chain E. Is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace

e

he payoff of doing a thorough SWOT analysis is A. Identifying whether the company's value chain is cost effective vis-à-vis the value chains of rivals B. Helping strategy-makers benchmark the company's resource strengths against industry key success factors C. Enabling a company to assess its overall competitive position relative to its key rivals D. Revealing whether a company's market share, measures of profitability and sales compare favorably or unfavorably vis-à-vis key competitors E. Assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities and the external threats to its future well-being

e

SWOT analysis _________. a.) provides the basis for crafting a strategy that capitalizes on the company's strengths, overcomes its weaknesses, aims squarely at capturing the company's best opportunities, and defends against competitive and environmental threats b.) provides a quick overview of where on the scale from "alarmingly weak" to "exceptionally strong" the attractiveness of the company's overall business situation ranks. c.) helps provide a basis for matching the company's strategy to its internal resource capabilities and its external opportunities and threats. d.) helps identify a company's core competencies and competitive capabilities and the seriousness of its resource weaknesses and competitive deficiencies. e.) all of these

e.) all of these

Examples of uniqueness drivers do not include

eliminating low value-added activities and work steps.

macro-environment

encompasses the broad environmental context in which a company's industry is situated

Barriers of entry are high when industry incumbents

enjoy large cost advantages over potential entrants.

It is important to recognize that not all buyers of an industry's product have ______.

equal degrees of bargaining power with sellers.

Strategic fit

exists whenever one or more activities constituting the value chains of different businesses are sufficiently similar in present opportunities for cross-business sharing or transferring of the resources and capabilities that enable these activities.

A balanced scorecard approach for measuring company performance entails setting both _______ and ________.

financial objectives and strategic objectives

supplier power is stronger when it is difficult or costly

for industry members to switch their purchases from one supplier to another

supplier power is stronger when demand

for suppliers products is high and the products are in short supply

A cash cow:

generates cash flows over and above its internal requirements, thus providing a corporate parent with funds for investing in cash hog businesses, financing new acquisitions, or paying dividends.

Good strategy making is inseparable from _______.

good business entrepreneurship

Competitive pressures are stronger when these are readily available and attractively priced

good subsitutes

Benchmarking the costs of company activities against rivals provides:

hard evidence of whether a company is cost-competitive.

Step three: determining the competitive value of STRATEGIC FIT in multibusiness companies. (pg 175)

i. Opportunities to combine the performance of certain activities, thereby reducing cost and capturing economics of scope. ii. Opportunities to transfer skills, technology, or intellectual capital from one business to another. iii. Opportunities to share use of a well-respected brand-name across multiple product and/or service categories.

Step two: evaluating business unit competitive strengths.

i. Relative market share. ii. Cost relative to competitors cost. iii. Products or services that say five fire expectations. iv. Ability to benefit from certificate with sibling businesses. v. Number of caliber and strategic alliances and collaborative partnerships. vi. Brand image and reputation. vii. Competitively valuable capabilities. viii. Profitability relative to competitors.

DIVERSIFICATION PATH: UNrelated businesses

have dissimilar value chains and resource requirements, with no competitively important cross-business relationships at the value chain level.

(?) Identifying the strategic issues and problems that merit front-burner managerial attention

helps set management's agenda for taking actions to improve the company's performance and business outlook

High barriers and weak entry threats today do not always translate into ______

high entry barriers and weak entry threats tomorrow.

Intangible Resources

human resources; brands, company image, and reputational assets; relationships; company culture and incentive system

best cost provider

hybrid between low cost and differentiation stategies. gives customers more value for their money. -Is a powerful competitive approach with value-conscious buyers looking for a good-to-very-good product or service at an economical price. -Create a "best-cost" status as the low-cost provider of a product or service with upscale attributes.

Step one: evaluating industry attractiveness.

i. Market size and projected growth rate. ii. The intensity of competition. iii. Emerging opportunities and threats. iv. The presence of cross industry strategic fit. v. Resource requirements. vi. Seasonal and cyclical factors. vii. Social political regulatory and environmental factors. viii. Industry profitability. Industry uncertainty in business risk.

buyers are more price-senstive

if the product represents a large fraction of their total purchases

strategically relevant

important enough to have a bearing on the decision the company ultimately makes about its long-term direction.

Barriers of entry are high when there are difficulties

in building a network of distributors/dealers or in securing adequate space on retailers shelves.

Competitive pressures are stronger when the cost that buyers incur

in switching to substitutes are low.

force driving industry change: reductions

in uncertainty and business risk

environmental forces

include ecological and environmental forces such as weather, climate, climate change.

political factors

include political policies

__________ can vary drastically from year to year depending on strategy

income tax expense

force driving industry change: regulatory

influences and government policy changes

first test of a winning strategy

insightful diagnosis of a company's external and internal environment

Political risks stem from:

instability or weakness in national governments and hostility to foreign business

SWOT =

internal strengths (basis for strategy) internal weaknesses (deficient capabilities) market opportunities (strategic objectives) external threats (strategic defenses)

Activity ratio - days of inventory

inventory / (COGS/365) -Measures inventory management efficiency. Fewer days of inventory are better.

The most appealing approaches to broad differentiation

involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate

Tapered Integration

involves both outsourcing and performing activities internally

A Backward Integration:

involves entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system.

A Forward Integration:

involves entry into value chain system activities closer to the end user.

a strategic group

is a cluster of industry rivals that have similar competitive approaches

cost driver

is a factor that has a strong influence on a firm's costs can be asset-based or activity-based

strategic group mapping

is a technique for displaying the different market or competitive positions that rival firms occupy in the industry

rivalry increases when buyer demand

is growing slowly or declining

Differentiation: Signaling Value

is important when: nature of differentiation is based on intangible features and therefore subjective or hard to quantify by the buyer Buyers are making a first-time purchase and are unsure what their experience will be with the product Product or service repurchase by buyers is infrequent Buyers are unsophisticated

Inimitable

is it hard to copy? the more difficult and costly it is for competitors to imitate a company's resource or capability, the more likely that it can also provide a sustainable competitive advantage

SWOT Analysis used to answer:

is the company able to seize market opportunities and nullify external threats?

A company achieves low cost leadership when:

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

Rare

it is something rivals lack? resources that are common among firms and widely available cannot be a source of competitive advantage

The anticipated industry environment is fundamentally attractive if ______.

it presents a company with good opportunity for above-average profitability.

A company exhibits strategic intent when:

it relentlessly pursues an ambitious strategic objective and concentrates its full resources and competitive actions on achieving that objective

rivalry increases as it becomes

less costly for buyers to switch brands

resource bundle

linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities. they often pass the four tests of a ressource competitive power when 1 resource in the bundle cannot

Resource Bundle

linked and closely-integrated set of competitive assets centered around one or more of its cross-functional capabilities

force driving industry change: emerging..

new Internet capabilities and applications

DIVERSIFICATION PATH: Related businesses

possess competitively valuable cross-business value chain and resource matchups.

Resource and Capability Analysis

powerful tool for sizing up a company's competitive assets and determining if they can support a sustainable competitive advantage over market rivals

strategic agenda

problems that merit prompt managerial attention can be found by zeroing in on the strategic issues a company faces and compiling a list of roadblocks

Resource and capability analysis

provides managers with 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. Two step process: 1. identify the company's resources and capabilities 2. Examine them more closely to ascertain which are the most competitively important and whether they can support a sustainable competitive advantage over rival firms. (applying the four tests of a resource's competitive power)

A company's _____ can be observed in the pattern of its actions over time, which is a far better indicator than any of its strategic plans on paper or any public pronouncements about its strategy

realized strategy

Restructuring

refers to overhauling and streamlining the activities of a business—combining plants with excess capacity, selling off underutilized assets, reducing unnecessary expenses, and otherwise improving the productivity and profitability of the firm

Barriers of entry are high when there are these types or restrictive polices

regulatory and trade

Valuable

resource of capability must be directly relevant to the compnay's strategy, making the company a more effective competitor

A company requires a dynamically evolving portfolio of:

resources and capabilities to sustain its competitiveness and help drive improvements in its performance.

strategic group maps

reveal which companies are close competitors and which are distant competitors

(?) A company's value chain identifies

the primary activities and related support activities it performs in creating customer value

an appraisal of a rival's objectives

should include not only its financial performance objectives but strategics ones as well

A company's value chain identifies:

the primary activities and related support activities that create customer value.

(?) SWOT analysis is a simple but powerful tool for

sizing up a company's resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being

force driving industry change: changing

societal concerns

sustainable competitive advantage

something the firm can persistently do better than its competitors

The best technique for revealing the market positions of industry competitors is _______.

strategic group mapping

The sum of a company's strategic vision, objectives, and strategy constitutes a _______.

strategic plan

Barriers of entry are high when customers have

strong brand preferences and high degrees of loyalty to seller.

Competitive pressures are stronger when buyers view

substitutes as comparable or better

Differentiation can be based on _____ or _____ attributes.

tangible or intangible

WHEN A FOCUSED LOW-COST OR FOCUSED DIFFERENTIATION STRATEGY IS ATTRACTIVE

target market niche is big enough to be profitable and offers good growth potential industry leaders chose not to compete in niche, focusers avoid competing against strong competitors it is costly or difficult for multi-segment competitors to meet the specialized needs of niche buyers the industry has many different niches and segments rivals have little or no entry interest in target segment

The biggest danger of outsourcing is:

that a company will farm out too many or the wrong types of activities and thereby hollow out its own capabilities.

supplier power is stronger when suppliers provide an item

that accounts for no more than a small fraction of the cost of the industry's product

(?) The four tests of a resource's competitive power are often referred to as

the VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable

Reducing price does not lead to higher total profits unless:

the added gains in unit sales are large enough to bring in a bigger total profit despite lower margins per unit sold.

acquisition premium, or control premium

the amount by which the price offered exceeds the preacquisition market value of the target company

The greater the amount of customer value that a company can offer profitably relative to close rivals:

the less competitively vulnerable it becomes.

When a rivalry is strong

the battle for market share is generally so vigorous that the profit margins are squeezed to bare-bones levels.

As a rule, the strongest competitive forces determine _______.

the extent of the competitive pressure on industry profitability

If a company has resources and capabilities that are competitively valuable and rare,

the firm will have a competitive advantage over market rivals.

(?) A company's resources and capabilities represent

the firm's competitive assets, which are considered big determinants of its competitiveness and ability to succeed in the marketplace

Value-creating activities have a dynamic relationship and contributes to

the formation an development of other capabilities

Economic risks stem from:

the instability of a country's monetary system, economic and regulatory policies, and the lack of property rights protections

The higher a company's costs are above those of close rivals:

the more competitively vulnerable it becomes.

five forces framework

the most powerful and widely used tool for diagnosing the principal competitive pressures in a market

Corporate venturing, or new venture development

the process of developing new businesses as an outgrowth of a firm's established business operations. It is also referred to as corporate entrepreneurship or intrapreneurship since it requires entrepreneurial-like qualities within a larger enterprise.

The scope of the firm refers to:

the range of activities which the firm performs internally, the breadth of its product and service offerings, the extent of its geographic market presence, and its mix of business.

Whether an industry's entry barriers should be considered high or low depends on _______.

the resources and capabilities possessed by the pool of potential entrants

To profitably employ a best-cost provider strategy, a company must have:

the resources and capabilities to incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

Corporate parenting

the role that a diversified corporation plays in nurturing its component businesses through the provision of: - Top management expertise - Disciplined control - Financial resources - Other types of generalized resources and capabilities such as long-term planning systems, business development skills, management development processes, and incentive systems

A company's competitive strategy deal exclusively with ______.

the specifics of management's game plan for competing successfully.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is

their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.

If a company's resources and capabilities are hard to copy, with no good substitutes,

then the firm may be able to sustain this advantage even in the face of active efforts by rivals to overcome it.

rivalry is more intense when

there is excess supply or unused production capacity

buyer bargaining power is stronger when cost of switching

to competing brands or substitutes are relatively low

The essence of a broad differentiation strategy is:

to offer unique product attributes that a wide range of buyers find appealing and worth paying for.

Leverage ratio - debt to equity ratio

total debt / total stockholders equity -Shows the balance between debt (funds borrowed both short term and long term) and the amount that stockholders have invested in the enterprise. The further the ratio is below 1.0, the greater the firm's ability to borrow additional funds. Ratios above 1.0 put creditors at greater risk, signal weaker balance sheet strength, and often result in lower credit ratings.

Leverage ratio - Total debt to assets ratio

total debts / total assets -Measures the extent to which borrowed funds (both short-term loans and long-term debt) have been used to finance the firm's operations. A low ratio is better—a high fraction indicates overuse of debt and greater risk of bankruptcy

VRIN is

valuable, rare, inimitable, non-substitutable

A _______________ is a factor that can have a strong differentiating effect.

value driver

Specialized resources and capabilities have:

very specific applications and their use is limited to a restricted range of industry and business types.

A good strategy must contain:

ways to deal with all the strategic issues and obstacles that stand in the way of the company's financial and competitive success in the years ahead.

The real payoff of driving forces analysis is to help managers understand ______.

what strategy changes are needed to prepare for the impacts of the driving forces.

the most extreme case of a "competitively unattractive" industry occurs

when all five forces are producing strong competitive pressures

buyer price sensitivity increases

when buyers are earning low profit or have low income

The task of crafting strategy is a ______, not a one-time event.

work in progress

Financial resource fit.

• Do individual businesses adequately contribute to achieving company-wide performance targets? • Does the corporation have adequate financial strength to fund its different businesses and maintain a healthy credit rating?

Using a nine cell matrix to evaluate the strength of a diversified company's business lineup.

• Each business unit is plotted on the nine cell matrix according to its overall attractiveness and straight scores and then shown as a bubble. • In general diversified companies best prospects for good overall performance involve concentrating corporate resources on the business units having the greatest competitive strength and industry attractiveness.

Profitability ratio - Total Return on Assets

(profits after taxes + interest) / total assets -A measure of the return on total investment in the enterprise. Interest is added to after-tax profits to form the numerator, since total assets are financed by creditors as well as by stockholders.

Profitability ratio - Operating profit margin (ROS)

(sales revenue - operating expenses) / sales revenues OR operating income / sales revenues -Shows the profitability of current operations without regard to interest charges and income taxes. Earnings before interest and taxes is known as EBIT in financial and business accounting

Driving- forces analysis has three steps:

* identify what the driving forces are * asses whether the drivers of change are acting to make the industry more or less attractive * determine what strategy changes are needed to prepare for the impact of the driving forces.

RESTRUCTURING A DIVERSIFIED COMPANY'S BUSINESS LINEUP - Factors leading to corporate restructuring

- A serious mismatch between the firm's resources and capabilities and the type of diversification that it has pursued - Too many businesses in slow-growth, declining, low-margin, or otherwise unattractive industries - Too many competitively weak businesses - Ongoing declines in the market shares of major business units that are falling prey to more market-savvy competitors - An excessive debt burden with interest costs that eat deeply into profitability - Ill-chosen acquisitions that haven't lived up to expectations

Managing Capabilities Dynamically involves:

- Attending to the ongoing modification of existing competitive assets - Taking advantage of any opportunities to develop totally new kinds of capabilities

Ways to improve internally performed value chain activities

- Implement best practices throughout the firm, particularly for high-cost activities - Eliminate some cost-producing activities altogether by revamping the value chain - Relocate high-cost activities to areas where they can be performed more cheaply - Outsource activities that can be performed by vendors or contractors more cheaply than if done in-house - Invest in productivity enhancing, cost-saving technological improvements - Find ways to detour around activities or items where costs are high - Redesign products and/or components to facilitate speedier and more economical manufacture or assembly

WHEN TO ENGAGE IN INTERNAL DEVELOPMENT

- Low resistance of incumbent firms to market entry - Availability of in-house skills and resources - develop and launch business - Cost of acquisition higher than internal entry - Added capacity affects supply and demand balance

STEP 2: EVALUATING BUSINESS-UNIT COMPETITIVE STRENGTH

- Relative market share - Costs relative to competitors' costs - Ability to match or beat rivals on key product attributes - Brand image and reputation - Other competitively valuable resources and capabilities - Benefits from strategic fit with firm's other businesses - Bargaining leverage with key suppliers or customers - Profitability relative to competitors

Sources of Benchmarking Information

- Reports, trade groups, analysts and customers - Visits to benchmark companies - Data from consulting firms

Threats to Resources and Capabilities

- Rivals providing better substitutes over time - Capabilities decaying from benign neglect - Disruptive competitive environment change

STRATEGIC DIVERSIFICATION OPTIONS

- Sticking closely with the existing business lineup and pursuing opportunities presented by these businesses - Broadening the current scope of diversification by entering additional industries - Retrenching to a narrower scope of diversification by divesting poorly performing businesses - Broadly restructuring the entire firm by divesting some businesses and acquiring others to put a whole new face on the firm's business lineup

liquidity ratios

- current ratio - working capital

Indicators of strategic success

- growth in sales and market share - acquisition and retention of customers - strengthening image and reputation - increasing profit margins and net profits - leadership in factors relevant to industry success - continuing improvement of key measures of operating performance

Organizational Capability

- intangible but observable capacity of a firm to perform some activity proficiently using a related combination of its resources (resource bundle) - is knowledge-based, residing in people and in a firm's intellectual capital or in its organizational processes and functional systems, which embody tacit knowledge.

Strategic "How To" Issues (issues that merit front-burner managerial attention)

- meet challenges of new foreign competitors - combat the price discounting of rivals - to both reduce high costs and prepare for price reductions - sustain growth as buyer demand slows - adapt to the changing demographics of the firm's customer base

indicators of weak strategy or weak execution (or both)

- sluggish financial performance - second-rate market accomplishments

Competitive Assets

- the firms resources and capabilities - determinants of its competitiveness and ability to succeed in the marketplace - what a firm's strategy depends on

leverage ratios

- total debt-to-assets - long-term debt-to-capital - debt-to-equity - long-term debt-to-equity - times interest earned (coverage)

What do the key appraisals in a Weighted Competitive Strength Assessment involve (2)?

-1. how the company matches up against key rivals on industry key success factors and other chief determinants of competitive success 2. whether and why the company has a net competitive advantage or disadvantage.

How value chain activities relate to resources and capabilities

-Capability/competence implies a capacity for action; value creating activity initiates the action. -when companies engage in a value creating activity, they draw on specific company resources and capabilities that underline and enable the activity. -Resources and capabilities that are both valuable and rare provide a company with what it takes for competitive advantage

Approaches to enhancing differentiation through changes in the value chain system?

-Coordinating with downstream channels to enhance customer value -Coordinating with upstream suppliers to better address customer needs

Ways of Delivering Superior Value via a Differentiation Strategy?

-Include product attributes and user features that lower the buyer's costs. -Incorporate tangible features that improve product performance. -Incorporate intangible features that enhance buyer satisfaction in non-economic ways.

Overall Low Cost Strategy

-Has lower cost than rivals -includes features and services that customers consider essential -is viewed by buyers as offering equivalent or higher value if priced lower than competing products

When a Best-Cost Provider Strategy Works Best

-Product differentiation is the market norm. -There are a large number of value-conscious buyers who prefer mid-range products. -There is competitive space near the middle of the market for a competitor with either a medium-quality product at a below-average price or a high-quality product at an average or slightly higher price. -Economic conditions have caused more buyers to become value-conscious.

When does a best cost strategy work best?

-Product differentiation is the norm. -Large numbers of value-conscious buyers can be induced to purchase economically-priced mid-range products and services, especially during recessionary times. -A provider can offer either a medium-quality product at a below-average price or a high-quality product at an average or slightly higher-than-average

What are ways to manage the value chain in order to enhace differentiation?

-Product r&D -Production r&d and technology related activity -supply chain activities -manufacturing activities -distribution and shipping activities -marketing, sales, and customer service activities.

What are the 5 strategic "how to" issues?

1. How to meet challenges of new foreign competitors. 2. How to combat the price discounting of rivals. 3. How to both reduce high costs and prepare for price reductions. 4. How to sustain growth as buyer demand slows. 5. How to adapt to the changing demographics of the firm's customer base.

The Value Chain Analysis Process

1. Segregate the firm's operations into different types of primary and secondary activities to identify the major components of its internal cost structure 2. Use activity-based costing to evaluate the activities 3. Do the same for significant competitors

Cost-Efficient Management of Value Chain Activities - Securing a Cost Advantage

-Use lower-cost inputs and hold minimal assets -Offer only "essential" product features or services -Offer only limited product lines -Use low-cost distribution channels -Use the most economical delivery methods

Improving supplier related value chain activities

-attacked by pressuring suppliers for lower prices, switching to lower priced substitute inputs, and collaborating closely with suppliers to identify mutual cost saving opportunities

When a Differentiation Strategy Works Best (name favorable market circumstances)

-buyer needs and uses of the product are diverse -there are many ways that differentiation can have value to buyers -few rival firms are following a similar differentiation approach -There is rapid change in the product's technology and features

Primary and secondary activities identify the components of its internal cost structure

-cost of each activity contributes to whether the company's overall cost position relative to rivals is favorable or unfavorable -Key purposes of value chain analysis and benchmarking are to develop the data for comparing a company's costs activity by activity against the costs of key rivals and to learn which internal activities are a source of cost advantage/disadvantage -Activity based accounting - determines the costs of performing each vale chain activity.

What do the SWOT listings reveal?

-drawing conclusions and translating these conclusions into strategic actions to better match the company's strategy to its internal strengths and market opportunities, to correct important weaknesses, and to defend against external threats. -A company's internal strengths should always serve as the basis of its strategy - placing heavy reliance on a company's best competitive assets is the soundest route to attracting customers and competing successfully against rivals

Identifying capabilities

-virtually all organizational capabilities are knowledge based, residing in people and in a company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. Two approaches: 1. takes the completed listing of a firm's resources as its starting point. Looking over the firm's resources and considering whether and to what extent the firm has built up any related capabilities. Ex: fleet of trucks, latest RFID tracking technology and a set of large automated distribution centers may be indicative of sophisticated capabilities in logistics and distribution 2. functional approach. Capabilities related to fairly specific functions draw on a limited set of resources and typically involve a single department or organizational unit. Capabilities in in injection molding or continuous casting or metal stamping are manufacturing related, capabilities in direct selling, promotional pricing or database marketing all connect to the sales and marketing functions, etc. Problem: many of the most important capabilities of firms are inherently cross functional. - draw on a number of different kinds of resources and are multidimensional in nature.

How to translate low cost strategy into attractive profit performance?

. Use lower cost edge to under price competitors and attract price-sensitive buyers in great enough numbers to increase total profits (VOLUME) 2. Maintain present price, be content with present mkt share, use lower cost edge to earn higher profit margin on each unit sold (PROFIT MARGIN BY KEEPING PRICE)

What are the 4 tests of a resource's competitive power?

1) Is the resource (or capability) competitively valuable? 2) Is the resource rare—is it something rivals lack? 3) Is the resource hard to copy? 4) Can the resource be trumped by different types of resources and capabilities—are there good substitutes available for the resource?

When a Low-Cost Provider Strategy Works Best

1) Price competition among rival sellers is vigorous. 2) Identical products are available from many sellers. 3) There are few ways to differentiate industry products. 4) Most buyers use the product in the same ways. 5) Buyers incur low costs in switching among sellers.

List 3 benefits of a vertical integration strategy.

1. Add materially to a firm's technological capabilities 2. Strengthen the firm's competitive position 3. Boost the firm's profitability

When a Differentiation Strategy Works Best?

1. Buyer needs and uses of the product are diverse. 2.There are many ways to differentiate the product or service that have value to buyers. 3. Few rival firms are following a similar differentiation approach. 4. Technological change is fast-paced and competition revolves around rapidly evolving product features.

List 2 core management functions.

1. Crafting strategy 2. Executing strategy

List 10 common cost-drivers

1. Economies of Scale 2. Learning and experience 3. Capacity utilization 4. Supply chain efficiencies 5. Input costs 6. Production technology and design 7. Communications systems and information technology 8. Bargaining power 9. Outsourcing or vertical integration 10. Incentive system and culture

What are the six questions that comprise the task of evaluating a company's resources and competitive position?

1. How well is the company's present strategy working? 2. Do the company's resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors? 3. Is the company able to seize market opportunities and overcome external threats to its future well-being? 4. Are the company's cost structure and value proposition competitive? 5. On an overall basis, is the company competitively stronger or weaker than key rivals? 6. What strategic issues and problems merit front-burner managerial attention?

How to Gain a Low-cost Advantage:

1. Perform value chain activities more cost-effectively than rivals. 2. Revamp the firm's overall value chain to eliminate or bypass cost-producing activities.

How to revamp or re engineer the value chain?

1. Selling Directly to consumers (cutting out costs of distributors) 2. Streamline operations (eliminate unnecessary steps) 3. Collaborating with suppliers to improve supply chain efficiency by reducing shipping ,handling, and material costs

The business universe is divided into (2):

1. The existing market 2. Blue-ocean market space

What does VRIN stand for?

1. Valuable 2. Rare 3. Inimitable 4. Non-substitutable

Two (2) telling signs of whether a company's situation is strong or precarious is:

1. whether its prices and costs are competitive with those of industry rivals 2. how it compares with rivals in terms of differentiation—how effectively it delivers on its customer value proposition.

Driving forces analysis helps managers identify whether A. The combined impacts of the driving forces will act to increase/decrease market demand, increase/decrease competition and raise/lower industry profitability in the years ahead B. It will become more or less important to aim the company's strategy at being the industry's low-cost producer

A

Using the five-forces model of competition to determine what competition is like in a given industry involves A . building the picture of competition in three steps: (1) identifying the specific competitive pressures associated with each of the five competitive forces; (2) evaluating how strong the pressures comprising each competitive force are; and (3) determining whether the collective impact of all five competitive forces is conducive to earning attractive profits. B. building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits. C. evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors. D. assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures. E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

A . building the picture of competition in three steps: (1) identifying the specific competitive pressures associated with each of the five competitive forces; (2) evaluating how strong the pressures comprising each competitive force are; and (3) determining whether the collective impact of all five competitive forces is conducive to earning attractive profits.

cash cow business

A cash cow business generates cash flows over and above its internal requirements, thus providing a corporate parent with funds for investing in cash hog businesses, financing new acquisitions, or paying dividends.

A company's Resources and Capabilities must be managed dynamically

A company requires a dynamically evolving portfolio of resources and capabilities to sustain its competitiveness and help drive improvements in its performance -must be continually strengthened and nurtured, may need to be broadened and deepened to allow the company to position itself to pursue emerging market opportunities 1. attending to the ongoing modification of existing competitive assets 2. casting a watchful eye for opportunities to develop totally new kinds of capabilities

What does a company's business model do?

A company's business model sets forth the logic for how its strategy will create value for customers, while at the same time generate revenues sufficient to cover costs and realize a profit.

What is a distinctive competence?

A competitively valuable activity that a firm performs better than its rivals.

Define resource bundle.

A linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities.

What is a global strategy?

A strategy in which a company employs the same basic competitive approach in all countries where it operates, sells much the same products everywhere, strives to build global brands, and coordinates its actions worldwide with strong headquarters control.

What is a multidomestic strategy?

A strategy in which a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions.

What is a blue-ocean strategy?

A strategy that offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand.

What is a company's realized strategy

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

internal capital market

A strong internal capital market allows a diversified firm to add value by shifting capital from business units generating free cash flow to those needing additional capital to expand and realize their growth potential.

What enables a company to improve its financial performance?

A stronger market standing and greater comparative vitality

The chief difference between a broad differentiation strategy and a focused differentiation is A. The size of the buyer group that a company is trying to appeal to B. The degree of bargaining power that buyers have C. Whether the product is strongly differentiated or weakly differentiated from rivals

A. The size of the buyer group that a company is trying to appeal to

Which of the following is not one of the strategy options for expanding into markets of foreign countries? A. A profit sanctuary strategy B. An export strategy C. A licensing strategy D. Establish a subsidiary in a foreign market strategy E. A franchising strategy

A. A profit sanctuary strategy

The target market of a best-cost provider is A) value-conscious buyers. B) brand-conscious buyers. C) price-sensitive buyers. D) middle-income buyers. E) young adults (in the 18-35 age group).

A) value-conscious buyers.

Which of the following is NOT a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the industry's key factors for future competitive success? D. Is the outlook for the industry conducive to providing attractive profitability? E What are the driving forces in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A. How many companies in the industry have good track records for revenue growth and profitability?

Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the key factors for future competitive success?

A. How many companies in the industry have good track records for revenue growth and profitability?

The competitive moves and business approaches a company's management is using to grow the business, compete successfully, attract and please customers, conduct operations, respond to changing economic and market conditions, and achieve organizational objectives is referred to as its A. strategy. B. mission statement. C. strategic intent. D. business model. E. strategic vision.

A. strategy.

What is a transitional strategy?

An approach that incorporates elements of both multidomestic and global strategies

A company achieves sustainable competitive advantage when A. It has a profitable business model B. An attractive number of buyers have a lasting preference for its products or services as compared to the offerings of competitors C. It is able to maximize shareholder wealth D. It is consistently able to achieve both its strategic and financial objectives E. Its strategy and its business model are well-matched and in sync

B

A company exhibits strategic intent when A. It adopts a strategic plan B. It relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective C. Senior executives pursue their strategic vision D. Top management establishes a comprehensive set of strategic objectives

B

A company needs financial objectives A. To spur company personnel to help the company overtake key competitors on such important measures as net profit margins and return on investment B. Because adequate profitability and financial strength is critical to effective pursuit of its strategic vision, as well as to its long-term health and ultimate survival—weak earnings and a weak balance sheet alarm shareholders and creditors and put executives' jobs at risk C. To indicate to employees whether the emphasis should be on earnings per share or return on investment or return on assets or positive cash flow D. To convince shareholders that top management is acting in their interests E. To counterbalance its pursuit of strategic objectives and have a balanced scorecard for judging the caliber of its overall performance

B

A company's strategy evolves from one version to the next because of A. Changing management conclusions about which of several appealing strategy alternatives is actually best B. The proactive efforts of company managers to improve this or that aspect of the strategy, a need to respond to changing customer requirements and expectations and a need to react to fresh strategic maneuvers on the part of rival firms C. Ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy) D. Pressures from shareholders to boost profit margins and pay higher dividends E. The importance of keeping the company's business model fresh and up-to-date

B

A set of "stretch" financial and strategic objectives A. Pushes the company closer to true profit maximization B. Is an effective tool for avoiding ho-hum results C. Helps convert the mission statement into meaningful company values D. Challenges company personnel to execute the strategy with greater proficiency E. Helps create a "balanced scorecard" for judging company performance

B

One of the important benefits of a well-conceived and well-stated strategic vision is to A. Clearly delineate how the company's business model will be implemented and executed B. Clearly communicate management's aspirations for the company to stakeholders and help steer the energies of company personnel in a common direction C. Set forth the firm's strategic objectives in clear and fairly precise terms D. Help create a "balanced scorecard" approach to objective-setting and not stretch the company's resources too thin across different products, technologies and geographic markets E. Indicate what kind of sustainable competitive advantage the company will try to create in the course of becoming the industry leader

B

Which of the following is not a factor that causes buyer bargaining power to be stronger? A. Some buyers are a threat to integrate backward into the business of sellers and become an important competitor B. The industry is composed of a few large sellers and the customer group consists of numerous buyers that purchase in fairly small quantities

B

Which one of the following is not an important aspect of evaluating the merits of a diversified company's strategy? A) Assessing the competitive strength of each business the company has diversified into B) Determining which business units are cash cows and which ones are cash hogs and then evaluating how soon the company's cash hogs can be transformed into cash cows C) Evaluating the strategic fits and resource fits among the various sister businesses D) Assessing the attractiveness of the industries the company has diversified into, both individually and as a group E) Ranking the performance prospects of the businesses from best to worst and deciding what priority to give each of the company's business units in allocating resources

B) Determining which business units are cash cows and which ones are cash hogs and then evaluating how soon the company's cash hogs can be transformed into cash cows

Which of the following is not a typical reason for companies to expand into the markets of foreign countries? A) To gain access to new customers B) To strengthen its capability to employ vertical integration strategies, especially those that involve partial integration (building positions in selected stages of the industry's value chain) C) To achieve lower costs and enhance the firm's competitiveness D) To capitalize on company competencies and capabilities E) To spread business risk across a wider geographic market base

B) To strengthen its capability to employ vertical integration strategies, especially those that involve partial integration (building positions in selected stages of the industry's value chain)

Diversification becomes a relevant strategic option in all but which one of the following situations? A) When a company spots opportunities to expand into industries whose technologies and products complement its present business. B) When a company is only earning a low profit margin in its principal business C) When a company has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D) When a company can open up new avenues for reducing costs by diversifying into closely related businesses. E) When a company can leverage existing competencies and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets.

B) When a company is only earning a low profit margin in its principal business

Which of the following is not a measure of the competitive power of a company's resource strengths? A) How hard it is for competitors to copy the resource strength B) Whether the company has more resources/capabilities than any other key rival C) Whether a company's resource is really competitively valuable D) How easily the resource or capability can be trumped by the substitute resources/capabilities of rivals E) Whether the resource or capability is rare and something rivals lack

B) Whether the company has more resources/capabilities than any other key rival

Diversifying into new businesses is justifiable only if it A) results in increased profit margins and bigger total profits. B) builds shareholder value. C) helps a company escape the rigors of competition in its present business. D) leads to the development of a greater variety of distinctive competencies and competitive capabilities. E) helps the company overcome the barriers to entering additional foreign markets.

B) builds shareholder value.

A broad differentiation strategy generally produces the best results in situations where A) buyer brand loyalty is low. B) buyer needs and uses of the product are diverse. C) new and improved products are introduced only infrequently. D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes. E) price competition is vigorous.

B) buyer needs and uses of the product are diverse.

The most difficult part of benchmarking is A. the decision of whether to do it at all. B. how to gain access to information regarding rivals practices and costs. C. when to initiate the process. D. what information to utilize in the analysis process. E. when to stop the process and move forward with strategy.

B. how to gain access to information regarding rivals practices and costs.

In a diversified company, a business subsidiary has more competitive advantage potential when A) it is a cash cow. B) it has value chain relationships with other business subsidiaries that present competitively valuable opportunities to transfer skills or technology or intellectual capital from one business to another, combine the performance of related activities and reduce costs, share use of a well-respected brand name, or collaborate to create new competitive capabilities. C) it is the company's biggest profit producer or is capable of becoming the biggest. D) it is in a fast-growing industry. E) it operates in an industry where competition is less intense and driving forces are relatively weak.

B) it has value chain relationships with other business subsidiaries that present competitively valuable opportunities to transfer skills or technology or intellectual capital from one business to another, combine the performance of related activities and reduce costs, share use of a well-respected brand name, or collaborate to create new competitive capabilities.

A company competing in a rapid-growth industry A) needs to be primarily concerned about building first-rate R&D capabilities. B) needs a strategy predicated on growing faster than the market average, so that it can boost its market share and improve its competitive standing vis-à-vis rivals. C) should put top priority on improving product quality. D) is well advised to employ a best-cost provider strategy. E) is doomed if it is not an aggressive first-mover.

B) needs a strategy predicated on growing faster than the market average, so that it can boost its market

Outsourcing strategies can offer such advantages as A) increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy. B) obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure. C) speeding a company's entry into foreign markets. D) permitting greater use of strategic alliances and collaborative partnerships. E) giving a firm more direct control over the costs of value chain activities.

B) obtaining higher quality and/or cheaper components or services, improving a company's ability to

A blue ocean type of offensive strategy A) is a pre-emptive strike type of price-cutting offensive used by a market leader to steal customers away from higher-priced rivals. B) offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand C) involves deliberately attacking those market segments where a key rival makes big profits. D) involves using innovative advertising and deep price discounts to grab sales and market share from complacent or distracted rivals. E) employs highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

B) offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand

One appealing aspect of unrelated diversification is that it A) expands a firm's competitive advantage opportunities to include a wider array of businesses. B) spreads the business risk across a group of truly diverse industries. C) increases strategic fit opportunities and the potential for a 1 + 1 =3 outcome on the bottom line. D) results in having more cash cow businesses than cash hog businesses. E) facilitates capturing the financial fits among sister businesses (as compared to a strategy of related diversification)

B) spreads the business risk across a group of truly diverse industries.

Cross-market subsidization refers to: A) the practice of charger higher prices in some countries than in other countries. B) supporting competitive offensives in one market with resources and profits diverted from operations in other country markets. C) convincing the governments of local countries to help finance and otherwise subsidize a company's entry into their market into order to help it overcome local entry barriers. D) using the profits earned in low-cost plants to help keep high-cost plants open. E) selling goods at cut-rate prices in the markets of foreign countries.

B) supporting competitive offensives in one market with resources and profits diverted from operations in other country markets.

The defining characteristic of unrelated diversification (as opposed to related diversification) is A) the presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit). B) that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities). C) the presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit). D) that the company's businesses are in different industries. E) the presence of cross-business financial fit.

B) that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities).

The defining characteristic of related diversification (as opposed to unrelated diversification) is A) that each business the company has diversified into are utilizing similar competitive strategies. B) the presence of cross-business value chain relationships and strategic fits. C) that each business the company has diversified into has very similar core competencies and competitive capabilities. D) that the company has about the same number of cash cow businesses as it does cash hog businesses. E) the existence of cross-industry resource fits and similar key success factors from industry to industry.

B) the presence of cross-business value chain relationships and strategic fits.

In a weighted competitive strength assessment, the sum of the weights should add up to A. 100%. B. 1.0. C. 10. D. 100. E. None of these.

B. 1.0.

One of the big dangers in crafting a competitive strategy is that managers, torn between the pros and cons of the various generic strategies, will opt for A. A low-cost provider strategy because it is usually the safest, least risky competitive strategy B. A "stuck-in-the-middle" strategy C. A broad differentiation strategy because it is frequently the most profitable competitive strategy

B. A "stuck-in-the-middle" strategy

Which of the following is not something a company's strategy is concerned with? A. Management's choices about how to attract and please customers B. How quickly and closely to copy the strategies being used by successful rival companies C. Management's choices about how to grow the business D. Management's choices about how to compete successfully E. Management's action plan for conducting operations and improving the company's financial and market performance

B. How quickly and closely to copy the strategies being used by successful rival companies

Which of the following is MOST likely to qualify as a driving force? A. Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals B. Successful introduction of innovative new products or new ways to market products C. An increase in the prices of substitute products D. Decisions on the part of industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader E. Decisions by one or more outsiders not to attempt to enter the industry

B. Successful introduction of innovative new products or new ways to market products

When a company operates in the markets of two or more different countries, its foremost strategic issue is A. whether to use strategic alliances to help defeat its rivals. B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries. C. whether to maintain a national (one-country) manufacturing base and export goods to the other countries. D. choosing which foreign companies to team up with via strategic alliances or joint ventures. E. whether to test the waters with an export strategy before committing to some other competitive approach.

B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures? A. A salad as a substitute for French fries B. Wireless phones as a substitute for wired telephones C. Coca-Cola as a substitute for Pepsi

C

Which one of the following is not a factor that affects the strength of supplier bargaining power? A. Whether needed inputs are in ample supply and are readily available from several different suppliers B. Whether industry members are a strong threat to integrate backward into the business of suppliers and self-manufacture their own requirements C. Whether industry members are struggling to make good profits because of slow-growing market demand

C

Which one of the following is not an advantage of setting "stretch" objectives? A. Helping to avoid ho-hum results B. Pushing company personnel to be more inventive and innovative C. Helping clarify the company's strategic vision and strategic intent D. Helping a company be more focused and intentional in its actions E. Spurring exceptional performance and helping build a firewall against contentment with modest performance gains

C

Which one of the following questions is not pertinent to company managers in thinking strategically about their company's directional path and developing a strategic vision? A. Is the outlook for the company promising if it continues with its present product-market-technology-customer focus? B. Are changing market and competitive conditions acting to enhance or weaken the company's prospects? C. What business approaches and operating practices should we consider in trying to implement and execute our business model? D. What are our ambitions for the company—what industry standing do we want the company to have? E. What, if any, new customer groups and/or geographic markets should the company get in position to serve?

C

Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed, which one of the following is not one of the main strategy options that a company can pursue? A) Pursue multinational diversification B) Restructure the company's business lineup with a combination of divestitures and new acquisitions C) Craft new initiatives to build/enhance the reputation of the company's brand name D) Divest some businesses and retrench to a narrower diversification base E) Broaden the diversification base

C) Craft new initiatives to build/enhance the reputation of the company's brand name

Which of the following are commonly encountered types of market conditions that must be considered by strategy-makers? A) Entrepreneurial industries, change dominant markets, and resource based industries. B) Hostile markets, competitive markets, oligopolies, and monopolies. C) Emerging markets, mature markets, fragmented markets, and turbulent markets. D) Lowe cost markets, differentiation markets, best cost markets, and focused industries. E) Moderately competitive industries, fiercely competitive industries, and weakly competitive industries.

C) Emerging markets, mature markets, fragmented markets, and turbulent markets.

Which one of the following is not a way for a company to build competitive advantage by pursuing a multinational diversification strategy? A) Fully capturing economies of scale and experience curve effects as well as cross-business economies of scope B) Using cross-business and cross-country coordination of certain value chain activities to outcompete rivals C) Expansion of a company's business model to include revenues from exporting, franchising, and licensing D) Transferring competitively valuable resources from one business to another and one country to another E) Leveraging use of a well-known and competitively powerful brand name across two or more of its businesses

C) Expansion of a company's business model to include revenues from exporting, franchising, and licensing

Which of the following is typically the strategic impetus for forward vertical integration? A) To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers B) To make it easier to expand the company's product line C) To gain better access to end users and better market visibility D) To achieve greater control over advertising and in-store retail merchandising E) To gain better access to greater economies of scale

C) To gain better access to end users and better market visibility

Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers? A) To enhance the quality of parts and components being supplied and/or to reduce defect rates B) To speed the availability of next-generation components C) To reduce the bargaining power they face from buyers of their products D) To squeeze out important cost savings for both themselves and their suppliers E) To reduce inventory and logistics costs

C) To reduce the bargaining power they face from buyers of their products

In which one of the following market circumstances is a broad differentiation strategy generally not well-suited? A) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B) When few rivals are pursuing a similar differentiation approach. C) When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated D) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E) When technological change is fast-paced and competition revolves around rapidly evolving product features

C) When most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated

The most popular strategy for entering new businesses and accomplishing diversification is A) forming a joint venture with another company to enter the target industry. B) internal startup. C) acquisition of an existing business already in the chosen industry. D) forming a strategic alliance with another company to enter the target industry. E) None of the above—strategic alliances and joint ventures are equally popular and rank well ahead of acquisition and internal start-up in terms of frequency of use.

C) acquisition of an existing business already in the chosen industry.

The central strategy-making challenge in a turbulent market environment is A) remaining the industry's first-mover. B) building stronger supply chain alliances than rivals. C) managing change. D) deciding when to cut prices versus when to improve product features and performance. E) how often to change the company's business model without impairing profitability.

C) managing change.

Horizontal Mergers and Acquisitions involve....

Combining the operations of companies within the same product or service market

Joint ventures have the potential for developing serious drawbacks due to:

Conflicting objectives and expectations of venture partners Disagreements among or between venture partners over how best to operate the venture Cultural clashes among and between the partners Dissolution of the venture when one of the venture partners decides to go their own way

A company that pursues and achieves strategic objectives Refer To: 43 A. Is likely to weaken the achievement of its short-term and long-term financial objectives B. Believes that the company's financial performance is not as important as it really is C. Is generally not strongly focused on its true mission of making a profit D. Is frequently in better position to improve its future financial performance (because of the increased competitiveness and strength in the marketplace that flows from the achievement of strategic objectives)

D

A company's values concern A. Whether and to what extent it intends to operate in an ethical and socially responsible manner B. How aggressively it will seek to maximize profits and enforce high ethical standards C. The beliefs and operating principles built into the company's "balanced scorecard" for measuring performance D. The beliefs, traits and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and strategy E. The beliefs, principles and ethical standards that are incorporated into the company's strategic intent and business model

D

A strategic group consists of those firms in an industry that A. Are subject to the same driving forces B. Are placing about the same emphasis on each distribution channel C. Use the same key success factors to differentiate their products D. Employ similar competitive approaches and occupy similar positions in the market

D

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A) when high transportation costs make it expensive to operate from central locations. B) whenever buyer-related activities are best performed in locations close to buyers. C) if economies of scale are essential to achieving acceptable production costs. D) Both A and B. E) None of the above.

D) Both A and B.

Which of the following is not a typical reason that many alliances prove unstable or break apart? A) Inability to work well together B) Mounting competition between one or more allies in the marketplace C) Changing conditions that render the purpose of the alliance obsolete and the emergence of more attractive technological paths D) Disagreement over how to divide the added market share and profits gained from joint collaboration E) Diverging objectives and strategic priorities

D) Disagreement over how to divide the added market share and profits gained from joint collaboration

The pattern of actions and business approaches that would NOT define a company's strategy include: A) actions to strengthen market standing and competitiveness by acquiring or merging with other companies. B) actions to strengthen competitiveness via strategic coalitions and partnerships. C) actions to upgrade competitively important resources and capabilities. D) actions to gain sales and market share with lower prices despite increased costs. E) actions to strengthen the bargaining position of suppliers and distributors with rivals.

D) actions to gain sales and market share with lower prices despite increased costs.

Which one of the following is not likely to be a suitable strategy option for companies competing in rapid- growth industries? A) Driving down costs per unit so as to enable price reductions that attract droves of new customers B) Pursuing rapid product innovation, both to set a company's product offering apart from rivals and to incorporate attributes that appeal to growing numbers of customers C) Gaining access to additional distributional channels and sales outlets D) Vertically integrating forward and backward to enable greater control of the industry value chain E) Expanding the product line to add models/styles that appeal to a wider range of buyers

D) Vertically integrating forward and backward to enable greater control of the industry value chain

The best strategic alliances A) aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. B) are those whose purpose is helping a company master a new technology. C) are those formed to enable the partners to be consistent first movers or fast followers. D) are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit. E) aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.

D) are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit.

Which of the following is not among the factors that affect whether competitive rivalry among participating firms is strong, moderate or weak? A. Whether the products of rival sellers are strongly or weakly differentiated B. Whether demand for the industry's product is growing rapidly or slowly C. The degree to which rivals are satisfied with their current market position D. Whether industry driving forces are strong or weak

D. Whether industry driving forces are strong or weak

A strategic group map is a helpful analytical tool for A) assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. B) determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. C) determining which company is the most profitable in the industry and why it is doing so well. D) determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions. E) pinpointing which of the five competitive forces is the strongest and which is the weakest.

D) determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions.

The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that A) a "think global, act local" approach involves charging much difference prices in the various country markets where the company competes. B) a "think global, act local" approach involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused) in all country markets. C) a "think global, act local" approach involves considerably less adherence to utilizing the same capabilities, distribution channels, and marketing approaches worldwide. D) local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions. E) a "think global, act global" approach involves selling under a single brand worldwide whereas a "think global, act local" approach involves the use of multiple brands (often a local brand for each local market).

D) local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.

A low-cost leader's basis for competitive advantage is A) using an everyday low pricing strategy to gain the biggest market share. B) bigger profit margins than rival firms. C) high buyer switching costs because of the company's differentiated product offering. D) meaningfully lower overall costs than competitors. E) a reputation for charging the lowest prices in the industry.

D) meaningfully lower overall costs than competitors.

Which of the following statements about a company's strategy is true? A. A company's strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level managers (so as to catch rival companies by surprise when the strategy is launched). B. A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches because of the risks of making on-the-spot changes. C. A company's 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. D. A company's strategy is typically a blend of proactive and reactive strategy elements. E. A company's strategy is developed mostly on the fly because of the constant efforts of managers to come up with fresh moves to keep the company's product offering clearly different and set apart from the product offerings of rival companies.

D. A company's strategy is typically a blend of proactive and reactive strategy elements.

What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities? A. Social ambiguity and causal uncertainty. B. Social simplicity and causal complexity. C. Collective complexity and causal ambiguity. D. Social complexity and causal ambiguity. E. Social simplicity and causal uncertainty.

D. Social complexity and causal ambiguity.

Which of the following is not a potential benefit of strategic alliances or other cooperative arrangements between foreign and domestic companies? A. Gaining wider access to attractive country markets B. Gaining better access to scale economies in production and/or marketing C. Filling competitively important gaps in their technical expertise and/or knowledge of local markets D. Greater ability to employ a global strategy (as opposed to a multicountry strategy) E. Sharing distribution facilities and dealer networks, thus mutually strengthening their access to buyers

D. Greater ability to employ a global strategy (as opposed to a multicountry strategy)

Which one of the following pairs of variables is LEAST likely to be useful in drawing a strategic group map? A. Geographic market scope and degree of vertical integration B. Brand name reputation and distribution channel emphasis C. Product quality and product-line breadth D. Level of profitability and size of market share E. Price/perceived quality and image range and the extent of buyer appeal

D. Level of profitability and size of market share

The competitive battles among rival sellers striving for better market positions, higher sales and market shares, and competitive advantage, suggests the rivalry force: A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies. B. is typically a weaker competitive force than is the threat of entry of new rivals. C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders. E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.

D. tends to intensify when strong companies with sizable financial resources, proven competitive capabilities, and respected brand names hurdle entry barriers looking for growth opportunities and launch aggressive, well-funded moves to transform into strong market contenders.

APPROACHES TO DIVERSIFYING THE BUSINESS LINEUP

Diversifying into New Businesses 1. Existing business acquisition 2. Internal new venture (start-up) 3. Joint venture

What's the most important with the swot analysis

Draw conclusion and draft strategic actions

Creating buyer value via a differentiation strategy A) has to be grounded in providing buyers with unique extras that deliver real value rather than perceived value. B) allows a company to command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features). C) can be achieved anywhere along the industry value chain and can involve incorporating product attributes and user features that either lower buyers' overall costs of using the product or raise the performance a buyer gets from the product. D) is an attractive competitive strategy when there are few ways to achieve differentiation that have value to buyers. E) Both B and C.

E) Both B and C.

Which of the following is not one of the ways in which a company can pursue competitive advantage by expanding outside its domestic market and competing multinationally? A) Locating value chain activities among various countries in a manner that lowers costs B) Efficient and effective transfer of competitively valuable competencies and capabilities from the company's domestic market to the targeted foreign markets C) Locating value chain activities among various countries in a manner that helps achieve greater product differentiation D) Cross-border coordination of its activities in ways that contribute to building a competitive edge E) Employing a profit sanctuary strategy to facilitate cross-market subsidization and thereby outcompete rivals that have a multicountry strategy.

E) Employing a profit sanctuary strategy to facilitate cross-market subsidization and thereby outcompete rivals that have a multicountry strategy.

Which of the following is not a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement? A) The alliance is critical to the company's achievement of an important objective. B) The alliance helps block a competitive threat. C) The alliance helps open up important new market opportunities. D) The alliance helps build, enhance, or sustain a core competence or competitive advantage. E) The alliance helps the company obtain additional financing on better credit terms.

E) The alliance helps the company obtain additional financing on better credit terms.

Which one of the following is not an offensive strategy that a company can use in competing in foreign markets? A) Attacking a foreign rival's profit sanctuaries B) Employing cross-market subsidization to win customers and sales away from select rivals in select country markets C) Dumping goods at cut-rate prices in the markets of foreign rivals D) Any of the "standard" offensive strategies discussed in Chapter 6 that any company can use to attack rivals, either foreign or domestic E) Using an export strategy to attack rivals in emerging country markets on the basis of both higher quality and lower prices

E) Using an export strategy to attack rivals in emerging country markets on the basis of both higher quality and lower prices

A focused low-cost strategy can lead to attractive competitive advantage when A) buyers are looking for the best value at the best price. B) buyers are looking for a budget-priced product. C) buyers are price sensitive and are attracted to brands with low switching costs. D) demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies. E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

The measure of internal cash flow estimates the cash a company's business is generating ____________. A) after payment of operating expenses, and interest B) before payment of operating expenses, interest, and taxes C) after payment of operating expenses, interest, taxes, dividends, and desirable reinvestments in the business D) before payment of interest and taxes. E) after payment of operating expenses, interest, and taxes

E) after payment of operating expenses, interest, and taxes

Cross-business strategic fits can be found A) in unrelated as well as related businesses and in the markets of foreign countries as well as in domestic markets. B) only in businesses whose products/services satisfy the same general types of buyer needs and preferences. C) mainly in either technology related activities or sales and marketing activities. D) chiefly in the R&D portions of the value chains of unrelated businesses E) anywhere along the respective value chains of related businesses.

E) anywhere along the respective value chains of related businesses.

The best place to look for cross-business strategic fits is A) in R&D and technology activities. B) in supply chain activities. C) in sales and marketing activities. D) in production and distribution activities. E) anywhere along the respective value chains of related businesses—no one place is best.

E) anywhere along the respective value chains of related businesses—no one place is best.

The task of driving forces analysis is to A) identify all the underlying factors that can cause industry and company profitability to rise or fall in the years ahead. B) predict what new forces of competitive and market change will emerge next. C) determine which of the five competitive forces is the biggest driver of industry change and to assess the impact on the company. D) identify which companies are being driven to move from one strategic group to another strategic group. E) determine how the collective impact of the driving forces will change market demand, competition and industry profitability

E) determine how the collective impact of the driving forces will change market demand, competition and industry profitability

Competitive success in fast-changing markets tends to hinge on a company's ability to A) be the first-mover in reacting and responding to change. B) be more adept than rivals in employing offensive strategies of one kind or another. C) develop a distinctive competence in anticipating change. D) stay on the cutting-edge of technological change. E) improvise, experiment, adapt, reinvent, and regenerate as market and competitive conditions shift rapidly and sometimes unpredictably.

E) improvise, experiment, adapt, reinvent, and regenerate as market and competitive conditions shift

A company achieves competitive advantage whenever A) it has a product offering that is differentiated from the product offerings of rivals. B) its customers exhibit a high degree of loyalty to the company's brand. C) it has more core competencies than its rivals. D) it has a better credit rating than rivals. E) it has some type of edge over rivals in attracting customers and coping with competitive forces.

E) it has some type of edge over rivals in attracting customers and coping with competitive forces.

The chief purpose of calculating quantitative industry attractiveness scores for each industry a company has diversified into is to A) determine which industry is the biggest and fastest growing. B) get in position to rank the industries from most competitive to least competitive. C) provide a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into, both individually and as a group, and further to provide an indication of which industries offer the best and worst long-term prospects. D) ascertain which industries have the easiest-to-achieve key success factors. E) rank the attractiveness of the various industry value chains from best to worst.

E) rank the attractiveness of the various industry value chains from best to worst.

Competing differently from rivals—doing what competitors don't do or, even better, doing what they can't do is referred to as its A) strategic offensive for becoming a market leader. B) business model. C) long-term strategic direction. D) mission statement. E) strategy.

E) strategy.

A joint venture is an attractive way for a company to enter a new industry when A) the pool of attractive acquisition candidates in the target industry is relatively small. B) it needs better access to economies of scope in order to be cost-competitive. C) the industry is growing slowly and adding too much capacity too soon could create oversupply conditions. D) the firm has no prior experience with diversification and the industry is on the verge of explosive growth. E) the opportunity is too risky or complex for a company to pursue alone, a company lacks some important resources or competencies and needs a partner to supply them, and/or a company needs a local partner in order to enter a desirable business in a foreign country.

E) the opportunity is too risky or complex for a company to pursue alone, a company lacks some important resources or competencies and needs a partner to supply them, and/or a company needs a local partner in order to enter a desirable business in a foreign country.

Which of the following is not one of the five generic types of competitive strategy? A. A low-cost provider strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. A market share dominator strategy

E. A market share dominator strategy

For a company to have competitively potent resources and capabilities, they must A. be in sync with changes in the company's own strategy. B. be in sync with its efforts to achieve a resource-based competitive advantage. C. fully support company efforts to attract customers. D. combat competitors' newly launched offensives to win bigger sales and market shares. E. All of these.

E. All of these.

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on: A. the degree to which buyers have any bargaining preferences and the extent to which buyers are price-sensitive. B. how many buyers are engaged in collaborative partnerships with sellers. C. whether entry barriers are high or low and the size of the pool of likely entry candidates. D. whether the overall quality of the items being furnished by industry members is rising or falling. E. whether demand-supply conditions represent a buyer's market or a seller's market.

E. whether demand-supply conditions represent a buyer's market or a seller's market.

What are functional area strategies?

Functional area strategies concern the actions and approaches employed in managing particular functions within a business (like r&d, production, sales and marketing, customer service, and finance)

The risk of being a best-cost provider strategy - getting squeezed on both sides

Get squeezed from low-cost providers and high-end differentiators Significantly lower price than high-end differentiators and significantly better product attributes to justify costs above cost leaders Easy to get stuck in middle

A SUSTAINABLE competitive advantage requires what?

Giving buyers lasting reasons to prefer a firm's products or services over those of its competitors.

Best-Cost Provider

Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals

competitive advantages and risks (low-cost approach)

Greater profits and market share due to underpricing competitors, try to attract more buyers, at lower margins need volume Larger profit margins when selling at competitive price (same price same market share), avoids price wars Risks: Low pricing doesn't attract enough new buyers Rival's retaliate and cut prices -> price war

Value Chain supporting activities

HR, Administration, R&D

Outsourcing

Involves contracting out certain value chain activities to outside specialists and strategic allies

What is the question asked by the Performance Test?

Is the strategy producing good company performance?

What are financial objectives?

Objectives that relate to the financial performance targets management has established.

Combined companies may be able to reduce supply chain cost because...

Of buying in greater volume from common suppliers

Blue Ocean Strategies

Offer growth in revenues and profits by discovering or inventing new industry segments that create new demand

A strategic vision should usually be stated adequately in ______.

One or two paragraphs.

_______ involves contracting out certain value chain activities to outside specialists and strategic allies.

Outsourcing

What is restructuring?

Overhauling and streamlining the activities of a business -combining plants with excess capacity, selling off underutilized assets, reducing unnecessary expenses, and otherwise improving the productivity and profitability of a company.

Pitfalls to Avoid in Pursuing a Low-Cost Provider Strategy

Overly aggressive price cutting that doesn't result in unit sales gains large enough to recoup forgone profits Relying on a cost advantage that isn't sustainable because rival firms can easily copy or overcome it Being too fixated on cost reduction such that the firm's offering is too features-poor to gain interest of buyers (need to provide value) Having a rival discover a new lower-cost value chain approach or develop a cost-saving technological breakthrough

______ is a valuable precondition for good strategy making.

Solid analysis of the company's competitive situation vis-à-vis its key rivals (Example: good industry analysis)

What are the best and most reliable leading indicators of a company's future financial performance and business prospects?

Strategic outcomes that indicate whether the company's competitiveness and market position are stronger or weaker.

Strategic plan = _______ + _______ + _______.

Strategic plan = Strategic vision + Objectives + Strategy

_______ = Strategic vision + Objectives + Strategy

Strategic plan = Strategic vision + Objectives + Strategy

Distinguishing Features: Broad Differentiation

Strategic target: a broad cross-section of the market Basis of competitive strategy: Ability to offer buyers something attractively different from competitor's offerings Product line: Many product variations, wide selection, emphasis on differentiating features Production emphasis: Build in whatever differentiating features buyers are willing to pay for, strive for product superiority Marketing emphasis: Tout differentiating features, charge premium price to cover extra costs of differentiating features Keys to maintaining the strategy: Stress constant innovation to stay ahead of imitative competitors, concentrate on a few key differentiating features Resources and capabilities required: concerning quality, design, intangibles, innovation. (marketing capabilities, R&D, technology)

What does SWOT stand for?

Strengths Weaknesses Opportunities Threats

Explain the Low-Cost Provider competitive strategy

Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers.

Low-Cost Provider

Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers.

How well a company performs and the degree of market success it enjoys are directly attributable to what?

The caliber of the company's strategy and the proficiency with which the strategy is executed.

Value Chain primary activities

Supply chain management, operations, distribution, sales and marketing, service = profit

What is cross market subsidization

Supporting competitive offensives in one market with resources and profits diverted from operations in another market - can be a powerful competitive weapon

Outsourcing gives the flexibility to __________

Switch suppliers

Capability/Competence

The capacity of a firm to perform some internal activity competently; developed and enabled through the deployment of a company's resources

CHOOSING A MODE OF MARKET ENTRY

The Question of Critical Resources and Capabilities: Does the firm have the resources and capabilities for internal development? The Question of Entry Barriers: Are there entry barriers to overcome? The Question of Speed: Is speed of the essence in the firm's chances for successful entry? The Question of Comparative Cost: Which is the least costly mode of entry, given the firm's objectives?

When is a competitive advantage sustainable?

The advantage is sustainable if it persists despite the best efforts of competitors to match or surpass this advantage.

What is an acquisition premium?

The amount by which the price offered exceeds the preacquisition market value of the target company

What is the central thrust of a company's strategy?

The central thrust of a company's strategy is undertaking moves to build and strengthen the company's long-term competitive position and financial performance by competing differently from rivals and gaining a sustainable competitive advantage over them.

Merger

The combination of two or more companies into a single corporate entity, with the newly created company often taking on a new name

What is a merger?

The combining of two or more firms into a single corporate entity that often takes on a new name.

What are transaction costs?

The cost of completing a business agreement or deal of some sort, over and above the price of the deal. They can included the costs of searching for an attractive target, the costs of evaluating its worth, bargaining costs, and the costs of completing the transaction.

Broad Differentiation Strategies

The essence of a broad differentiation strategy is to offer unique product or service attributes that a wide range of buyers find appealing and worth paying for. -offering differentiating features that clearly set the firm's products or services apart from rivals -profits are enhanced when the cost of differentiation is outweighs by extra price demanded by the product.

What does the textbook mean when it talks about "strategically relevant factors?"

The factors that are important enough that they should shape management's decisions regarding the company's long-term direction, objectives, strategy, and business model

____ the less competitively vulnerable the company becomes.

The greater the amount of customer value that a company can offer profitably relative to close rivals

The greater the value of cross-business strategic fit in enhancing a firm's performance in the marketplace or on the bottom line, the more competitively powerful is its strategy of related diversification.

The greater the value of cross-business strategic fit in enhancing a firm's performance in the marketplace or on the bottom line, the more competitively powerful is its strategy of related diversification.

On an overall basis, is the company competitively stronger or weaker than key rivals?

The key appraisals here involve how the company matches up against key rivals on industry key success factors and other chief determinants of competitive success and whether and why the company has a net competitive advantage or disadvantage. Quantitative competitive strength assessments, using the method page 114presented in Table 4.4, indicate where a company is competitively strong and weak and provide insight into the company's ability to defend or enhance its market position. As a rule, a company's competitive strategy should be built around its competitive strengths and should aim at shoring up areas where it is competitively vulnerable. When a company has important competitive strengths in areas where one or more rivals are weak, it makes sense to consider offensive moves to exploit rivals' competitive weaknesses. When a company has important competitive weaknesses in areas where one or more rivals are strong, it makes sense to consider defensive moves to curtail its vulnerability.

What is corporate venturing?

The process of developing new businesses as an outgrowth of a company's established business operations

What strategic issues and problems merit front-burner managerial attention?

This analytic step zeros in on the strategic issues and problems that stand in the way of the company's success. It involves using the results of industry analysis as well as resource and value chain analysis of the company's competitive situation to identify a "priority list" of issues to be resolved for the company to be financially and competitively successful in the years ahead. Actually deciding on a strategy and what specific actions to take is what comes after developing the list of strategic issues and problems that merit front-burner management attention.

Specific indicators of how well a company's strategy is working include

Trends in the company's sales and earnings growth. Trends in the company's stock price. The company's overall financial strength. The company's customer retention rate. The rate at which new customers are acquired. Evidence of improvement in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity.

What do quantitative competitive strength assessments, indicate?

Where a company is competitively strong and weak. Quantitative competitive strength assessments also provide insight into the company's ability to defend or enhance its market position.

Activity-based costing A. Is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost B. Involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival

a

Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because A. Without a precise fix on what problems/issues a company confronts, managers cannot know what the industry's key success factors are B. The "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook

b

Activity-based cost accounting aims at A. Making cross-company comparisons of the costs of each value chain activity B. Dividing all company expenses into two categories: activities whose costs are variable and activities whose costs are fixed C. Determining the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost

c

Activity-based cost accounting is used to A. Determine whether the value chains of rival companies are similar or different B. Benchmark the costs of primary value chain activities against the costs of the support value chain activities C. Determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and make-up of a company's internal cost structure

c

Identifying the primary and secondary activities that comprise a company's value chain A. Indicates whether a company's resource strengths will ultimately translate into greater value for shareholders (in particular, higher dividends and a higher stock price) B. Reveals whether a company's resource strengths are well-matched to the industry's key success factors C. Is a first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs); assigning costs to each of the primary and secondary activities is called activity-based cost accounting

c

If a company doesn't possess a distinctive competence, A. All potential for competitive advantage is lost B. It is unlikely to survive in the marketplace and should exit the industry C. It can still marshal competitive power in the marketplace via a collection of adequate-to-good resource strengths

c

In a weighted competitive strength analysis, each strength measure is assigned a weight based on A. Its percentage share of total industry revenues B. The importance of each competitive strength measure in building a sustainable competitive advantage C. Its perceived importance in determining a company's competitive success in the marketplace

c

One important indicator of how well a company's present strategy is working is whether A. It has more core competencies than close rivals B. Its strategy is built around at least two of the industry's key success factors C. The company is achieving its financial and strategic objectives and whether it is an above-average industry performer

c

The best example of a company strength is A. Having higher earnings per share and a higher return on shareholders' equity investment than key rivals B. Being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders or strategic alliances C. Having proven technological expertise and ability to churn out new and improved products on a regular basis

c

Liquidity ratio - working capital

current assets - current liabilities -The cash available for a firm's day-to-day operations. Larger amounts mean the company has more internal funds to (1) pay its current liabilities on a timely basis and (2) finance inventory expansion, additional accounts receivable, and a larger base of operations without resorting to borrowing or raising more equity capital.

Liquidity ratio - Current ratio

current assets / current liabilities -Shows a firm's ability to pay current liabilities using assets that can be converted to cash in the near term. Ratio should be higher than 1.0.

The strongest competitive pressures associated with potential entry frequently come not from outsiders but from _______.

current industry participants looking for growth opportunities

Price to earnings ratio

current market price per share / earnings per share -P/E ratios above 20 indicate strong investor confidence in a firm's outlook and earnings growth; firms whose future earnings are at risk or likely to grow slowly typically have ratios below 12.

A company's strategic options for remedying cost disadvantages in internally performed value chain activities do not include A. Revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities) B. Implementing the use of best practices, particularly for high-cost activities C. Investing in productivity-enhancing, cost-saving technological improvements D. Switching to activity-based costing

d

Which of the following best describes the market opportunities that tend to be most relevant to a particular company? A. Those market opportunities that provide avenues for taking market share away from close rivals and enhance a company's image as a leader in product innovation and product quality B. Those market opportunities that offer the company a chance to raise entry barriers C. Those market opportunities that help promote greater diversification of revenues and profits D. Those market opportunities that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage

d

Which of the following does not represent a potential core competence? A. Skills in manufacturing a high-quality product at a low cost B. Know-how in creating and operating systems for cost-efficient supply chain management C. The capability to fill customer orders accurately and swiftly D. Having a wider product line than rivals

d

Which of the following is not an example of an external threat to a company's future profitability? A. The lack of a distinctive competence B. New legislation that entails burdensome and costly government regulations C. Slowdowns in market growth

d

Which one of the following provides the most accurate picture of whether a company is cost competitive with its rivals? A. How the costs of the company's internally performed activities (its own value chain) compare against the costs of the internally-performed activities of rival companies B. Costs in the value chains of the company's suppliers C. Costs in the value chains of a company's distributors and retail dealers forward channel allies D. The costs of a company's internally performed activities, costs in the value chains of both the company's suppliers and forward channel allies and how all these costs compare against the costs that make up the value chain systems employed by rival firms

d

The generic types of competitive strategies include a. market share growth provider, sales revenue leader strategy, and market share retention strategy b. offensive strategies, defensive strategies, and counter maneuvers strategies c. low-cost/low-price strategies, high-quality/high-price strategies, and medium price strategies d. low-cost provider, broad differentiation, best-cost provider, focused low cost and focused differentiation strategies e. price leader strategies, price follower strategies, technology leader, and first-mover strategies

d. low-cost provider, broad differentiation, best-cost provider, focused low cost and focused differentiation strategies

A core competence A. Adds to a company's arsenal of competitive capabilities and competitive assets and is a genuine resource strength B. Is typically knowledge-based, residing in a company's intellectual capital and not in its tangible physical assets on the balance sheet C. Is often grounded in cross-department combinations of knowledge and expertise D. Is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs E. All of the above

e

A distinctive competence A. Is a competitively important activity that a company performs better than its competitors B. Gives a company competitively valuable capability that is unmatched by rivals C. Is a basis for sustainable competitive advantage D. Can underpin and add real punch to a company's strategy E. All of the above

e

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is A. Competitive strength analysis B. Activity-based costing C. Resource cost mapping D. SWOT analysis E. Benchmarking

e

A weighted competitive strength assessment is generally analytically superior to an unweighted strength assessment because A. A weighted ranking identifies which competitive advantages are most powerful B. An unweighted ranking doesn't discriminate between companies with high and low market shares C. It singles out which competitor has the most competitively potent core competencies D. Weighting each company's overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength E. All of the various measures of competitive strength are not equally important

e

Which of the following is not part of the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. Analyzing the company's external environment B. Evaluating the company's own resources and competitive position C. Surveying a company's board members, managers, select employees and key investors regarding what strategic issues they think the company faces D. Developing a "worry list" of "how to," "whether to.," and "what to do about.." E. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead

e

the most important part of the driving-force analysis

is to determine whether the collective impact of the forces will increase or decrease market demand

the real payoff of driving-forces analysis

is to help managers understand what strategy changes are needed to prepare for the impacts of the forces

buyer bargaining power is stronger when buyer demand

is weak in relation to industry supply

In order to chart a company's strategic course wisely

managers must first develop a deep understanding of the company's present situation.

factors in a company's environment having the biggest strategy-shaping inpact

pertain to the company's immediate industry and competitive environment.

Tangible Resources

physical resources, financial resources, technological assets, organizational resources

What strategic issues and problems merit front burner managerial attention?

pinpointing the precise things that management needs to worry about sets the agenda for deciding what actions to take next to improve the company's performance and business outlook -How to stave off market challenges from new foreign competitors, how to combat the price discounting of rivals, how to reduce the company's high costs, how to sustain the company's present rate of growth in light of slowing buyer demand, whether to correct the company's competitive deficiencies by acquiring a rival company with the missing strengths, whether to expand into foreign markets, whether to reposition the company and move to a different strategic group, what to do about growing buyer interest in substitute products, and what to do to combat the aging demographics of the company's customer base.

A company's competitive strength scores

point directly to the kinds of offensive and defensive actions it can use to exploit its competitive strengths and reduce its competitive vulnerabilities.

(?) A company's competitive strength scores pinpoint its strengths and weaknesses against rivals and

point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities

To assess their competitive power, one must go beyond merely identifying a company's resources and capabilities to probe their ______.

caliber

In a strategic balance sheet, strengths represent _______ and weaknesses represent _______.

competitive assets; competetive liabilities

The higher a company's costs are above those of close rivals, the more _________ it becomes

competitively vulnerable

The payoff from SWOT analysis comes from the __________ and ___________ that flow from the four lists

conclusions about a company's situation and the implications for strategy improvement

(?) One important indicator of how well a company's present strategy is working is whether

the company is achieving its financial and strategic objectives and whether it is an above-average industry performer

The factors in a company's environment that have the biggest strategy shaping impact typically pertain to:

the company's immediate industry and competitive environment.

internal environment

the company's resources and organizational capabilities

external environment

the competitive conditions of the industry in which the company operates

The payoff from a SWOT analysis comes from:

the conclusions about a company's situation and the implications for strategy improvement that flow from the four lists (strengths, weaknesses, opportunities, and threats).

Transaction costs

the costs of completing a business agreement or deal of some sort, over and above the price of the deal. They can include the costs of searching for an attractive target, the costs of evaluating its worth, bargaining costs, and the costs of completing the transaction.

SWOT analysis A. Is a way to measure whether a company's value chain is longer or shorter than the chains of key rivals B. Is a tool for benchmarking whether a firm's strategy is closely matched to industry key success factors C. Reveals whether a company is competitively stronger than its closest rivals D. Provides a good overview of whether a company's situation is fundamentally healthy or unhealthy

d

The difference between a company competence and a core competence is that A. A company competence refers to a company's best-executed functional strategy and a core competence refers to a company's best-executed business strategy B. A company competence refers to a company's strongest resource whereas a core competence refers to a company's lowest-cost and most efficiently performed value chain activity C. A company competence is a competitively relevant activity which a firm performs especially well relative to other internal activities, whereas a core competence is an activity that a company has learned to perform proficiently D. A company competence represents real proficiency in performing an internal activity whereas a core competence is a competitively relevant activity which a firm performs better than other internal activities

d

The spotlight in analyzing a company's resources, internal circumstances and competitiveness includes such questions/concerns as A. Whether the company's present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend payout ratio and average annual increase in the common stock price B. Whether the company's key success factors are more dominant than the key success factors of close rivals C. Whether the company has the industry's most efficient and effective value chain D. What are the company's resource strengths and weaknesses and its external opportunities and threats

d

The two most important parts of SWOT analysis are A. Pinpointing the company's competitive assets and pinpointing its competitive liabilities B. Identifying the company's resource strengths and identifying the company's best market opportunities C. Identifying the external threats to a company's future profitability and pinpointing how many market opportunities it has D. Drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions to better match the company's strategy to its resource strengths and market opportunities, correct the important weaknesses and defend against external threats

d

The value of doing competitive strength assessment is to A. Determine how competitively powerful the company's core competencies are B. Learn if the company's market opportunities are better than those of its rivals C. Learn whether a company has a distinctive competence D. Learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals

d

Which one of the following is not something that can be gleaned from identifying a company's resource strengths, resource weaknesses, market opportunities and external threats? A. How to improve a company's strategy by using company strengths and capabilities as cornerstones for its strategy B. Which market opportunities are best suited to a company's strengths and capabilities C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats D. How to turn a core competence into a distinctive competence

d

Firm's competitive strategy

deals exclusively with specifics of its efforts to position itself in market-place, please customers, ward off competitive threats, and achieve a particular kind of competitive advantage

A company's resource weaknesses can relate to A. Inferior or unproven skills, expertise or intellectual capital in competitively important parts of the business B. Something that it lacks or does poorly (in comparison to rivals) C. Deficiencies in competitively important physical, organizational or intangible assets D. Missing or competitively inferior capabilities in key areas E. All of these

e

Determining whether a company's prices and costs are competitive A. Requires looking at the costs of a company's competitively relevant suppliers and forward channel allies (distributors/dealers) B. Requires considering the costs of a company's internally performed activities C. Involves the use of benchmarking the costs in a company's value chain system (the costs of its suppliers, its internally performed activities, the costs of its distributors/dealers) against the costs of the value chain systems employed by rival firms D. Typically involves the use of activity-based cost accounting E. All of these

e

One of the lessons of SWOT analysis is that a company's strategy should A. Be grounded in its resource strengths and capabilities B. Be aimed at those market opportunities that offer the best potential for both profitable growth and competitive advantage C. Seek to defend against threats to the company's future profitability D. Generally not place heavy demands on areas where company resources are weak or unproven E. All of these

e

The competitive power of a company resource strength or competitive capability hinges on A. How hard it is for competitors to copy B. Whether it is durable and has staying power (in the sense of not losing its value quickly because of new developments) C. Whether it is really competitively superior to the essentially equivalent type of resource/capability of rivals D. How easily it can be trumped by the different resources/capabilities of rivals E. All of these

e

The options for remedying an internal cost disadvantage include A. Investing in productivity-enhancing, cost-saving technological improvements B. Redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly C. Implementing the use of best practices, particularly for high-cost activities D. Eliminating some cost-producing activities from the value chain, especially low value-added activities E. All of these

e

When a company is good at performing a particular internal activity, it is said to have A. A competitive advantage over rivals B. A competitive capability C. A distinctive competence D. A core competence E. A company competence

e

Which of the following is not an option for remedying a supplier-related cost disadvantage? A. Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchased B. Negotiate more favorable prices with suppliers C. Collaborate closely with suppliers to identify mutual cost-saving opportunities D. Switch to lower priced substitute inputs E. Persuade forward channel allies to implement best practices

e

Successful competitive strategies are resource-based

firm's competitive strategy is most likely to succeed if it is predicated on leveraging a competitively valuable collection of resources and capabilities that match the strategy sustaining a firm's competitive advantage depends on its resources, capabilities, and competences that are difficult for rivals to duplicate and have no good substitutes

A cash hog:

generates cash flows that are to small to fully fund its operations and growth and requires cash infusions to provide additional working capital and finance capital investment.

Step four: evaluating resorts fit.

i. Resource fit exist when that's -Businesses, individually, strengthen a company's overall mix of resources and compatibilities. ii. The parent company is sufficient resources that I had customer value to support its entire group of businesses without spreading itself to them

A company's value chain

identifies the primary activities and related support activities that create customer value.

economic conditions

include the general economic climate and specific factors such as interest rates, exchange, inflation, unemployment, and the rate of economic growth.

technological factors

include the pace of technological change and technical developments

legal and regulatory factors

include the regulations and laws with which companies must comply

sociocultural forces

include the societal values, attitudes, cultural influences and lifestyles that impact demand for particular goods and services.

Leverage ratio - long term debt to capital ratio

long term debt / (long term debt + total stockholders equity) A measure of creditworthiness and balance sheet strength. It indicates the percentage of capital investment that has been financed by both long-term lenders and stockholders. A ratio below 0.25 is preferable since the lower the ratio, the greater the capacity to borrow additional funds. Debt-to-capital ratios above 0.50 indicate an excessive reliance on long-term borrowing, lower creditworthiness, and weak balance sheet strength.

Leverage ratio - long term debt to equity ratio

long term debt / total stockholders equity -Shows the balance between long-term debt and stockholders' equity in the firm's long-term capital structure. Low ratios indicate a greater capacity to borrow additional funds if needed.

force driving industry change: change in an industry

long term growth rate

Successful _____________, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable.

low-cost leaders

A ________ is in the best position to win the business of price-sensitive buyers, set the floor on market price, and still earn a profit.

low-cost provider

A __________ basis for competitive advantage is lower overall costs than competitors.

low-cost provider's

Easy-to-copy differentiating features do not:

offer the promise of sustainable competitive advantage.

A strategic fit exists whenever:

one or more activities constituting the value chains of different businesses are sufficiently similar as to present opportunities for cross-business sharing or transferring of the resources and capabilities that enable these activities.

PESTEL

political factors, economic conditions, socio cultural forces, technological factors, environmental factors, legal/regulatory conditions

Framework for Competitor Analysis four indicators of a rival moves

* rival current strategy * objectives *resources and capabilities *assumptions

Types of company resources - Intangible

** often embodied in something material -Human assets and intellectual capital (education, experience, knowledge, and talent of the workforce, cumulative learning, intellectual capital and know how of specialized teams and work groups, key personnels knowledge concerning important business functions, managerial talent and leadership skill, creativity and innovativeness of certain personnel) -Brands, company image, and reputational assets (brand names, trademarks, product/company image, buyer loyalty and goodwill, company reputation for quality, service and reliability, reputation with suppliers and partners for fair dealing -Relationships (alliances, joint ventures, partnerships that provide access to technologies, specialized know how or geographic markets, networks of dealers or distributors, the trust established with various partners -Company culture and incentive system (the norms of behavior, business principles, and ingrained beliefs within the company, the attachment of personnel to the company's ideals, the compensation system and the motivation level of company personnel

Types of company resources - Tangible

**can be touched or quantified. -Physical resources(land and real estate, manufacturing plants, equipment, distribution facilities, locations of stores, plants, distribution centers, overall pattern of their physical locations, ownership of or access rights to natural resources - mineral deposits) -Financial resources (cash and cash equivalents, marketable securities, credit rating and borrowing capacity) -Technological assets (patents, copyrights, production technology, innovation technologies, technological processes) -Organizational resources (IT and comm. systems, planning coordination and control systems, company's organizational design and reporting structure)

Joint ventures are advantageous when diversification opportunities:

- Are too large, complex, uneconomical, or risky for one firm to pursue alone - Require a broader range of competencies and know-how than a firm possesses or can develop quickly - Are located in a foreign country that requires local partner participation or ownership

STEP 3: DETERMINING THE COMPETITIVE VALUE OF STRATEGIC FIT IN DIVERSIFIED COMPANIES

- Assessing the degree of strategic fit across its businesses is central to evaluating a company's related diversification strategy. - The real test of a diversification strategy is what degree of competitive value can be generated from strategic fit.

WHEN TO CONSIDER DIVERSIFYING

- Growth opportunities are limited as its principal markets reach their maturity and buyer demand is either stagnating or set to decline. - Changing industry conditions—new technologies, inroads being made by substitute products, fast-shifting buyer preferences, or intensifying competition—are undermining the firm's competitive position.

DIVESTING BUSINESSES AND RETRENCHING TO A NARROWER DIVERSIFICATION BASE - Factors motivating business divestitures

- Long-term performance can be improved by concentrating on stronger positions in fewer core businesses and industries. - Business is in a once-attractive industry where market conditions have badly deteriorated - Business has either failed to perform as expected or is lacking in cultural, strategic, or resource fit. - Business has become more valuable if sold to another firm or as an independent spin-off firm.

CALCULATING INDUSTRY-ATTRACTIVENESS SCORES: KEY MEASURES

- Market size and projected growth rate - The intensity of competition among market rivals - Emerging opportunities and threats - The presence of cross-industry strategic fit (How well do the industry's value chain and resource requirements match up with the value chain activities of other industries in which the firm has operations?) - Resource requirements (Do the resource requirements for an industry match those of the parent firm or are they otherwise within the company's reach?) - Social, political, regulatory, environmental factors - Industry profitability

Ways to improve forward value chain activities

- Pressure forward channel allies to reduce their costs and markups so as to make the final price to buyers more competitive - Collaborate with forward channel allies to identify win-win opportunities to reduce costs - Change to a more economical distribution strategy, including switching to cheaper distribution channels

Ways to improve supplier value chain activities

- Pressure suppliers for lower prices - Switch to lower-priced substitute inputs - Collaborate closely with suppliers to identify mutual cost-saving opportunities - Work with suppliers to enhance the firm's differentiation - Select and retain suppliers who meet higher-quality standards - Coordinate with suppliers to enhance design or other features desired by customers - Provide incentives to suppliers to meet higher-quality standards, and assist suppliers in their efforts to improve

Support activities of value chain

- Product R&D, technology, and system development - HR management - General administration

Primary activities of value chain

- Supply chain management - Operations - Distribution - Sales and marketing - Service - Profit margin

Value Chain for an Entire Industry

- The firm's internal value chain - The value chains of industry suppliers - The value chains of channel intermediaries Why? - Costs and margins of suppliers & channel partners can affect prices to end consumers - Activities of channel partners can affect industry sales volumes & customer satisfaction

Competitive Strength Assessment Implications

- The higher a firm's overall weighted strength rating, the stronger its overall competitiveness versus rivals - The rating score indicates the total net competitive advantage for a firm relative to other firms - Firms with high competitive strength scores are targets for benchmarking - The ratings show how a firm compares against rivals, factor by factor (or capability by capability) - Strength scores can be useful in deciding what strategic moves to make

BROADENING A DIVERSIFIED FIRM'S BUSINESS BASE - Factors motivating the addition of businesses

- The transfer of resources and capabilities to related or complementary businesses - Rapidly changing technology, legislation, or new product innovations in core businesses - Shoring up the market position and competitive capabilities of the firm's present businesses - Extension of the scope of the firm's operations into additional country markets

Benchmarking

- Tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing their "best practices" - Assesses whether the cost competitiveness and effectiveness of a firm's value chain activities are in line with its competitors' activities

Focused Strategy approaches

-focused low-cost strategy (private label goods - mimic successful brands and sell at a lower cost) -focused market niche strategy

examples of uniqueness drivers

-input quality -innovation and technological advances -Continous improvement -product, features, design and performance -production r&d -employees skills, training, experience -marketing and brand building -customer service

Improving value chain activities of distribution partners

-to achieve better costs competitiveness in the forward portion of the industry value chain 1. Pressure distributors, dealers, allies to reduce the costs and markup 2. Collaborate with them to identify win-win opportunities to reduce costs 3. change to a more economical distribution strategy, switching to cheaper distribution channels enhancing differentiation through activities at the forward end of the value chain forecasting. 1. engaging in cooperative advertising and promotions with forward allies, 2. creating exclusive arrangements with downstream sellers or utilizing other mechanisms that increase their incentive to enhance delivered customer value, and 3. creating and enforcing standards for downstream activities and assisting in training channel partners in business practices. Ex: Harley Davidson

Indicators of how well a company's strategy is working

-whether the company is achieving its stated financial and strategic objectives -whether its financial performance is above the industry average -whether it is gaining customers and increasing its market share Specific indicators: -trends in the company's sales and earnings growth -trends in the company's stock price -the company's overall financial strength -the company's customer retention rate -rate at which new customers are acquired -evidence of improvement in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity

List 9 things to look for in order to identify a company's strategy.

1. Actions to strengthen the firm's bargaining position with suppliers, distributors, and others. 2. 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. 3. Actions to gain sales and market share with lower prices based on lower costs. 4. Actions to enter new product or geographic markets or to exit existing ones 5. Actions to capture emerging market opportunities and defend against external threats to the company's business prospects. 6. Actions to strengthen market standing and competitiveness by acquiring or merging with other companies. 7. Actions to strengthen competitiveness via strategic alliances and collaborative partnerships. 8 .Actions and approaches used in managing R&D, production, sales, and marketing, finance, and other key activities. 9. Actions to upgrade, build, or acquire competitively important resources and capabilities.

List 6 factors favoring internal development.

1. Ample time to develop and launch business 2. Cost of acquisition is higher than internal entry 3. Added capacity will not affect supply and demand balance 4. Low resistance of incumbent firms to market entry 5. No head-to-head competition in targeted industry 6. Availability of in-house skills and resources

What are the 3 questions used in assessing the impact of the factors driving industry change?

1. Are the driving forces as a whole causing demand for the industry's product to increase or decrease? 2. Is the collective impact of the driving forces making competition more or less intense? 3. Will the combined impacts of the driving forces lead to higher or lower industry profitability?

STEPS IN EVALUATING THE STRATEGY OF A DIVERSIFIED FIRM

1. Assess the attractiveness of the industries the firm has diversified into, both individually and as a group 2. Assess the competitive strength of the firm's business units within their respective industries 3. Evaluate the extent of cross-business strategic fit along the value chains of the firm's various business units 4. Check whether the firm's resources fit the requirements of its present business lineup 5. Rank the performance prospects of the businesses from best to worst and determine resource allocation priorities 6. Craft strategic moves to improve corporate performance

BUILDING SHAREHOLDER VALUE VIA UNRELATED DIVERSIFICATION - Using an Unrelated Diversification Strategy to Pursue Value

1. Astute corporate parenting by management - Provide leadership, oversight, expertise, and guidance - Provide generalized or parenting resources that lower operating costs and increase SBU efficiencies 2. Cross-business allocation of financial resources - Serve as an internal capital market - Allocate surplus cash flows from businesses to fund the capital requirements of other businesses 3. Acquiring and restructuring undervalued companies - Acquire weakly performing firms at bargain prices - Use turnaround capabilities to restructure them to increase their performance and profitability

Evaluating the Strategy of a Diversified Company

1. Attractiveness of industries 2. Strength of business units 3. Cross-business strategic fit 4. Fit of firm's resources 5. Allocation of resources 6. New strategic moves

When does rivalry among competitive sellers decrease (or is weaker)?

1. Buyer demand is growing rapidly. 2. Buyer costs to switch brands are high. 3. The products of rival sellers are strongly differentiated and customer loyalty is high. 4. Fixed and storage costs are low. 5. Sales are concentrated among a few large sellers. 6. Rivals are similar in size, strength, objectives, strategy, and country of origin. 7. Exit barriers are low.

Buyer bargaining power is stronger when (8):

1. Buyer demand is weak in relation to industry supply. 2. The industry's products are standardized or undifferentiated. 3. Buyer costs of switching to competing products are low. 4. Buyers are large and few in number relative to the number of industry sellers. 5. Buyers are well-informed about the quality, prices, and costs of sellers. 6. Buyers have the ability to integrate backward into the business of sellers. 7. Buyers have the ability to postpone purchases. 8. Buyers are price-sensitive .

Buyers are price-sensitive when (3):

1. Buyers earn low profits or income. 2. The product represents a significant fraction of their purchases. 3. Product performance is not a critical consideration.

List 3 disadvantages of greenfield strategies

1. Capital costs of initial development 2. Risks of loss due to political instability or lack of legal protection of ownership 3. Slowest form of entry due to extended time required to construct facility

Cost-Cutting Methods

1. Capturing all economies of scale (make more reduce cost, standard products and automation game=limit the types of shoes) 2. Take advantage of experience and learning-curve effects 3. Operating facilities at full or near-full capacity (don't pay for what you don't need) 4. Improve supply chain efficiency 5. Substitute lower-cost inputs wherever there is little or no sacrifice in product quality or performance (only needs to be acceptable) 6. Use firm's bargaining power with suppliers/others in value chain to gain concessions (e.g. large volume discounts) 7. Use online systems and sophisticated software to achieve operating efficiencies (use with suppliers) 8. Improve process design and employ advanced production technology (e.g. TQM & robotics etc.) 9. Be alert to cost advantages of outsourcing or vertical integration 10. Motivate employees through incentives and company cultures (the right employees)

List the 12 most common drivers of industry change.

1. Changes in an industry's long-term growth rate. 2. Increasing globalization. 3. Emerging new internet capabilities and applications. 4. Changes in who buys the product and how they use it. 5. Technological change and manufacturing process innovation. 6. Product and marketing innovation. 7. Entry of exit of major firms. 8. Diffusion of technical know-how across companies and countries. 9. Changes in cost and efficiency. 10. Reductions in uncertainty and business risk. 11. Regulatory influences and government policy changes. 12. Changing societal concerns, attitudes, and lifestyles.

Managers modify strategy in response what 6 things?

1. Changing market conditions 2. Advancing technology 3. Fresh moves of competitors 4. Shifting buyer needs 5. Emerging market opportunities 6. New ideas for improving the strategy

What are the benefits of successful differentiation?

1. Command premium price 2. Increase its unit sales 3. Gain buyer loyalty to its brand

Successful differentiation allows a firm to do one or more of the following (3):

1. Command premium prices for the firm's products 2. Increased unit sales due to attractive differentiation 3.Gain brand loyalty that bonds buyers to the firm's products

What are the five competitive forces from within an industry?

1. Competition from rival sellers 2. Competition from potential new entrants to the industry 3. Competition from producers of substitute products 4. Supplier bargaining power 5. Customer bargaining power

the risks of a focused low-cost or focused differentiation strategy

1. Competitors will find ways to match focused firm's capabilities in serving target niche 2. Specialized preferences and needs of niche members shift over time toward the product attributes desired by the majority of buyers (niche becomes similar to whole market) 3. As attractiveness of the segment increases, it draws in more competitors, intensifying rivalry and splintering segment profits

List 3 risks off a focused low-cost or focused differentiation strategy.

1. Competitors will find ways to match the focused firm's capabilities in serving the target niche. 2. The specialized preferences and needs of niche members to shift over time toward the product attributes desired by the majority of buyers. 3. As attractiveness of the segment increases, it draws in more competitors, intensifying rivalry and splintering segment profits.

List 2 actions value chain revamping for increased differentiation can potentially include.

1. Coordinating with channel allies to enhance customer perceptions of value 2. Coordinating with suppliers to better address customer needs

Revamping the Value Chain System to Increase Differentiation

1. Coordinating with channel allies to enhance customer perceptions of value (creating quality standards) 2. Coordinating with suppliers to better address customer needs (e.g. speed of delivery)

What are the 6 most widely encountered barriers to entry?

1. Cost advantages enjoyed by industry incumbents. 2. Strong brand preferences and high degrees of customer loyalty. 3. Strong "network effects" in customer demand. 4. High capital requirements. 5. The difficulties of building a network of distributors or dealers and securing adequate space on retailers' shelves. 6. Restrictive government policies.

List 5 reasons why across national borders makes strategy-making more complex.

1. Different countries have different home-country advantages in different industries 2. Location-based value chain advantages for certain countries 3. Differences in government policies, tax rates, and economic conditions 4. Currency exchange rate risks 5. Differences in buyer tastes and preferences for products and services

HOW MUCH DIVERSIFICATION?

1. Diversify into closely related businesses or into totally unrelated businesses? 2. Diversify present revenue and earnings base to a small or major extent? 3. Move into one or two large new businesses or a greater number of small ones? 4. Acquire an existing company? 5. Start up a new business from scratch? 6. Form a joint venture with one or more companies to enter new businesses?

STRUCTURES OF COMBINATION RELATED-UNRELATED DIVERSIFIED FIRMS

1. Dominant-business enterprises: - Have a major "core" firm that accounts for 50 to 80% of total revenues and a collection of small related or unrelated firms that accounts for the remainder 2. Narrowly diversified firms: - Are comprised of a few related or unrelated businesses 3. Broadly diversified firms: - Have a wide-ranging collection of related businesses, unrelated businesses, or a mixture of both 4. Multibusiness enterprises: - Have a business portfolio consisting of several unrelated groups of related businesses

The two most important parts of SWOT analysis are:

1. Drawing conclusions about what story the compilation of strengths, weaknesses, opportunities, and threats tells about the company's overall situation. 2. Acting on the conclusions to better match the company's strategy to its internal strengths and market opportunities, to correct the important internal weaknesses, and to defend against external threats.

What are some important cost drivers in a company's value chain?

1. Economies of scale 2. Learning and experience 3. Capacity utilization 4. Input costs 4. Production technology and design 5. Communications systems and information technology 6. bargaining power 7. outsourcing or vertical integration 8. Labor productivity and compensation costs

Barrier entry threats are stronger when (5):

1. Entry barriers are low. 2. Industry members are unwilling or unable to strongly contest the entry of newcomers. 3. There is a large pool of potential entrants, some of which have the capabilities to overcome high entry barriers. 4. Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence. 5. Buyer demand is growing rapidly and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents.

What are the 5 strategic "should we" issues?

1. Expand rapidly or cautiously into foreign markets. 2. Reposition the firm to move to a different strategic group. 3. Counter increasing buyer interest in substitute products. 4. Expand of the firm's product line. 5. Correct the firm's competitive deficiencies by acquiring a rival firm with the missing strengths

A winning strategy will pass what 3 tests?

1. Fit (external, internal, and dynamic consistency) 2. Competitive Advantage (durable competitive advantage) 3. Performance (outstanding financial and market performance)

Why should a company communicate the strategic vision? (4 reasons)

1. Fosters employee commitment to the firm's chosen strategic direction. 2. Ensures understanding of its importance. 3. Motivates, informs, and inspires internal and external stakeholders. 4. Demonstrates top management support for the firm's future strategic direction and competitive efforts

Competitive pressures from substitutes are stronger when (3):

1. Good substitutes are readily available and attractively priced. 2. Substitutes have comparable or better performance features 3. Buyers have low costs in switching to substitutes.

List 3 advantages of greenfield strategies

1. High level of control over venture 2. "Learning by doing" in the local market 3. Direct transfer of the firm's technology, skills, business practices, and culture

Thinking strategically about a company's industry and competitive environment entails using some well-validated concepts and analytical tools to get clear answers to what six questions?

1. How strong are the industry's competitive forces? 2. What are the driving forces in the industry, and what impact will they have on competitive intensity and industry profitability? 3. What market positions do industry rivals occupy—who is strongly positioned and who is not? 4. What strategic moves are rivals likely to make next? 5. What are the key factors of competitive success? 6. Is the industry outlook conducive to good profitability?

List the 6 management choices about how to compete that strategy represents (also known as aspects of strategy).

1. How to attract and please customers. 2. How to compete against rivals. 3. How to position the company in the marketplace. 4. How best to respond to changing economic and market conditions. 5. How to capitalize on attractive opportunities to grow the business. 6. How to achieve the company's performance targets.

What are the 6 key questions to consider in evaluating a company's ability to compete successfully against market rivals

1. How well is the present strategy working? 2. Do the company's resources and capabilities have sufficient competitive power to give it a sustainable advantage over competitors? 3. Is the company able to seize market opportunities and overcome external threats to its future well-being? 4. Are the company's cost structure and value proposition competitive? 5. On an overall basis, is the company competitively stronger or weaker than key rivals? 6. What strategic issues and problems merit front-burner managerial attention?

What are the steps in constructing a strategic group map?

1. Identify the competitive characteristics that delineate strategic approaches used in the industry. 2. Plot the firms on a two-variable map using pairs of the competitive characteristics. 3. Assign firms occupying about the same map location to the same strategic group. 4. Draw circles around each strategic group, making the circles proportional to the size of the group's share of total industry sales revenues.

What the 3 steps of driving forces analysis ?

1. Identifying what the driving forces are. 2. Assessing whether the driving forces are, on the whole, acting to make the industry more or less attractive. 3. Determining what strategy changes are needed to prepare for the impact of the driving forces

List 4 different routes to achieving a differentiation strategy.

1. Incorporate product attributes and user features that lower the buyer's overall costs of using the firm's product. 2. Incorporate tangible features (e.g., styling) that increase customer satisfaction with the product. 3. Incorporate intangible features (e.g., buyer image) that enhance buyer satisfaction in noneconomic ways. 4. Signal the value of the firm's product (e.g., price, packaging, placement, advertising) offering to buyers.

Benchmarking: (2 things)

1. Involves improving a firm's internal activities based on learning other companies' "best practices." 2. Assesses whether the cost competitiveness and effectiveness of a firm's value chain activities are in line with its competitors' activities

Why does a sound, well-communicated strategic vision matter? (5 reasons)

1. It crystallizes senior executives' own views about the firm's long-term direction. 2. It reduces the risk of rudderless decision making. 3. It is a tool for winning the support of organization members to help make the vision a reality 4. It provides a beacon for lower-level managers in setting departmental objectives and crafting departmental strategies that are in sync with the firm's overall strategy. 5. It helps an organization prepare for the future.

List 7 factors that make an alliance "strategic."

1. It facilitates achievement of an important business objective. 2. It helps build, sustain, or enhance a core competence or competitive advantage. 3. It helps block a competitive threat. 4. It helps remedy an important resource deficiency or competitive weakness. 5. It increases the bargaining power of alliance members over suppliers or buyers. 6. It helps open up important new market opportunities. 7. It mitigates a significant risk to a firm's business.

Crafting and executing strategy are top-priority managerial tasks because (2 possible reasons, listed by test priority):

1. It is management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance. 2. Good strategy coupled with good strategy execution are the most telling signs of good management and greatly raises the chances that a company will be a standout performer in the marketplace.

What are 3 signs of a firm's competitive strength?

1. Its prices and costs are in line with rivals. 2. Its customer-value proposition is competitive and cost effective. 3. Its bundled capabilities are yielding a sustainable competitive advantage

List the 5 Generic Competitive Strategies

1. Low-Cost Provider 2. Broad Differentiation 3. Focused Low-Cost 4. Focused Differentiation 5. Best-Cost Provider

What are 3 purposes of defensive strategies

1. Lower the firm's risk of being attacked 2. Weaken the impact of an attack that does occur 3. Influence challengers to aim their efforts at other rivals

Competitive Strength Assessment Process

1. Make a list of the industry's KSFs & measures of competitive strength or weakness (6 to 10 measures usually suffice) 2. Assign a weight to each competitive strength measure based on its perceived importance 3. Rate the firm and its rivals on each competitive strength measure and multiply by each measure by its corresponding weight

List the 4 best targets for offensive attacks.

1. Market leaders that are in vulnerable competitive positions 2. Runner-up firms with weaknessesin areas where the challenger is strong. 3. Struggling enterprises on the verge of going under. 4. Small local and regional firms with limited capabilities.

What are the 6 principal offensive strategy options?

1. Offering an equally good or better product at a lower price. 2. Leapfrogging competitors by being first to market with next-generation products. 3. Pursuing continuous product innovation to draw sales and market share away from competitors. 4. Adapting and improving on the good ideas of other companies. 5. Using hit-and-run guerrilla warfare tactics to grab market share from complacent or distracted rivals. 6. Launching a preemptive strike to secure an advantageous position that rivals are prevented o discouraged from duplicating.

Calculating industry attractiveness scores include two methods:

1. One is the siding inappropriate waits for the industry attractiveness measures. 2. The second requirement for creating accurate the tractor this course is to have sufficient knowledge to write the industry on each of attractive miss measure.

What are the five generic competitive strategies?

1. Overall low cost provider 2. Broad differentiation 3. Focused low cost 4. Focused differentiation 5. Best cost provider strategy

What are the downside of low cost strategy provider?

1. Overly Aggressive Price Cutting ----Price cutting results in lower margins, no increase in sales volume and lower profitability. 2. Relying on easily imitated cost reductions ----The value of a cost advantage depends on its sustainability. 3. Becoming too fixated on cost reduction ---Ignoring buyer interest in additional features. ---Overlooking declining buyer sensitivity to price. ---Technological breakthroughs nullify cost advantages

A company's board of directors has what four important corporate governance obligations to fulfill?

1. Oversee the company's financial accounting and financial reporting practices. 2. Diligently critique and oversee the company's direction, strategy, and business approaches. 3. Evaluate the caliber of senior executives' strategy-making and strategy-executing skills. 4. Institute a compensation plan for top executives that rewards them for actions and results that serve shareholder interests.

List the two major avenues for achieving a cost advantage.

1. Perform value chain activities more cost-effectively than rivals. 2. Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities.

A balanced scorecard measures a firm's optimal performance by (2):

1. Placing a balanced emphasis on achieving both financial and strategic objectives. 2. Tracking both measures of financial performance and measures of whether a firm is strengthening its competitiveness and market position.

The macro-environment is comprised of what 6 principal components?

1. Political factors 2. Economic conditions 3. Sociocultural forces 4. Technological factors 5. Environmental factors (concerning the natural environment) 6. Legal/regulatory conditions

force driving industry change:

product innovation

Resource

productive input or competitive asset that is owned or controlled by a firm

What are the 2 reasons that account for why some positions can be more attractive than others?

1. Prevailing competitive pressures from the industry's five forces may cause the profit potential of different strategic groups to vary. 2. Industry driving forces may favor some strategic groups and hurt others.

When does a low-cost strategy work best?

1. Price competition among rival sellers is especially vigorous. 2. The products of rival sellers are essentially identical and are readily available from several sellers. 3. There are few ways to achieve product differentiation that have value to buyers. 4. Buyers incur low costs in switching their purchases from one seller to another. 5. The majority of industry sales are made to a few, large-volume buyers. 6. Industry newcomers use introductory low prices to attract buyers and build a customer base.

List seven the situations in which a low-cost provider strategy works best.

1. Price competition among rival sellers is vigorous. 2. Identical products are available from many sellers. 3. There are few ways to differentiate industry products. 4. Most buyers use the product in the same ways. 5. Buyers incur low costs in switching among sellers. 6. The majority of industry sales are made to a few, large volume buyers. 7. New entrants can use introductory low prices to attract buyers and build a customer base.

Realized (current) strategy is a blend of:

1. Proactive (deliberate) strategy elements that include both continued and new initiatives. 2. Reactive (emergent) strategy elements that are required due to unanticipated competitive developments and fresh market conditions

List 8 common uniqueness drivers:

1. Product features and performance 2. Customer services 3. Production R&D 4. Technology and Innovation 5. Input quality 6. Employee skill, training, experience 7. Sales and marketing 8. Quality control processes

A company's strategy is increasingly effective the more it _____ (3).

1. Provides some insulation from competitive pressures 2. Shifts the competitive battle in the company's favor 3. Positions firms to take advantage of attractive growth opportunities.

Effective Low-Cost Approaches:

1. Pursue cost-savings that are difficult to imitate 2. Avoid reducing product quality to unacceptable levels

What are some pitfalls in a differentiation strategy?

1. Pursuing a differentiation strategy keyed to product or service attributes that are easily and quickly copied. 2. Incorporating product features or attributes in which buyers see little value or are easily copied by rivals. 3. Overspending on efforts to differentiate that erode profitability. 4. Over-differentiating so that product quality or service levels exceed buyers' needs. 5. Trying to charge too high a price premium. 6. Not establishing meaningful gaps in quality or service or performance features over the products of rivals.

List 6 pitfalls to avoid when using a differentiation strategy.

1. Relying on product attributes easily copied by rivals. 2. Introducing product attributes that do not evoke an enthusiastic buyer response. 3. Eroding profitability by overspending on efforts to differentiate the firm's product offering. 4. Offering only trivial improvements in quality, service, or performance features vis-à-vis the products of rivals. 5. Adding frills and features such that the product exceeds the needs and use patterns of most buyers. 6. Charging too high a price premium.

What are the signals of the likelihood of strategic moves?

1. Rivals under pressure to improve financial performance 2. Rivals seeking to increase market standing 3. Public statements of rivals' intentions 4. Profiles developed by competitive intelligence units

The cost advantages of industry incumbents can stem from what 6 sources?

1. Scale economies in production, distribution, advertising, or other activities. 2. The learning-based costs savings that accrue from experience in performing certain activities such as manufacturing or new product development or inventory management 3. Costs-savings accruing from patents or proprietary technology 4. Exclusive partnerships with the best and cheapest suppliers of raw materials and components 5. Favorable locations 6. Low fixed costs

List 3 actions value chain revamping for lower costs can potentially include.

1. Selling direct to consumers and bypassing the activities and costs of distributors and dealers. 2. Streamlining operations by eliminating low value-added or unnecessary work steps and activities. 3. Reducing materials handling and shipping costs by having suppliers locate their plants or warehouses close to the company's own facilities.

Proven approaches to winning a sustainable competitive advantage include:

1. Strategies keyed to develop a cost-based advantage 2. Strategies keyed to creating a differentiation-based advantage 3. Focusing on a narrow market niche within an industry 4. Developing unmatched competitively valuable resources and capabilities

What are 4 ways to build a competitive advantage?

1. Striving to become the industry's low-cost provider (efficiency). 2. Outcompeting rivals on differentiating features (effectiveness). 3. Offering the lowest (best) prices for differentiated goods (best-cost provider). 4. Focusing on better serving a niche market's needs (efficiency and\or effectiveness).

Supplier bargain power is stronger when (8):

1. Supplier products/services are in short supply (giving suppliers more leverage in setting prices). 2. Supplier products/services are differentiated. 3. Industry members incur high costs in switching their purchases to alternative suppliers. 4. The supplier industry is more concentrated than the industry it sells to and is dominated by a few large companies. 5. Supplier products/services account for a small percentage of industry members' costs. 6. Industry members can't integrate backward and self-supply. 7. There are no good substitutes for what the suppliers provide. 8. Suppliers are not dependent on the industry for a large portion of their revenues.

When a focused low cost or focused differentiation strategy is viable?

1. Target market is big enough to be profitable 2. Industry leaders have chosen not to compete in this niche 3. It is costly or difficult for multi segmented competitors to meet the needs of niche buyers and at the same time satisfy the expectations of mainstream customers. 4. Few rivals are trying to specialize in the same target segment

THREE TESTS FOR BUILDING SHAREHOLDER VALUE THROUGH DIVERSIFICATION

1. The attractiveness test Are the industry's profits and return on investment as good or better than present business(es)? 2. The cost of entry test Is the cost of overcoming entry barriers so great as to long delay or reduce the potential for profitability? 3. The better-off test How much synergy (stronger overall performance) will be gained by diversifying into the industry?

What are the two crucial elements of a company's business model?

1. The customer value proposition—a plan for satisfying customer wants and needs at a price customers will consider good value 2. The profit formula—a plan for a cost structure that will enable the company to deliver the customer value proposition profitably.

What are the 2 best indicators of a well-conceived, well-executed strategy?

1. The firm is achieving its stated financial and strategic objectives. 2. The firm is an above-average industry performer.

Places in the total value chain system for a firm to look for ways to improve its efficiency and effectiveness

1. The firm's own internal activity segments 2. The suppliers' part of the overall value chain system 3. The forward channel portion of the value chain system

List 3 tests for determining whether diversification will add long-term value for stockholders.

1. The industry attractiveness test 2. The cost-of-entry test 3. The better-off test

List 5 conditions under which a focused low-cost or focused differentiation strategy is attractive.

1. The target market niche is big enough to be profitable and offers good growth potential. 2. Industry leaders chose not to compete in the niche—focusers avoid competing against strong competitors 3. It is costly or difficult for multi-segment competitors to meet the specialized needs of niche buyers. 4. The industry has many different niches and segments. 5. Rivals have little or no interest in the target segment.

Buyer bargaining power is weaker when (8):

1. There is a shortage of industry goods relative to buyer demand. 2. Seller products are differentiated. 3. Buyer costs of switching to competing products are high. 4. Buyers are small and numerous relative to sellers. 5. Buyers' information regarding sellers is limited in quantity and quality. 6. Buyers cannot credibly threaten to integrate backward. 7. Buyers cannot easily postpone purchases. 8. Buyers are not very price-sensitive.

Supplier bargain power is weaker when (9):

1. There is a surge in the availability of supplies. 2. The item being supplied is a "commodity." 3. Industry members' switching costs to alternative suppliers are low. 4. Industry members account for a big fraction of suppliers' sales. 5. The number of suppliers is large relative to the number of industry members and there is no supplier with large market shares. 6. Suppliers' products account for a large fraction of the industry costs. 7. Industry members have the potential to integrate backward. 8. Good substitutes for supplier products/services exist 9. Industry members are major customers of suppliers.

Concrete, measurable objectives are managerially valuable for what 3 reasons?

1. They focus efforts and align actions throughout the organization. 2. They serve as yardsticks for tracking a company's performance and progress. 3. They motivate employees to expend greater effort and perform at a high level.

4 purposes of setting objectives:

1. To convert the vision and mission into specific, measurable, timely performance targets. 2. To focus efforts and align actions throughout the organization. 3. To serve as yardsticks for tracking a firm's performance and progress. 4. To provide motivation and inspire employees to greater levels of effort.

List 5 reasons companies decide to enter foreign markets

1. To gain access to new customers. 2. To achieve lower costs through economies of scale, experience, and increased purchasing power. 3. To further exploit core competencies. 4. To gain access to resources and capabilities located in foreign markets. 5. To spread business risk across a wider market base

The most important parts of driving forces analysis is to determine whether the collective impact of driving forces will be______ (3).

1. To increase or decrease market demand. 2. Make competition more or less intense. 3. Lead to higher or lower industry profitability.

List 5 ways to secure a cost advantage.

1. Use lower-cost inputs and hold minimal assets 2. Offer only "essential" product features or services 3. Offer only limited product lines 4. Use low-cost distribution channels 5. Use the most economical delivery methods

Profitability ratio - Return on Invested Capital (ROIC) or Return on Capital Employed (ROCE)

profits after taxes / (long term debt + total stockholders equity) -A measure of the return that shareholders are earning on the monetary capital invested in the enterprise. A higher return reflects greater bottom-line effectiveness in the use of long-term capital.

What are the 5 guidelines for creating group maps?

1. Variables selected as map axes should not be highly correlated. 2. Variables should reflect important (sizable) differences among rival approaches. 3. Variables may be quantitative, continuous, discrete and\or defined in terms of distinct classes and combinations. 4. Drawing group circles proportional to the combined sales of firms in each group will reflect the relative sizes of each strategic group. 5. Drawing maps using different pairs of variables will show the different competitive positioning relationships present in the industry's structure.

Profitability ratio - Net profit margin (net ROS)

profits after taxes / sales revenues -shows after tax profits per dollar of sales

Profitability ratio - Net Return on Total Assets (ROA)

profits after taxes / total assets -a measure of the return earned by stockholders on the firms total assets

When does rivalry among competitive sellers increase (or is stronger)?

1. When buyer demand is growing slowly or declining. 2. As it becomes less costly for buyers to switch brands. 3. As the products of rival sellers become less strongly differentiated. 4. Buyer costs to switch brands are low 5. The firms in the industry have high fixed costs or high storage costs. 6. Competitors are numerous or are of roughly equal size and competitive strength. 7. Rivals have diverse objectives, strategies, and/or countries of origin. 8. Rivals face high exit barriers.

List 5 conditions that lead to first-mover advantages:

1. When pioneering helps build a firm's reputation and creates strong brand loyalty. 2. When a first mover's customers will thereafter face significant switching costs. 3. When property rights protections thwart rapid imitation of the initial move. 4. When an early lead enables movement down the learning curve ahead of rivals. 5. When a first mover can set the technical standard for the industry

Late-mover advantages (or first-mover disadvantages) arise in what 4 instances?

1. When pioneering is more costly than imitating and offers negligible experience or learning-curve benefits. 2. When the products of an innovator are somewhat primitive and do not live up to buyer expectations. 3. When rapid market evolution allows fast followers to leapfrog a first mover's products with more attractive next-version products. 4. When market uncertainties make it difficult to ascertain what will eventually succeed.

List 4 the situations in which a differentiation strategy works best.

1. When there is a diversity of buyer needs and uses for a product 2. When there are many ways that differentiation can have value to buyers 3. When there are few rival firms follow a similar differentiation approach 4. When there is rapid change in technology and product features

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

1. Whether a company's market target is broad or narrow 2. Whether the company is pursuing a competitive advantage linked to lower costs or differentiation.

Specific indicators of how well a company's strategy is working include (8):

1. Whether the firm's sales are growing faster than, slower than, or about the same pace as the market as a whole. 2. Whether the company is acquiring new customers at an attractive rate as well as retaining existing customers. 3. Whether the firm's image and reputation with its customers is growing stronger or weaker. 4. Whether the firm's profit margins are increasing or decreasing and how well its margins compare to rival firm's margins. 5. Trends in the firm's net profits and return on investment relative to those of other companies in the industry. 6. Whether the company's overall financial strength and credit rating are improving or declining. 7. How well the company stacks up against rivals on factors relevant to buyer's choices, such as price, product, quality, innovative features, delivery time, and customer service. 8. Whether key measures of operating performance are improving, remaining steady, or deteriorating.

The risks of a focused low cost or focused differentiation strategy

1. competitors will find effective ways to match a focusers capabilities in serving the target niches 2. the preferences and needs of niche members shift overtime to the product attributes desire by the majority. 3. the segment may become so attractive is is soon filled with competitors

focused differentiation strategy

1. existence of a buyer segment that is looking for special product attributes or seller capabilities 2. firm's ability to create a product or service offering that stands apart from that of rivals competing in the same target market niche (rich people are a popular niche: BMW, Lexus)

Competitive Strength Assessment

1. make a list of the industry's key success factors and other telling measures of competitive strength or weakness 2. assign weights to each of the measures of competitive strength based on their perceived importance 3. calculate weighted strength ratings by scoring each competitor on each strength measure and multiplying the assigned rating by the assigned weight 4. sum the weighted strength ratings on each factor to get an overall measure of competitive strength for each company being rated 5. use the overall strength ratings to draw conclusions about the size and extent of the company's net competitive advantage or disadvantage and to take specific note of areas of strength and weakness -high weighted competitive strength ratings signal a strong competitive position and possession of competitive advantage; low ratings signal a weak position and competitive disadvantage

WHAT DOES CRAFTING A DIVERSIFICATION STRATEGY ENTAIL?

1. picking new industries to enter and deciding on means of entry 2. pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage 3. establishing investment priorities and steering corporate resources into the most attractive business units 4. initiating actions to boost the combined performance of the cooperation's collection of businesses

List 2 factors that inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities.

1. social complexity 2. causal ambiguity

What 3 strategic management tasks does a strategic plan consist of?

1. strategic vision 2. objectives 3. strategy

For backward integration to be a viable and profitable strategy, a company must be able to:

1.) Achieve the same scale economies as outside suppliers 2.) Match or beat suppliers' production efficiency with no decline in quality

Outsourcing makes sense when:

1.) Activity can be performed better or more cheaply by outside specialists 2.) Activity is NOT crucial to the firm's ability to achieve sustainable competitive advantage 3.) Improves organizational flexibility and speeds time to market 4.) Reduces the company's risk exposure to changing technology and/or buyer preferences 5.) Allows concentration on its core business 6.) Leverage its key resources and core competencies 7.) Do even better what is already does best

Offensive strategy options include:

1.) Attacking the competitive weaknesses of rivals 2.) Offering an equally good or better product at a lower price 3.) Pursing product innovation 4.) Leapfrogging competitors by being the first to the market 5.) Adopting and improving on the good ideas of other companies 6.) Deliberately attacking those market segments where a key rival makes big profits 7.) Maneuvering around competitors to capture unoccupied or less contested market territory 8.) Using hit-and-run or guerrilla warfare tactics to grab sales and market share 9.) Launching a preemptive strike to capture a rare opportunity or secure an industry's limited resources

Vertical Integration involves expanding the firm's range of value chain activities _______ into source of supply or ________ toward end users

1.) Backward 2.) Forward

Vertical Integration into forward stages of industry value chain allows manufacturers to gain:

1.) Better access to end users 2.) Improve market disability 3.) Include the end user's purchase experience as a differentiating feature

Defensive strategies have two forms:

1.) Blocking the avenues open to challengers 2.) Signaling challengers that retaliation is likely

Reasons to enter into Strategic Alliances:

1.) Bring together the personnel and expertise needed to create desirable new skill sets and capabilities 2.) Overcome deficits in their own technical and manufacturing expertise 3.) Gain economies of scale in production or marketing 4.) Improve supply chain efficiency 5.) Expedite the development of promising new technologies or products 6.) Acquire or improve market access through joint marketing agreements

Ways of blocking the avenues open to challengers:

1.) Broaden its product line to close vacant niches 2.) Add new models 3.) Introduce new features 4.) Lower prices 5.) Announcements of new product and price changes 6.) Volume discounts

Examples of maneuvering around competitors to capture unoccupied or less contested market territory:

1.) Build strong positions in geographic areas 2.) Launching product categories where close rivals have little or no market presence

When a company acquires another company in the same industry, there's usually enough overlap in operations that:

1.) Certain inefficient plants can be closed 2.) Distribution and sales activities can be partly combined and dowsized

Alliances are more likely to be long-lasting when:

1.) Collaboration with partners that do NOT compete directly 2.) Trusting relationship has been established 3.) Continued collaboration is in their mutual interest

Alliances stand a reasonable chance of helping a company reduce _________ but very rarely have they proved a strategic option for gaining a durable ____________ over rivals

1.) Competitive Disadvantage 2.) Competitive edge

Vertical Integration extends a firm's ________ and ________ within the same industry

1.) Competitive advantage 2.) Operating scope

Why Mergers and Acquisitions sometimes fail to produce anticipated results:

1.) Cost savings may prove smaller than expected 2.) Gains in competitive capabilities may take longer than expected 3.) Efforts to mesh the company culture can stall due to resistance 4.) Employees become disenchanted and leave 5.) Differences in management styles and operating procedures can be hard to work out

The goal of signaling challengers that the strong retaliation is likely in the event of an attack is either to:

1.) Dissuade challengers from attacking 2.) To divert challengers to less threatening options

Joint Ventures tend to be more _____ but also ______ than other arrangements

1.) Durable 2.) Riskier

Examples of a company that achieved a Blue Ocean Strategy:

1.) Ebay 2.) Starbucks

What Mergers and Acquisition are trying to achieve:

1.) Extending the company's business into new product categories 2.) Creating a more cost-efficient operation 3.) Expanding a company's geographic coverage 4.) Gaining quick access to new technologies or complimentary resources and capabilities 5.) Leading the convergence of industries whose boundaries are being blurred

A First Mover needs to be a _______ and continue to move aggressively to capitalize on any......

1.) Fast learner 2.) Initial pioneering advantage

Vertical Integration strategies can be aimed at ______, _____, or _______

1.) Full integration 2.) Partial integration 3.) Tapered Integration

Drawbacks to Vertical Integration:

1.) Increases a firm's capital investment in the industry 2.) Increases business risk if industry growth and profitability are sour 3.) Slow to embrace technological advances 4.) Less flexibility in accommodating shifting buyer preferences 5.) Capacity matching problems 6.) Development of new skills and business capabilities

A Blue Ocean Strategy views the business as consisting of two distinct types of market space:

1.) Industry boundaries are defined and accepted, the competitive rules of the game are understood by all industry members, and companies try to outperform rivals by capturing a bigger share of existing demand 2.) "A Blue Ocean" - The industry does not really exist yet, is unattainable by competition, and offer wide open opportunity for profitability and growth

Vertical Integration has no real payoff unless:

1.) It produces sufficient cost savings to justify extra investment 2.) Adds materially to a company's technological and competitive strengths 3.) Helps differentiate the company's product offering

Bypassing regulatory wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it:

1.) Lowers distribution costs 2.) Lower selling prices 3.) Relative cost advantage 4.) High profit margins

The best targets for offensive attacks:

1.) Market leaders that are vulnerable 2.) Runner-up firms with weaknesses in areas where the challenger is strong 3.) Struggling enterprises that are on the verge of going under 4.) Small local and regional firms with limited capabilities

________ and ________ are much used strategic options to strengthen a company's market position

1.) Mergers 2.) Acquisitions

Options for "guerrilla offensives" include:

1.) Occasional lowballing on price 2.) Surprising key rivals with sporadic but intense bursts of promotional activity

Decisions regarding the firm's operating scope and how to strengthen its markets standing:

1.) Offensive strategic moves 2.) Defensive strategic moves 3.) Be a First Mover, fast follower, or late mover 4.) Whether to move closer to the customer (forward integration) or closer to the suppliers (backward integration) 5.) Which value chain activities should be outsourced 6.) Whether to enter strategic alliances or partnership arrangements

The difference between a merger and an acquisition relates more to the details of _________, __________, and __________, than to strategy and competitive advantage

1.) Ownership 2.) Management Control 3.) Financial arrangements

Being first to initiate a strategic move can have a high payoff when:

1.) Pioneering helps build a firm's image and reputation with buyers 2.) Early commitments to new technologies, new style components, new or emerging distribution channels can produce cost advantage over rivals 3.) First-time customers remain strongly loyal to pioneering firms in making repeat purchases 4.) Moving first constitutes a preemptive strike, making imitation hard or unlikely

Signaling Challengers that retaliation is likely can be done by:

1.) Publicly announcing management's commitment to maintain the firm's present market share 2.) Publicly committing the copmany to a policy of matching competitors' terms or prices 3.) Maintain a war chest of cash and marketable securities 4.) Marking a stronger counter response to enhance the firm's image as a tough defender

The biggest danger of outsourcing is that a company will farm out the wrong types of activities leading to:

1.) Reduction i the firm's strategic competitiveness 2.) Reduction in long-run success in the marketplace

Characteristics of a Strategic Alliance:

1.) Relevant collaboration of some sort 2.) Joint contribution of resources 3.) Shared risk 4.) Shared control 5.) Mutual dependence

Horizontal Mergers and Acquisitions allow companies to rapidly increase ______ and ___________

1.) Scale 2.) Horizontal Scope

Examples of preemptive moves include:

1.) Securing the best distributor 2.) Obtain the most favorable site at a new interchange or intersection (in a mall) 3.) Tying up the most reliable, high-quality suppliers via partnerships, long-term contracts, or acquisition

Guerrilla offensives are particularly well suited to _________ who have neither the _________ nor the _______ to mount a full-fledged attack on industry leaders

1.) Small challengers 2.) Resources 3.) Market visibility

Strategic offenses are called for when a company:

1.) Spots opportunities to gain profitable market share at the expense of rivals 2.) Has no other choice but try to attack a rival's competitive advantage

The two best reasons for investing company resources in Vertical Integration are to:

1.) Strengthen the firm's competitive position 2.) Boost its profitability

When to consider backward integration: (SPIT)

1.) Suppliers have large profit margins 2.) Powerful suppliers are inclined to raise prices at every opportunity 4.) Item being supplied is a major cost component 4.) Technological skills are easily mastered or acquired

To be successful, a preemptive move doesn't have to _______ from following or copying; it merely needs to give a firm a....

1.) Totally block it 2.) A prime position that is not easily circumvented

Signs of leader vulnerability include:

1.) Unhappy buyers 2.) Inferior product line 3.) Weak competitive strategy 4.) Preoccupation with diversification into other industries 5.) Mediocre or declining profitability

The purpose of defensive strategies are to:

1.) Weaken the impact of any attack that occurs 2.) Influence challengers to aim their efforts at other rivals 3.) Lower the risk of being attacked

Avantages of being a follower rather than being a First Mover:

1.) When pioneering leadership is more costly than followership 2.) When the products of an innovator do NOT live up to buyer expectations 3.) When potential buyers are skeptical about the benefits of a new technology 4.) When rapid evolution gives fast followers the opening to leapfrog a First Mover's product with more attractive next-version products

Financial Options for Allocating Company Financial Resources

>Pay off existing long-term or short-term debt >Increase dividend payments to Shareholders >Repurchase shares of co's common stock >Build cash reserves; invest in short-term securities

KEY INDICATORS OF INDUSTRY ATTRACTIVENESS

>Social, political, regulatory, environmental factors >Seasonal and cyclical factors >Industry uncertainty and business risk >Market size and projected growth rate >Industry profitability >The intensity of competition among market rivals >Emerging opportunities and threats

) A company's strategy is a "work in progress" and evolves over time because of A. The ongoing need of company managers to react and respond to changing market and competitive conditions B. The ongoing need to imitate the new strategic moves of the industry leaders C. The need to make regular adjustments in the company's strategic vision D. The importance of developing a fresh strategic plan every year (which also has the benefit of keeping employees from becoming bored with executing the same strategy year after year after year) E. The frequent need to modify key elements of the company's business model

A

A "balanced scorecard" that includes both strategic and financial performance targets is a conceptually strong approach for judging a company's overall performance because A. Financial performance measures are lagging indicators that reflect the results of past decisions and organizational activities whereas strategic performance measures are leading indicators of a company's future financial performance B. It entails putting equal emphasis on good strategy execution and good business model execution C. A balanced scorecard approach pushes managers to avoid setting objectives that reflect the results of past decisions and organizational activities and, instead, to set objectives that will serve as leading indicators of a company's future financial performance

A

A company needs performance targets or objectives A. For its operations as a whole and also for each of its separate businesses, product lines, functional departments and individual work units B. Because they give the company clear-cut strategic intent C. In order to unify the company's strategic vision and business model

A

A company's mission statement typically addresses which of the following questions? A. "Who are we and what do we do?" B. "What objectives and level of performance do we want to achieve?" C. "Where are we going and what should our strategy be?" D. "What approach should we take to achieve sustainable competitive advantage?" E. "What business model should we employ to achieve our objectives and our vision?"

A

A company's overall strategy A. Is really a collection of strategic initiatives and actions devised by managers and key employees up and down the whole organizational hierarchy B. Is subject to being changed much less frequently than either its objectives or its mission statement and thus serves as the base of its strategy-making pyramid C. Should be based on a flexible strategic vision and strategic intent D. Is customarily reviewed and approved level-by-level by the company board of directors E. Determines whether its strategic intent is proactive or reactive

A

A company's strategic vision concerns A. A company's directional path and future product-market-customer-technology focus B. Why the company does certain things in trying to please its customers C. Management's storyline of how it intends to make a profit with the chosen strategy D. "who we are and what we do." E. What future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage

A

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 A. Is competitively unattractive from the standpoint of earning good profits B. Offers little ability to build a sustainable competitive advantage C. Is highly conducive to achieving strong product differentiation and high customer loyalty to the company's brand

A

Business strategy concerns A. The actions and approaches crafted by management to produce successful performance in one specific line of business B. What set of businesses to be in and why C. Selecting a business model to use in pursuing business objectives D. Selecting a set of stretch financial and strategic objectives for a particular line of business E. Choosing the most appropriate strategic intent for a specific line of business

A

Changing circumstances and ongoing managerial efforts to improve the strategy A. Account for why a company's strategy evolves over time B. Explain why a company's strategic vision undergoes almost constant change C. Make it very difficult for a company to have concrete strategic objectives D. Make it very hard to know what a company's strategy really is E. All of the above

A

Company managers connect values to the chosen strategic vision by A. Making it clear that company personnel are expected to live up to the values in conducting the company's business and pursuing its strategic vision B. Using a values-based balanced scorecard to measure the company's progress in achieving the vision C. Making achievement of the values a prominent part of the company's strategic objectives D. Combining the company's values and mission/business purpose into a single statement E. Making adherence to the company's values the centerpiece of the company's strategy

A

Crafting a strategy involves A. Stitching together a proactive/intended strategy and then adapting first one piece and then another as circumstances surrounding the company's situation change or better options emerge B. Developing a 5-year strategic plan and then fine-tuning it during the remainder of the plan period; big changes in strategy are thus made only once every 5 years C. Trying to imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage D. Doing everything possible (in the way of price, quality, service, warranties, advertising and so on) to make sure the company's product/service is very clearly differentiated from the product/service offerings of rivals E. All of these accurately characterize the managerial process of crafting a company's strategy

A

Crafting and executing strategy are top-priority managerial tasks because A. Good strategy coupled with good strategy execution greatly raises the chances that a company will be a standout performer in the marketplace B. They are necessary ingredients of a sound business model C. The management skills of top executives are sharpened as they work their way through the strategy-making/strategy-executing process D. Doing these tasks helps executives develop an appropriate strategic vision, strategic intent and set of strategic objectives E. Of the contribution they make to maximizing value for shareholders

A

Developing a strategic vision for a company entails A. Prescribing a strategic direction for the company to pursue and a rationale for why this strategic path makes good business sense B. Describing its business model and the kind of value that it is trying to deliver to customers C. Putting together a story line of why the business will be a moneymaker D. Describing "who we are and what we do." E. Coming up with a long-term plan for outcompeting rivals and achieving a competitive advantage

A

Evaluating whether an industry's environment presents a company with a sufficiently attractive business opportunity involves A. Sizing up overall industry and competitive conditions to determine whether the industry's overall profit prospects are above average, average or below average B. Determining which firms in the industry have a competitive advantage and how they got their advantage C. Determining the overall strength of the five competitive forces

A

In analyzing driving forces, the strategist's role is to A. Identify the driving forces and evaluate their impact on (1) demand for the industry's product, (2) the intensity of competition and (3) industry profitability B. Predict future marketing innovations and how fast the industry is likely to globalize C. Evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage

A

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers not relatively strong? A. When buyer demand is growing rapidly B. When buyers are relatively well informed about sellers' products, prices and costs C. When buyers pose a major threat to integrate backward into the product market of sellers

A

Management's strategic vision for an organization A. Charts a strategic course for the organization ("where we are going") and provides a rationale for why this directional path makes good sense B. Describes in fairly specific terms the organization's strategic intent, strategic objectives and strategy C. Spells out how the company will become a big moneymaker and boost shareholder value D. Addresses the critical issue of "why our business model needs to change and how we plan to change it." E. Spells out the organization's strategic intent and the actions and moves that will be undertaken to achieve it

A

Strategic intent refers to a situation where a company A. Relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective B. Decides to adopt a particular strategy C. Commits to using a particular business model to make money D. Commits to pursuing stretch strategic objectives

A

Supplier bargaining power is weaker when A. Good substitute inputs exist or new ones emerge B. The cost of switching from one supplier to another is high C. Suppliers furnish a critical part or component

A

The bargaining leverage of suppliers is greater when A. There are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small B. Industry members incur low costs in switching their purchases from one supplier to another C. Industry members purchase in large quantities and thus are important customers of the suppliers

A

The competitive moves and business approaches a company's management is using to grow the business, stake out a market position, attract and please customers, compete successfully, conduct operations and achieve organizational objectives is referred to as its A. Strategy B. Mission statement C. Strategic intent D. Business model E. Strategic vision

A

The competitive pressures from substitute products tend to be stronger when A. Buyers are relatively comfortable with using substitutes and the costs to buyers of switching over to the substitutes are low B. There are more than 10 sellers of substitute products C. The quality and performance of the substitutes is well above what buyers need to meet their requirements

A

The difference between the concept of a company mission statement and the concept of a strategic vision is that A. A mission statement typically concerns a company's present business scope ("who we are and what we do") whereas the principal concern of a strategic vision is with the company's long term direction and future product-market-customer-technology focus

A

The heart and soul of a company's strategy-making effort A. Involves coming up with moves and actions that produce a durable competitive edge over rivals B. Is figuring out how to maximize the profits and shareholder value C. Concerns how to improve the efficiency of its business model D. Deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner that keeps the company's prices as low as possible E. Is figuring out how to become the industry's low-cost provider

A

The payoff of good scouting reports on rivals is improved ability to A. Anticipate what moves rivals are likely to make next, thereby providing a valuable assist in outmaneuvering them in the marketplace B. Determine which rivals are in the best strategic group C. Figure out how many key success factors a rival has

A

The payoffs of a clear vision statement do not include A. Greater ability to avoid strategic inflection points B. Helping the organization prepare for the future C. Reducing the risks of rudderless decision-making D. Helping to crystallize top management's own view about the firm's long-term direction E. Providing a tool for winning the support of organizational members for internal changes that will help make the vision a reality

A

The strength of competitive pressures that suppliers can exert on industry members is mainly a function of A. Whether needed inputs are in short supply or whether ample supplies are readily available from several different suppliers B. Whether suppliers self-manufacture what they supply or source their items from other manufacturers C. The industry's position in the growth cycle

A

The task of stitching together a strategy A. Entails addressing a series of hows: how to grow the business, how to please customers, how to outcompete customers, how to outcompete rivals, how to respond to changing market conditions, how to manage each functional piece of the business and develop needed competencies and capabilities and how to achieve strategic and financial objectives B. Is primarily an exercise in deciding which of several freshly-emerging market opportunities to pursue C. Is mainly an exercise that should be dictated by what is comfortable to management from a risk perspective and what is acceptable in terms of capital requirements

A

Which of the following are common shortcomings of company vision statements? A. Too broad, vague or incomplete, bland/uninspiring, not distinctive and too reliant on superlatives B. Unrealistic, unconventional and un-businesslike C. Too specific, too inflexible and can't be achieved in 5 years D. Too broad, too narrow and too risky E. Not customer-driven, out-of-step with emerging technological trends and too ambitious

A

Which of the following are integral parts of the managerial process of crafting and executing strategy? A. Developing a strategic vision, setting objectives and crafting a strategy B. Developing a proven business model, deciding on the company's strategic intent and crafting a strategy C. Setting objectives, crafting a strategy, implementing and executing the chosen strategy and deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage D. Coming up with a statement of the company's mission and purpose and communicating it to all employees, setting objectives, choosing what business approaches and operating practices to employ, selecting a business model and monitoring developments and initiating corrective adjustments E. Deciding on the company's strategic intent, setting financial objectives, crafting a strategy and choosing what business approaches and operating practices to employ

A

Which of the following is generally not considered as a barrier to entry? A. Rapid market growth B. Sizable capital requirements and an array of regulatory requirements C. Strong buyer loyalty to existing brands

A

Which of the following is not a good example of a marketing-related key success factor? A. Product R & D capabilities and expertise in product design B. A well-known and well-respected brand name C. Breadth of product line and product selection

A

Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? A. The industry's growth potential, whether competition appears destined to become stronger or weaker and whether the industry's overall profit prospects are above average, average or below average B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing and whether economies of scale and experience curve effects are a key success factor

A

Which of the following is the best example of a well-stated financial objective? A. Increase earnings per share by 15% annually B. Gradually boost market share from 10% to 15% over the next several years C. Achieve lower costs than any other industry competitor D. Boost revenues by a percentage greater than the industry average E. Maximize total company profits and return on investment

A

Which one of the following is not a reason why industry members are often motivated to enter into collaborative partnerships with key suppliers? A. To reduce the costs of switching suppliers B. To speed the availability of next-generation components C. To enhance the quality of parts and components being supplied and reduce defect rates

A

cash hog business

A cash hog business generates cash flows that are too small to fully fund its operations and growth and requires cash infusions to provide additional working capital and finance new capital investment.

Runner up firms are an especially attractive target when...

A challenger's resources strengths and competitive capabilities are well suited to exploit their weaknesses

Define strategic group

A cluster of industry rivals that have similar competitive approaches and market positions.

What is an acquisition?

A combination in which one firm, the acquirer, purchases and absorbs the operations of another firm, the acquired.

A company pursuing related diversification exhibits resource fit when its businesses have matching specialized resource requirements along their value chains.

A company pursuing unrelated diversification has resource fit when the parent company has adequate corporate resources (parenting and general resources) to support its businesses' needs and to add value.

What is a company's deliberate strategy?

A company's deliberate strategy consists of proactive strategy elements that are both planned and realized as planned

What is a company's emergent strategy?

A company's emergent strategy consists of reactive strategy elements that emerge as changing conditions warrant.

What are the company's most important resources and capabilities and can they give the company a sustainable advantage over competitors?

A company's resources can be identified using the tangible/intangible typology presented in this chapter. Its capabilities can be identified either by starting with its resources to look for related capabilities or looking for them within the company's different functional domains. The answer to the second part of the question comes from conducting the four tests of a resource's competitive power—the VRIN tests. If a company has resources and capabilities that are competitively valuable and rare, the firm will have a competitive advantage over market rivals. If its resources and capabilities are also hard to copy (inimitable), with no good substitutes (nonsubstitutable), then the firm may be able to sustain this advantage even in the face of active efforts by rivals to overcome it

A company's strategy typically evolves over time, emerging from a blend of what two elements?

A company's strategy typically evolves over time, emerging from a blend of (1) proactive deliberate actions on the part of company managers to improve the strategy, and (2) reactive emergent responses to unanticipated developments and fresh market conditions.

Translating proficient performance of value chain activities into competitive advantage

A company's value creating activities can offer a competitive advantage in one of two ways 1. they can contribute to greater efficiency and lower costs relative to competitors (cost based competitive strategy requires determined management efforts to be cost efficient in performing value chain activities. Ex: Dollar General, Nucor Steel, Greyhound lines) 2. they can provide a basis for differentiation, so customers are willing to pay relatively more for the company's goods and services. (competitive advantage based on differentiation. Continuous investment and activities that deliver consistent, reinforcing messages. Ex: Grey Goose - status, Ikea - design, FedEx - reliability, 3M - innovation, Nordstrom - customer service.

What are a company's values?

A company's values are the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.

What is a distinctive competence?

A competitively important activity that a company performs better than it's rivals - it thus represents a competitively superior resource strength.

What is a core competence?

A competitively important activity that a company performs better than other internal activities. (Central to a company's strategy adn competitiveness)

Price cutting offensive are best initiated by companies that have first achieved.....

A cost advantage

In a Partial Integration:

A firm builds positions only in selected stages of the vertical chain.

Concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products.

A focused differentiation strategy

concentrating on a narrow buyer segment (or market niche) and rivals on costs, thus being able to serve niche members at a lower price.

A focused low-cost strategy

What is an unsuitable\mismatched market.

A market that is best avoided as the firm's strengths are not matched to market factors

What is a marginally interesting market?

A market that presents high risk and questionable profit potential.

What is an absolute "must pursue" market?

A market that represents much potential but is hidden in "fog of the future."

What is a joint venture?

A partnership involving the establishment of an independent corporate entity that the partners own and control jointly, sharing in its revenues and expenses.

portfolio approach

A portfolio approach to ensuring financial fit among a firm's businesses is based on the fact that different businesses have different cash flow and investment characteristics.

Cost-efficient management of value chain activities

A uniqueness driver can have a strong differentiating effect be based on physical as well as functional attributes of a firm's products Be the result of superior performance capabilities of the firm's human capital Have an effect on more than one of the firm's value chain activities Create a perception of value (brand loyalty) in buyers where there is little reason for it to exist

Uniqueness driver

A value chain activity or factor that can have a strong effect on customer value and creating differentiation.

Which one of the following statements is false? A) A company's macro-environment includes all relevant external factors and influences that bear upon a company's decision to move to a different strategic group, change its strategic intent, or modify its objectives, strategy, or business model. B) A company's strategy is increasingly effective the more it provides some insulation from competitive pressures and shifts the competitive battle in the company's favor. C) The task of driving forces analysis is to separate the major causes of industry change from the minor ones. D) Scouting competitors well enough to anticipate their next moves allows managers to prepare effective countermoves (perhaps even beat a rival to the punch) and to take rivals' probable actions into account in crafting their own best course of action. E) The degree to which an industry is attractive or unattractive is not the same for all industry participants or all potential entrants because the attractiveness of the opportunities an industry presents depends heavily on whether a company has the resource strengths and competitive capabilities to capture them.

A) A company's macro-environment includes all relevant external factors and influences that bear upon a company's decision to move to a different strategic group, change its strategic intent, or modify its objectives, strategy, or business model.

Which of the following does not generally account for why the supply side of an industry may be fragmented and contain thousands of companies? A) A condition where most all competitors have, for one reason or another, chosen to pursue focus and market niche strategies B) Low entry barriers that permit small firms to enter cheaply and quickly C) An absence of scale economies permits small companies to compete on an equal cost footing with larger firms D) Buyer preferences and requirements are so diverse that very large numbers of firms can easily coexist trying to accommodate differing buyer tastes, expectations, and pocketbooks E) The scope of the geographic market for the industry's product or service is transitioning from national to global, putting companies in more and more countries in the same competitive arena

A) A condition where most all competitors have, for one reason or another, chosen to pursue focus and market niche strategies

Which one of the following does NOT account for WHY a company's strategy evolves from one version to another? A) A need to promote stability and retain the status quo. B) The need to abandon some strategy elements that are no longer working well. C) A need to respond to changing customer requirements and expectations. D) A need to react to fresh strategic maneuvers on the part of rival firms. E) The proactive efforts of company managers to improve this or that aspect of the strategy.

A) A need to promote stability and retain the status quo.

Which of the following is/are not "valid" strategy options for entering and/or competing in foreign markets? A) An import strategy, a strategic alliance strategy, a profit sanctuary strategy, and a cross-market subsidization strategy B) A global strategy where a company uses essentially the same competitive strategy approach in all country markets where it has a presence. C) A multicountry strategy D) An export strategy and using strategic alliances or joint ventures with foreign companies as the primary vehicle for entering foreign markets E) A franchising strategy and a strategy of licensing foreign firms to use the company's technology or to produce and distribute the company's products

A) An import strategy, a strategic alliance strategy, a profit sanctuary strategy, and a cross-market subsidization strategy

Which of the following best illustrates an economy of scope? A) Being able to eliminate or reduce costs by combining related value-chain activities of different businesses into a single operation B) Being able to eliminate or reduce costs by performing all of the value chain activities of related sister businesses at the same location C) Being able to eliminate or reduce costs by extending the firm's scope of operations over a wider geographic area D) Being able to eliminate or reduce costs by expanding the size of a company's manufacturing plants E) Being able to eliminate or reduce costs by having more value chain activities performed in-house rather than outsourcing them

A) Being able to eliminate or reduce costs by combining related value-chain activities of different businesses into a single operation

Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? A) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company's Web site. B) Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best C) Improving the company's ability to innovate by allying with "world-class" suppliers who have cutting edge intellectual capital and are first-to-market with next-generation parts and components D) Being able to speedily and efficiently assemble diverse kinds of competitively valuable expertise E) Obtaining higher quality and/or cheaper components or services

A) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company's Web site.

Which one of the following is not part of the task of critiquing a diversified company's strategy, assessing its business makeup, and deciding how to improve overall company performance? A) Checking whether each business a company has diversified into can pass the profitability test, the capital gains test, the growth rate test, and the resource strength test B) Checking for strategic fits and resource fits C) Ranking the performance prospects of the businesses from best to worst and determining what the corporate parent's priority should be in allocating resources to its various businesses D) Assessing the attractiveness of the industries the company has diversified into, both individually and as a group E) Assessing the competitive strength of the company's business units and determining how many are strong contenders in their respective industries

A) Checking whether each business a company has diversified into can pass the profitability test, the capital gains test, the growth rate test, and the resource strength test

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals B) Prepare to compete on the basis of low price C) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding) D) Try to change the local market to better match the way the company does business elsewhere E) Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances

A) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals

Which of the following is unlikely to be a promising option for competing in a fragmented industry? A) Employing deep price discounting, extensive advertising, and other muscle-flexing maneuvers to gain market dominance in a select few country markets B) Specializing by product type or becoming a low-cost operator C) Specializing by customer type D) Focusing on a limited geographic area E) Constructing and operating "formula" facilities at many different locations

A) Employing deep price discounting, extensive advertising, and other muscle-flexing maneuvers to gain market dominance in a select few country markets

Which of the following statements is false? A) Export strategies are favored by most participants in foreign markets because domestic plants tend to be more cost efficient than foreign plants, because using domestic plants as a production base for exporting goods to foreign markets is less risky and entails lower capital requirements, and because it is a lot easier to establish distribution capabilities in foreign markets than it is to establish production capabilities. B) Profitability in emerging country markets rarely comes quickly or easily—new entrants have to be sensitive to local conditions, be willing to invest in developing the market for their products over the long-term, and be patient in earning a profit. C) Using franchising strategies to pursue global expansion is often attractive to service and retailing enterprises. D) Using a licensing strategy to participate in foreign markets often makes good sense when a firm with valuable technical know-how or a unique patented product lacks the organizational capability or resources to enter foreign markets on its own. E) With multicountry competition, competition in one national market is not closely linked to competition in another national market—thus, there is no global market, just a collection of self-contained country markets.

A) Export strategies are favored by most participants in foreign markets because domestic plants tend to be more cost efficient than foreign plants, because using domestic plants as a production base for exporting goods to foreign markets is less risky and entails lower capital requirements, and because it is a lot easier to establish distribution capabilities in foreign markets than it is to establish production capabilities.

Which one of the following is not a strategic pitfall companies can make during the transition from fairly rapid growth to industry maturity? A) Going overboard in outsourcing the performance of value chain activities to allies and partners B) Steering a middle course between low-cost, differentiation, and focusing, thus leaving the firm stuck in the middle C) Overexpanding in the face of slowing growth D) Overspending on advertising and sales promotion efforts in a losing effort to combat the growth slowdown E) Failing to pursue cost reduction aggressively enough

A) Going overboard in outsourcing the performance of value chain activities to allies and partners

Evaluating a company's resources and competitive position does not include developing answers to which one of the following questions? A) How good is the company's value chain? B) Is the company competitively stronger or weaker than key rivals? C) What are the company's resource strengths and weaknesses and its external opportunities and threats? D) Are the company's prices and costs competitive? E) What strategic issues and problems merit front-burner managerial attention?

A) How good is the company's value chain?

Which of the following is not a typical feature of an emerging industry or a challenge that companies in emerging industries have to contend with and try to overcome? A) How to raise sufficient capital to fund an R&D effort that will enable the company to win the race against rivals to patent the industry's technology B) Many potential buyers expect first-generation products to be rapidly improved and delay their purchase until technology and product design mature C) The marketing challenge is to induce first-time purchase and overcome customer concerns about product features, performance reliability, and conflicting claims of rival firms D) Strong learning and experience curve effects may be present, allowing significant price reductions as volume builds and costs fall E) There are often uncertainties surrounding an emerging industry's technology with no consensus regarding which product attributes will prove decisive in winning buyer favor

A) How to raise sufficient capital to fund an R&D effort that will enable the company to win the race against rivals to patent the industry's technology

Which of the following is not a strategic disadvantage of vertical integration? A) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. B) Vertical integration poses all kinds of capacity-matching problems. C) It boosts a firm's capital investment in the industry and thus increases business risk if the industry becomes unattractive later. D) Vertical integration can result in less flexibility in accommodating shifting buyer preferences when a new product design doesn't include parts and components that the company makes in-house. E) Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities

A) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs.

Which of the following statements about a company's strategy is false? A) Normally, companies have a narrow window of strategic freedom in choosing the hows of strategy because all competitors are facing the same market conditions and competitive pressures and, therefore, have to cope with them using very similar strategies. B) A company's strategy results in achieving sustainable competitive advantage when an attractive number of buyers prefer its products or services over the offerings of competitors and when the basis for this preference is durable. C) A company's strategy is based partly on trial-and-error organizational learning about what has worked well and what hasn't. D) A company's strategy and strategic moves are only partly the result of proactive plotting and management design. E) A company's strategy is a work in progress, not a one-time management exercise.

A) Normally, companies have a narrow window of strategic freedom in choosing the hows of strategy because all competitors are facing the same market conditions and competitive pressures and, therefore, have to cope with them using very similar strategies.

Which one of the following strategic actions is not well-matched to dealing with the transition from rapid growth to industry maturity? A) Steering a middle course between low cost, differentiation, and focusing B) Pruning marginal products and models C) Improving value chain efficiency D) Acquiring rival companies at bargain prices E) Trimming costs

A) Steering a middle course between low cost, differentiation, and focusing

Which of the following is not one of the most frequently used strategic approaches to building competitive advantage? A) Striving for a competitive edge based on bigger profit margins B) Developing expertise and resource strengths that give the company competitive capabilities that rivals can't easily imitate or trump with capabilities of their own C) Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals D) Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche E) Outcompeting rivals based on differentiating features

A) Striving for a competitive edge based on bigger profit margins

Which of the following is not one of the four basic routes to achieving a differentiation-based competitive advantage? A) Striving to capture all available economies of scale B) Incorporating tangible features that raise product performance C) Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product D) Delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match E) Incorporating features that enhance buyer satisfaction in intangible or non-economic ways

A) Striving to capture all available economies of scale

Which one of the following is not a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement? A) The alliance involves joint contribution of resources and is mutually beneficial. B) The alliance helps block a competitive threat or open up new market opportunities. C) The alliance helps mitigate a significant risk to a company's business. D) The alliance helps build, enhance, or sustain a core competence or competitive advantage. E) The alliance is critical to the company's achievement of an important objective.

A) The alliance involves joint contribution of resources and is mutually beneficial.

Which of the following is NOT one of the basic reasons that a company's strategy evolves over time? A) The need on the part of company managers to initiate fresh strategic actions that boost employee commitment and create a results-oriented culture. B) The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy. C) An ongoing need to abandon those strategy features that are no longer working well D) The need to respond to the actions and competitive moves of rival firms. E) The need to keep strategy in step with changing market conditions and changing customer needs and expectations.

A) The need on the part of company managers to initiate fresh strategic actions that boost employee commitment and create a results-oriented culture.

Which one of the following is not among the major reasons a company might choose to enter foreign markets? A) To build profit sanctuaries necessary to wage guerrilla offensives against challengers invading its home market. B) To spread business risk across a wider geographic market base. C) To gain access to more buyers for the company's products/services. D) To capitalize on company competencies and capabilities E) To achieve lower costs and enhance the firm's competitiveness.

A) To build profit sanctuaries necessary to wage guerrilla offensives against challengers invading its home market.

What is the foremost question in running a business enterprise? A) What must managers do, and do well, to make a company a winner in the marketplace? B) What can employees do, and do well, to ensure customer satisfaction? C) What can shareholders do, and do well, to ensure a profitable company? D) None of these. E) All of these.

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

Every strategy needs: A) a distinctive element that attracts customers and produces a competitive edge. B) to include similar characteristics to rival company strategies. C) to pursue conservative growth built on historical strengths. D) to employ diverse and sundry operating practices for producing greater control over sales growth targets. E) to mimic the plans of the industry's most successful companies.

A) a distinctive element that attracts customers and produces a competitive edge.

A joint venture is an attractive way for a company to enter a new industry when A) a firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps. B) it needs access to economies of scope and good financial fits in order to be cost-competitive. C) it is uneconomical for the firm to achieve economies of scope on its own initiative. D) the firm has no prior experience with diversification. E) it has not built up a hoard of cash with which to finance a diversification effort.

A) a firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps.

A slow-exit type of end-game strategy involves A) a gradual phasing down of operations coupled with an objective of generating the greatest possible harvest of cash from the business for as long as possible. B) selling off assets gradually and liquidating the business over a period of 5-10 years. C) gradually reducing the size of the company's customer base, starting with the least profitable customers and moving steadily toward the most profitable customers—with the intent of selling out to the highest bidder when the business starts to become unprofitable. D) withdrawing, one by one, from the various country markets where the firm competes and gradually retreating to the country market where sales and profits are highest. E) pruning the operating budget by 5-10 percent annually and outsourcing more and more value chain activities to outside suppliers.

A) a gradual phasing down of operations coupled with an objective of generating the greatest possible harvest of cash from the business for as long as possible.

Economies of scope A) are cost reductions that flow from operating in multiple related businesses. B) arise only from strategic fit relationships in the production portions of the value chains of sister businesses. C) are more associated with unrelated diversification than related diversification. D) are present whenever diversification satisfies the attractiveness test and the cost-of-entry test. E) arise mainly from strategic fit relationships in the distribution portions of the value chains of unrelated businesses

A) are cost reductions that flow from operating in multiple related businesses.

The best strategic alliances A) are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit. B) are those whose purpose is to create an industry key success factor. C) are those which help a company move quickly from one strategic group to another. D) involve joining forces in R&D to develop new technologies cheaper than a company could develop the technology on its own. E) aim at raising an industry's barriers to entry.

A) are highly selective, focusing on particular value chain activities and on obtaining a particular

Broad differentiation strategies are an attractive competitive approach whenever A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product or by sellers with very similar capabilities. B) buyers are quick to switch brands when a product fails to meet their expectations. C) no other rivals have a strong brand name reputation. D) price competition is especially vigorous. E) buyer switching costs are high and the industry's products are weakly differentiated.

A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product or by sellers with very similar capabilities.

Broad differentiation strategies generally work best in market circumstances where A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product. B) most buyers have similar needs and use the product in the same ways. C) the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart. D) buyers are price sensitive and buying switching costs are quite low. E) the five competitive forces are strong.

A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product.

A competitive strategy of striving to be the low-cost provider is particularly attractive when A) buyers are large and use the product in much the same ways. B) most rivals are trying to differentiate their product offering from those of rivals. C) there are many ways to achieve higher product quality that have value to buyers. D) buyers are not swayed by advertising and are not very brand-loyal. E) most rivals are pursuing best-cost or broad differentiation strategies.

A) buyers are large and use the product in much the same ways.

Competitive pressures stemming from substitute products are weaker when A) buyers don't believe substitute products have equal or better features, and buyers' costs of switching to substitutes are relatively high. B) the industry consists of a relatively large number of rival sellers that are fairly equal in size and similar in competitive capability. C) entry barriers are moderately high but by no means prohibitive and there is a fairly small pool of entry candidates. D) a number of customers buy in large volumes and are in a strong bargaining position to win concessions from sellers. E) buyer loyalty to the products they are currently purchasing buyers' costs of switching to substitutes are relatively low.

A) buyers don't believe substitute products have equal or better features, and buyers' costs of switching to substitutes are relatively high.

Relative market share is A) calculated by dividing a business's percentage share of total industry sales volume by the percentage share held by its largest rival—it is a better indicator of a business's competitive strength than is a simple percentage measure of market share. B) calculated by adjusting a company's dollar market share up or down in proportion to whether the company's quality and customer service are above/below industry averages. C) calculated by dividing a company's market share (based on dollar volume) by the industry-average market share. D) particularly useful in identifying cash cows and cash hogs cash cow businesses have big relative market shares (above 1.0) and cash hog businesses have low relative market shares (below 0.5). E) calculated by subtracting the industry-average market share (based on dollar volume) from a company's market share to determine how much a company's market share is above/below the industry average—this amount is a better indicator of a business's competitive strength than is just looking at the firm's market share percentage

A) calculated by dividing a business's percentage share of total industry sales volume by the percentage share held by its largest rival—it is a better indicator of a business's competitive strength than is a simple percentage measure of market share.

Strategic actions to eliminate a cost disadvantage A) can aim at lowering costs (1) in the suppliers' part of the industry value chain, (2) in a company's own internally-performed activities, and/or (3) in the forward channel portion of the value chain. B) work best when they aim at lowering the costs of performing those tasks and activities where the company has core competencies and distinctive competencies. C) work best when aimed at increasing the amount of the company's low-cost competitive assets and decreasing the amount of its high-cost competitive assets. D) are likely to be most effective when they are aimed at lowering the costs of the value chain activities that a company performs internally. E) are most likely to be successful when they involve efforts to concentrate more company resources and talents on those value chain activities where the company already has the lowest costs.

A) can aim at lowering costs (1) in the suppliers' part of the industry value chain, (2) in a company's own internally-performed activities, and/or (3) in the forward channel portion of the value chain.

The attractiveness test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether A) conditions in the target industry are sufficiently attractive to permit earning consistently good profits and returns on investment. B) the potential diversification move will boost the company's competitive advantage in its existing business. C) shareholders will viewed the contemplated diversification move as attractive. D) key success factors in the target industry are attractive. E) there are attractive strategic fits between the value chains of the company's present businesses and the value chain of the new business it is considering entering.

A) conditions in the target industry are sufficiently attractive to permit earning consistently good profits and returns on investment.

The objective of a best-cost provider strategy is to A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes). B) offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry. C) attract buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry-average price. D) outcompete rivals using low-cost provider strategies. E) translate its best-cost status into achieving the highest profit margins of any firm in the industry.

A) deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes).

The strategy options for local companies in competing against global challengers include A) develop business models that exploit the shortcomings of local distribution networks and infrastructure, utilize keen understanding of local customer needs and preferences, and transferring company expertise to cross-border markets. B) employing defensive rather than offensive strategies, entering into strategic alliances with other local companies to defeat the challengers, and not using an import strategy. C) licensing the company's technology to industry participants competing in foreign markets. D) developing a core competence in as many value chain activities as possible, and pursuing a multicountry strategy to quickly build new profit sanctuaries. E) Using an export strategy to gain economies of scale, forming strategic alliances with global giants, using home-run strategies to enter nearby foreign markets, and relying on patriotic themes in local advertising to defeat global challengers trying to enter their home markets.

A) develop business models that exploit the shortcomings of local distribution networks and infrastructure, utilize keen understanding of local customer needs and preferences, and transferring company expertise to cross-border markets.

One strategic fit-based approach to related diversification would be to A) diversify into new industries that present opportunities to transfer competitively valuable expertise, technological know-how, or other capabilities from one business to another. B) diversify into those industries where the same kinds of driving forces and competitive forces prevail, thus allowing use of much the same competitive strategy in all of the business a company is in. C) acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups. D) acquire companies in forward distribution channels (wholesalers and/or retailers). E) expand into foreign markets where the firm currently does no business.

A) diversify into new industries that present opportunities to transfer competitively valuable expertise, technological know-how, or other capabilities from one business to another.

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves A) evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts. B) assessing whether the diversification move will make the company better off by increasing its resource strengths and competitive capabilities. C) evaluating whether the diversification move will make the company better off by making it less subject to the bargaining power of customers and/or suppliers. D) assessing whether the diversification move will make the company better off by increasing its profit margins and returns on investment. E) All of these.

A) evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.

Mergers and acquisitions are often driven by such strategic objectives as to A) expand a company's geographic coverage or extend its business into new product categories. B) reduce the number of industry key success factors. C) reduce the number of strategic groups in the industry. D) facilitate a company's shift from a low-cost leadership strategy to a focused low-cost strategy. E) lengthen a company's value chain and thereby put it in better position to deliver superior value to buyers.

A) expand a company's geographic coverage or extend its business into new product categories.

Vertical integration strategies A) extend a company's competitive scope within the same industry by expanding its operations across more parts of the industry value chain. B) are one of the best strategic options for helping companies win the race for global market leadership. C) offer good potential to expand a company's lineup of products and services. D) are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E) are a good strategy option for helping a company to revamp its value chain and bypass low value- added activities.

A) extend a company's competitive scope within the same industry by expanding its operations across

A key issue in companies pursuing an unrelated diversification strategy is A) how wide a net to cast in building a portfolio of unrelated businesses. B) whether to keep or divest businesses whose technological approaches do not match the overall technology and R&D strategy of the corporation. C) how quickly to divest businesses whose competitive strategies do not closely match the competitive strategies of sister businesses. D) whether to build shareholder value via paying higher dividends or via actions aimed at increasing the company's stock price. E) whether to acquire new businesses that offer potential for achieving greater economies of scope or businesses that offer potential for achieving greater economies of scale.

A) how wide a net to cast in building a portfolio of unrelated businesses.

Corporate restructuring strategies A) involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup. B) entails reducing the scope of diversification to a smaller number of businesses. C) entail selling off marginal businesses to free up resources for redeployment to the remaining businesses. D) focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. E) focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability

A) involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup.

A focused low-cost strategy A) involves a marketing emphasis that communicates the attractiveness of a budget-priced product tailored to fit the expectations of buyers comprising the target market niche. B) is the hardest of the five generic types of competitive strategies to employ successfully. C) involves the use of deep price discounting to capture customers. D) entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques. E) cannot be sustained over time unless the focuser is aggressive in entering other segments where it also can achieve a low-cost advantage.

A) involves a marketing emphasis that communicates the attractiveness of a budget-priced product tailored to fit the expectations of buyers comprising the target market niche.

Acquisition of an existing business is an attractive strategy option for entering a promising new industry because it A) is an effective way to hurdle entry barriers, is usually quicker than trying to launch a brand-new start-up operation, and allows the acquirer to move directly to the task of building a strong position in the target industry. B) is less expensive than launching a new start-up operation, thus passing the cost-of-entry test. C) is a less risky way of passing the attractiveness test. D) is more likely to result in passing the shareholder value test, the profitability test, and the better-off test. E) offers the prospect of gaining an immediate competitive advantage in the new industry and thus helps ensure that the diversification move will pass the competitive advantage test for building shareholder value

A) is an effective way to hurdle entry barriers, is usually quicker than trying to launch a brand-new start-up operation, and allows the acquirer to move directly to the task of building a strong position in the target industry.

The nine-cell industry attractiveness-competitive strength matrix A) is useful for helping decide which businesses should have high, average, and low priorities in allocating corporate resources. B) indicates which businesses are cash hogs and which are cash cows. C) pinpoints what strategies are most appropriate for businesses positioned in the three top cells of the matrix butis less clear about the best strategies for businesses positioned in the bottom six cells. D) identifies which sister businesses have the greatest strategic fit. E) identifies which sister businesses have the greatest resource fit.

A) is useful for helping decide which businesses should have high, average, and low priorities in allocating corporate resources.

The strategic appeal of related diversification is that A) it allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities. B) it is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses). C) it involves diversifying into industries having the same kinds of key success factors. D) it is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses. E) it facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.

A) it allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.

A company achieves a competitive advantage when: A) it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost. B) it has a profitable business model. C) it is able to maximize shareholder wealth. D) it is consistently able to achieve both its strategic and financial objectives. E) its strategy and its business model are well-matched and in sync.

A) it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost.

Businesses competing in stagnant or declining industries must A) make a fundamental strategic choice—whether to remain committed to the industry for the long-term despite the industry's dim prospects or whether to pursue an end-game strategy to withdraw gradually or quickly from the market. B) pursue vertical integration and gain greater operating control over more stages of the industry's value chain. C) initiate deep price cuts to rejuvenate long-term demand and expand into the markets of foreign countries, especially emerging country markets. D) outsource as many value chain activities as possible, particularly as concerns production-related activities. E) steer a middle course between low-cost, differentiation and focusing and adopt a best-cost producer strategy aimed squarely at being a middle-of-the-market seller.

A) make a fundamental strategic choice—whether to remain committed to the industry for the long-term

In identifying an industry's dominant economic features, there is a need to consider such things as A) market size and growth rate, the number of buyers, the scope of competitive rivalry, the number of rivals, demand-supply conditions, product innovation, the degree of product differentiation, the presence of scale economies and/or learning/experience curve effects, and the pace of technological change. B) the threat of additional entry into the industry and what the industry's key success factors are. C) the strength of competitive pressures from producers of substitute products and which competitors are in which strategic groups. D) the extent and importance of seller-supplier collaborative partnerships, the extent and importance of seller-buyer collaborative partnerships, and the bargaining leverage of sellers and buyers. E) All of these.

A) market size and growth rate, the number of buyers, the scope of competitive rivalry, the number of rivals, demand-supply conditions, product innovation, the degree of product differentiation, the presence of scale economies and/or learning/experience curve effects, and the pace of technological change.

For a company to translate performance of value chain activities into competitive advantage, it A) must be more cost efficient in how it performs value chain activities or better able to manage activities that add customer value. B) has to develop more core competencies than rivals by focusing primarily on R&D and market research. C) must be more adept than rivals in using benchmarking and activity-based costing. D) has to position itself in the strategic group where profit margins are highest. E) must adopt more best practices than rival firms.

A) must be more cost efficient in how it performs value chain activities or better able to manage activities that add customer value.

In diversified companies with unrelated businesses, the strategic attention of top executives tends to be focused on A) screening acquisition candidates and evaluating the pros and cons of keeping or divesting existing businesses. B) identifying acquisition candidates that can pass the better-off test. C) identifying opportunities to achieve greater economies of scope. D) identifying opportunities to acquire businesses that can benefit from using the parent company's potent brand name. E) identifying acquisition candidates that can pass the capital gains test

A) screening acquisition candidates and evaluating the pros and cons of keeping or divesting existing businesses.

A firm pursuing a best-cost provider strategy A) seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) achieves competitive advantage because its operating activities are "best-in-industry" or "best-in-world." D) is a hybrid strategy based upon superior resources and a narrow market niche. E) a "middle of the road" strategic approach that attempts to satisfy the product or service needs of consumers with average household incomes.

A) seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation.

Defensive strategies: A) serve the purpose of helping protect competitive advantage, lowering the risk of being attacked, weakening the impact of any attack that occurs, and influencing would-be challengers to aim their attacks elsewhere; they often entail actions that signal would-be challengers that retaliation is likely. B) are the best ways to counter the efforts of firms trying to make market inroads with substitute products. C) tend to work more frequently than offensive strategies because they are usually less risky and are more likely to succeed if they are predicated on actions to capture first-mover advantages via preemptive strikes that foreclose imitation by rivals. D) employ efforts to block challengers from using end-run offensives and pre-emptive strike strategies and they are most likely to succeed when the defensive actions to thwart challengers stress vigorous price-cutting and added advertising. E) work best when they involve a combination of vertical integration, acquisition of other firms, outsourcing certain value chain activities, and strategic alliances with suppliers.

A) serve the purpose of helping protect competitive advantage, lowering the risk of being attacked, weakening the impact of any attack that occurs, and influencing would-be challengers to aim their attacks elsewhere; they often entail actions that signal would-be challengers that retaliation is likely.

With an unrelated diversification strategy, the types of companies that make particularly attractive acquisition targets are A) struggling companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital. B) companies offering the biggest potential to reduce labor costs. C) cash cow businesses with excellent financial fit. D) companies that are market leaders in their respective industries. E) companies that are employing the same basic type of competitive strategy as the parent corporation's existing businesses.

A) struggling companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital.

A company attempting to be successful with a broad differentiation strategy has to A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. B) incorporate more differentiating features into its product/service than rivals. C) concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created). D) have a widely known and highly respected brand name image. E) provide a top-of-the-line product and sell it at premium prices.

A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for.

To be successful with a differentiation strategy, a company has to A) study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for. B) incorporate more differentiating features into its product/service offering than rivals and also charge a price no higher than the prices charged by rivals. C) have a state-of-the-art value chain and concentrate on providing buyers with a technologically superior product. D) outspend rivals on R&D in order to have differentiating attributes that rivals don't have. E) Concentrate on differentiating its product on the basis of superior product quality or personalized customer service.

A) study buyers" needs and behavior very carefully to learn what they consider important, what they think has value, and what they are willing to pay for.

Excellent execution of an excellent strategy is: A) the best test of managerial excellence and the best recipe for making a company a standout performer. B) a solid indication that managers are maximizing profits and looking out for the best interests of shareholders. C) the best test of whether a company is a "true" industry leader. D) the best evidence that managers have a winning business model. E) the best test of whether a company enjoys sustainable competitive advantage.

A) the best test of managerial excellence and the best recipe for making a company a standout performer.

Internal start-up of a new business subsidiary can be a more attractive means of entering a desirable new business than is acquiring an existing firm already in the targeted industry when A) the company has ample time and adequate resources to launch the new internal start-up business from the ground up. B) there is a small pool of desirable acquisition candidates. C) the target industry is growing rapidly and no good joint venture partners are available. D) all of the potential acquisition candidates are losing money. E) the target industry is comprised of several relatively large and well-established firms.

A) the company has ample time and adequate resources to launch the new internal start-up business from the ground up.

To identify a diversified company's strategy, one should consider such factors as A) the extent to which the firm is broadly or narrowly diversified, whether it is pursuing related or unrelated diversification (or a mixture of both), and the recent moves it has made to divest businesses, acquire new businesses, and strengthen the positions of existing businesses. B) whether the company is focusing on "milking its cash cows" or "feeding its cash hogs." C) the technological proficiencies, labor skill requirements, and functional area strategies characterizing each of the firm's businesses. D) each business's competitive approach—whether it is pursuing a low-cost leadership, differentiation, best-cost, focused differentiation, or focused low-cost strategy. E) whether it is emphasizing the pursuit of economies of scale or economies of scope.

A) the extent to which the firm is broadly or narrowly diversified, whether it is pursuing related or unrelated diversification (or a mixture of both), and the recent moves it has made to divest businesses, acquire new businesses, and strengthen the positions of existing businesses.

The chief difference between a broad differentiation strategy and a focused differentiation is A) the size of the buyer group that a company is trying to appeal to. B) the degree of bargaining power that buyers have. C) whether the product is strongly differentiated or weakly differentiated from rivals. D) the type of value chain being used to achieve a differentiation-based competitive advantage. E) the number of upscale attributes incorporated into the product offering.

A) the size of the buyer group that a company is trying to appeal to.

Strategy is about competing differently than rivals, thus strategy success is about: A) the sources of sustained advantages and superior profitability. B) those emergent, unplanned, reactive, and adaptive strategies that are more appropriate than deliberate or intended ones that drive the realized strategy. C) matching internal resources and capabilities to the industry environment. D) keeping the firm current with the rapid pace of change in the industry. E) All of these.

A) the sources of sustained advantages and superior profitability.

The essential requirement for different businesses to be "related" is that A) their value chains possess competitively valuable cross-business relationships. B) the products of the different businesses are bought by much the same types of buyers. C) the products of the different businesses are sold in the same types of retail stores. D) the businesses have several key suppliers in common. E) the productions methods that they employ both entail economies of scale.

A) their value chains possess competitively valuable cross-business relationships.

The essential requirement for different businesses to be "related" is that A) their value chains possess competitively valuable cross-business relationships. B) the products of the different businesses are bought by much the same types of buyers. C) the products of the different businesses are sold in the same types of retail stores. D) the businesses have several key suppliers in common. E) the productions methods that they employ both entail economies of scale

A) their value chains possess competitively valuable cross-business relationships.

Broad differentiation strategies are well-suited for market circumstances where A) there are many ways to differentiate the product or service and many buyers perceive these differences as having value. B) most buyers have the same needs and use the product in the same ways. C) buyers are susceptible to clever advertising. D) barriers to entry are high and suppliers have a low degree of bargaining power. E) price competition is especially vigorous.

A) there are many ways to differentiate the product or service and many buyers perceive these differences

One of the frequently used successful and dependable strategic approaches is: A) to come up with a distinctive element that builds strong customer loyalty and yields a winning competitive edge. B) to aggressively pursue all of the growth opportunities the company can identify. C) to develop a product/service with more innovative performance features than what rivals are offering and to provide customers with better after-the-sale service. D) to come up with a business model that enables a company to earn bigger profits per unit sold than rivals. E) to charge a lower price than rivals and thereby win sales and market share away from rivals.

A) to come up with a distinctive element that builds strong customer loyalty and yields a winning competitive edge.

When industry attractiveness ratings are calculated for each of the industries a multi-business company has diversified into, the results help indicate A) which industries appear to be the best and worst ones to be in and the attractiveness of all the industries as a group from the standpoint of the company's long-term performance. B) which industries have attractive key success factors and which industries have unattractive key success factors. C) which industries have the biggest economies of scale and which industries have the greatest economies of scope and the overall potential for cost reduction in the industries as a group. D) which industries are most attractive from the standpoint of long-term growth and the growth prospects of all the industries as a group. E) which industries are most attractive from the standpoint of industry driving forces and competitive forces.

A) which industries appear to be the best and worst ones to be in and the attractiveness of all the industries as a group from the standpoint of the company's long-term performance.

Which one of the following does not account for why a company's strategy evolves from one version to another? A. A desire on the part of company managers to develop new strategy elements on the fly B. The need to abandon some strategy elements that are no longer working well C. A need to respond to changing customer requirements and expectations D. A need to react to fresh strategic maneuvers on the part of rival firms E. The proactive efforts of company managers to improve this or that aspect of the strategy

A. A desire on the part of company managers to develop new strategy elements on the fly

Which of the following is not an accurate statement as concerns competing in the markets of foreign countries? A. A multi-country strategy is generally superior to a global strategy. B. There are country-to-country differences in consumer buying habits and buyer tastes and preferences. C. A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. D. Product designs suitable for one country are often inappropriate in another. E. Market growth rates vary from country to country.

A. A multi-country strategy is generally superior to a global strategy.

Which of the following is not an accurate statement as concerns competing in the markets of foreign countries? A. A multicountry strategy is generally superior to a global strategy. B. There are country-to-country differences in consumer buying habits and buyer tastes and preferences. C. A company must contend with fluctuating exchange rates and country-to-country variations in host-government restrictions and requirements. D. Product designs suitable for one country are often inappropriate in another. E. Market growth rates vary from country to country.

A. A multicountry strategy is generally superior to a global strategy.

Which one of the following is not one of the ways a company can strive to gain competitive advantage (or offset domestic disadvantages) by expanding into foreign markets? A. By competing in both developed and emerging country markets and/or by selling direct to foreign buyers via the company's Web site B. By dispersing its activities among various countries in a manner that lowers costs. C. By transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets D. By dispersing its activities among various countries in a manner that helps achieve greater product differentiation and, and/or working to deepen/broaden its resource strengths and capabilities E. By using cross-border coordination of its strategic moves in ways that a domestic-only competitor cannot

A. By competing in both developed and emerging country markets and/or by selling direct to foreign buyers via the company's Web site

Easy-to-copy differentiating features A. Cannot produce sustainable competitive advantage B. Seldom are perceived by buyers as having much value C. Tend to give buyers a high degree of power in bargaining for a lower price

A. Cannot produce sustainable competitive advantage

Functional strategies A. Concern the actions, approaches and practices to be employed in managing particular functions or business processes or key activities within a business B. Specify what actions a company should take to resolve specific strategic issues and problems C. Are normally crafted by operating-level managers D. Are concerned with how to unify the firm's several different operating strategies into a cohesive whole E. Are normally crafted by the company's CEO and other senior executives

A. Concern the actions, approaches and practices to be employed in managing particular functions or business processes or key activities within a business

What supports competitive offensives in one market with resources and profits diverted from operations in another market? A. Cross-market subsidization. B. Foreign market strategy. C. Domestic-only company. D. Home market offensive. E. Multidomestic company.

A. Cross-market subsidization.

Best-cost provider strategies are appealing in those market situations where A. Diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value B. A company is positioned between competitors who have ultra-low prices and competitors who have top-notch products in terms of both quality and performance C. Buyers are more quality-conscious than price-conscious

A. Diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value

The competitive threat that outsiders will enter a market is weaker when A. Financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers B. The industry is characterized by the lack of sizable scale economies and learning/experience curve effects C. The industry's market growth is rapid

A. Financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers

The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is the: A. Five Forces Model. B. SWOT. C. Competition Intensity Model. D. Dynamic Simulation Model. E. Competitor Profiling.

A. Five Forces Model.

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.

Benchmarking provides a company with which of the following? A. Hard evidence of cost competitiveness. B. Proof of resource availability. C. A company strategy. D. Verification of total cost ownership. E. Improvements to internal processes

A. Hard evidence of cost competitiveness.

Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment? A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores. B. High scores indicate that a company is a power-user of best practices while low scores signal minimal or ineffective adoption of best practices. C. The company with the lowest score has the lowest-cost value chain. D. The company with the lowest score has the strongest net competitive advantage over its rivals. E. High scores indicate which rivals are most vulnerable to competitive attack.

A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores.

Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? A. Hiring and firing senior-level executives and working with the company's chief strategic planning officer to improve the company's strategy when performance comes up short of expectations B. Being inquiring critics and exercising strong oversight over the company's direction, strategy and business approaches C. Evaluating the caliber of senior executives' strategy-making/strategy-executing skills

A. Hiring and firing senior-level executives and working with the company's chief strategic planning officer to improve the company's strategy when performance comes up short of expectations

Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the key factors for future competitive success? D. Does the outlook for the industry present the company with sufficiently attractive prospects for profitability? E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A. How many companies in the industry have good track records for revenue growth and profitability?

Potential entrants are more likely to be deterred from actually entering an industry when A. Incumbent firms have previously been aggressive in defending their market positions against entry B. Incumbent firms are complacent C. Buyers are not particularly price sensitive and the industry already contains a dozen or more rivals

A. Incumbent firms have previously been aggressive in defending their market positions against entry

Which of the following most accurately reflect a company's resource strengths? A. Its human, physical and/or organization assets; its skills and competitive capabilities; and achievements or attributes that enhance the company's ability to compete effectively B. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals D. Whether it has more primary activities in its value chain than close rivals and a better overall value chain than these rivals E. Whether it has more core competencies than close rivals

A. Its human, physical and/or organization assets; its skills and competitive capabilities; and achievements or attributes that enhance the company's ability to compete effectively

For a company to translate performance of value chain activities into competitive advantage, it A. Must (1) develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers (2) be more cost efficient in how it performs value chain activities such that it has a low-cost advantage B. has to develop more core coompetencies than rivals. C. Must be more adept than rivals in using benchmarking and activity-based costing. D. has to position itself in the strategic group where profit margins are highest E. must adopt more best practices than rival firms.

A. Must (1) develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers (2) be more cost efficient in how it performs value chain activities such that it has a low-cost advantage

Which of the following is generally not considered as a barrier to entry? A. Rapid market growth B. Sizable capital requirements and an array of regulatory requirements C. Strong buyer loyalty to existing brands D. Sizable economies of scale in production E. Difficulties in gaining access to technological know-how

A. Rapid market growth

The major avenues for achieving a cost advantage over rivals include A. Revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out-managing rivals in the efficiency with which value chain activities are performed B. Having a management team that is highly skilled in cutting costs C. Being a first-mover in adopting the latest state-of-the-art technologies, especially those relating to low-cost manufacture

A. Revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or out-managing rivals in the efficiency with which value chain activities are performed

Identifying and assessing a company's resource strengths and weaknesses and its external opportunities and threats is called A. SWOT analysis. B. competitive asset/liability analysis. C. competitive positioning analysis. D. strategic resource assessment. E. company resource mapping

A. SWOT analysis.

What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry? A. Strategic group mapping B. Global industry change C. Dynamic mapping analysis D. Distribution analysis E. None of these.

A. Strategic group mapping

A company attempting to be successful with a broad differentiation strategy has to A. Study buyer needs and behavior carefully to learn what buyers consider important, what they think has value and what they are willing to pay for B. Incorporate more differentiating features into its product/service than rivals C. Concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created)

A. Study buyer needs and behavior carefully to learn what buyers consider important, what they think has value and what they are willing to pay for

The intensity of rivalry among competing sellers does not depend on whether A. The industry has more than two strong driving forces and whether the industry has more than 2 strategic groups B. Competitors are diverse in terms of visions, strategic intents, objectives, strategies, resources and countries of origin C. Strong companies outside the industry have acquired weak firms in the industry and are launching aggressive, well-funded moves to transform the acquired companies into strong market contenders

A. The industry has more than two strong driving forces and whether the industry has more than 2 strategic groups

Which of the following is particularly pertinent in evaluating whether an industry presents a sufficiently attractive business opportunity? A. The industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average B. An assessment of which firms in the industry have the best and worst competitive strategies, whether the number of strategic groups in the industry is increasing or decreasing, and whether economies of scale and experience curve effects are a key success factor C. Whether there are more than five key success factors and more than five barriers to entry D. Constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group E. Whether the market leaders

A. The industry's growth potential, whether competition appears destined to become stronger or weaker, and whether the industry's overall profit prospects are above average, average, or below average

Which of the following is not an example of an external threat to a company's future profitability? A. The lack of a distinctive competence B. New legislation that entails burdensome and costly government regulations C. Slowdowns in market growth D. More intense competitive pressures E. The introduction of restrictive trade policies in countries where the company does business

A. The lack of a distinctive competence

Focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where A. The market is composed of distinctly different buyer groups who have different needs or use the product in different ways B. Most other rival firms are using a best-cost producer strategy C. Buyers have strong bargaining power and entry barriers are low

A. The market is composed of distinctly different buyer groups who have different needs or use the product in different ways

Management's direction-setting, strategy-making effort is not complete until A. The pieces of a company's strategy up and down the strategy pyramid are cohesive and mutually reinforcing, fitting together like a jigsaw puzzle B. The mission and strategic intent of each functional area and each operating unit are agreed to by the whole management team C. The company's board of directors has officially approved the strategic vision, objectives and strategy proposed by top management

A. The pieces of a company's strategy up and down the strategy pyramid are cohesive and mutually reinforcing, fitting together like a jigsaw puzzle

Which of the following is NOT one of the five typical sources of competitive pressures? A. The power and influence of industry driving forces B. The bargaining power of suppliers and seller-supplier collaboration C. The threat of new entrants into the market D. The attempts of companies in other industries to win customers over to their own substitute products E. The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry

A. The power and influence of industry driving forces

Which of the following is not one of the five typical sources of competitive pressures? A. The power and influence of industry driving forces B. The bargaining power of suppliers and seller-supplier collaboration C. The threat of new entrants into the market

A. The power and influence of industry driving forces

Which of the following is generally NOT considered a barrier to entry? A. The reaction of incumbent firms to rapid market growth B. High capital requirements and restrictive government policies C. Strong brand preferences and a high degree of customer loyalty D. Cost advantages due to the economies of scale in production enjoyed by incumbent firms E. Strong "network effects" in customer demand

A. The reaction of incumbent firms to rapid market growth

Which of the following factors represents the strategically relevant political factors in the macroenvironment that will influence the performance of all firms across the board? A. The strength of the federal banking system B. The exogenous forces related to the general environmental demand C. Social factors that could fuel a political agenda and create greater transparency D. Bailouts and energy policies that are industry-specific E. Tax policy, fiscal policy, and tariffs providing impetus for anti-trust matters

A. The strength of the federal banking system

Which one of the following is not a reason why industry members are often motivated to enter into collaborative partnerships with key suppliers? A. To reduce the costs of switching suppliers B. To speed the availability of next-generation components C. To enhance the quality of parts and components being supplied and reduce defect rates D. To squeeze out important cost savings for both themselves and their suppliers E. To reduce inventory and logistics costs

A. To reduce the costs of switching suppliers

The keys to sustaining a broad differentiation strategy are A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features B. To charge a premium price that more than covers the extra costs of differentiating features and to convince customers to be brand loyal C. To out-innovate and out-advertise rivals

A. To stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features

A competitively superior resource or capability is a company's A. True strategic asset providing a competitive advantage. B. Equally valuable substitute resource providing a competitive advantage. C. Assessment of the availability of superior substitutes. D. Unsurpassed worker productivity and product quality. E. Unique piecework incentive system providing a competitive advantage.

A. True strategic asset providing a competitive advantage.

Which of the following is not a viable strategy option for a local company in competing against global challengers? A. Using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments B. Developing business models to exploit shortcoming in local distribution networks or infrastructure C. Taking advantage of low-cost labor and other competitively important local work-force qualities D. Transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale E. Using acquisitions and rapid growth strategies to defend against expansion-minded multinationals

A. Using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments

Which of the following is not one of the six questions that comprise the task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working? C. Are the company's cost structure and value proposition competitive? D. Is the company competitively stronger or weaker than key rivals? E. What strategic issues and problems merit front-burner managerial attention?

A. What are the company's most profitable geographic market segments?

Which of the following is NOT a question asked to deduce a marketing-related key success factor? A. What are the industry product R&D capabilities and expertise in product design? B. What basis do buyers choose between the competing brands of sellers? C. What product attributes and service characteristics are crucial? D. What resources must a company have to be competitive? E. What shortcomings are almost certain to put a company at a significant disadvantage?

A. What are the industry product R&D capabilities and expertise in product design?

In which of the following situations is employing a "think local, act local" multidomestic strategy highly questionable? A. When a company wished to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide B. When there are significant country-to-country differences in customer preferences and buying habits industry is characterized by big economies of scale and strong experience curve effects C. When the trade restrictions of host governments are diverse and complicated D. When there are significant country-to-country differences in distribution channels and marketing methods E. When host governments enact regulations requiring that products sold locally meet strictly-defined manufacturing specifications or performance standards

A. When a company wished to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide

In which of the following circumstances are competitive pressures associated with the bargaining power of buyers NOT relatively strong? A. When buyer demand is growing rapidly B. When buyers are relatively well-informed about sellers' products, prices, and costs C. When buyers pose a credible threat to integrate backward into the product market of sellers D. When sellers' products are weakly differentiated, making it easy for buyers to switch to competing brands E. When buyers have considerable discretion over whether and when they purchase the product

A. When buyer demand is growing rapidly

Which of the following conditions acts to weaken buyer bargaining power? A. When buyers are unlikely to integrate backward into the business of sellers B. When buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs C. When the costs incurred by buyers in switching to competing brands or to substitute products are relatively low D. When the products of rival sellers are weakly differentiated and buyers have considerable discretion over whether and when they purchase the product E. When buyers are few in number and/or often purchase in large quantities

A. When buyers are unlikely to integrate backward into the business of sellers

The rivalry among competing firms tends to be more intense A. When demand for the product is growing slowly, one or maybe several industry members have powerful and successful competitive strategies, buyers have low switching costs and the actions of any one company to attract more customers and boost market share have strong direct impact on the businesses of rivals B. When the products/services of rival sellers are strongly differentiated and buyer demand is strong C. When rivals are relatively content with their market position

A. When demand for the product is growing slowly, one or maybe several industry members have powerful and successful competitive strategies, buyers have low switching costs and the actions of any one company to attract more customers and boost market share have strong direct impact on the businesses of rivals

How valuable a low-cost leader's cost advantage is depends on A. Whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs B. How easy it is for the low-cost leader to gain the biggest market share C. The aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute lowest possible costs D. The leader's ability to combine the cost advantage with a reputation for good quality E. The low-cost's leader's ability to be the industry leader in manufacturing innovation so as to keep lowering its manufacturing costs

A. Whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs

Whether a resource or capability can support a competitive advantage is determined by which two tests? A. Whether the resource or capability is competitively valuable and/or is something that rivals lack. B. Whether the resource or capability is rare and/or is hard to copy. C. Whether the resource or capability can be trumped and/or is hard to copy. D. Whether the resource or capability is competitively valuable and/or are there good substitutes available for the resource. E. Whether the resource or capability is hard to copy and/or can be trumped by different types of resources and capabilities.

A. Whether the resource or capability is competitively valuable and/or is something that rivals lack.

Transferring core competencies and resource strengths from one country market to another is A. a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. B. best accomplished with a multidomestic strategy as opposed to a global strategy. C. feasible only with a global strategy; it can't be done with a multidomestic strategy. D. unlikely to result in a competitive advantage. E. nearly always the easiest and most sure-fire way to build competitive advantage in trying to compete successfully in foreign markets.

A. a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage.

The characteristics of a world market where global competition prevails include A. a market situation where competitive conditions across national markets are linked strongly enough to form a true world market and where leading competitors typically compete head to head in many different countries. B. minor cost variations from country-to-country (as concerns production, distribution, sales and marketing, and other primary components of the industry value chain) and minimal cross-country trade restrictions. C. a competitive environment comprised of so many competitors that no company has a sizable worldwide market share. D. many companies racing for global market leadership, with most contenders using the same basic type of competitive strategy and positioned in the same strategic group. E. low barriers to entry, such as large number of rivals that the actions of any one rival have little impact on the sales and market shares of other rivals, and key success factors that vary from country to country.

A. a market situation where competitive conditions across national markets are linked strongly enough to form a true world market and where leading competitors typically compete head to head in many different countries.

To succeed in predicting the next strategic moves and countermoves of close or key rivals, it is useful to consider such indicators as: A. a rival's current strategy, objectives, capabilities, and assumptions about itself and the industry. B. a rival's market share, customer segmentation, business model, and product proposition. C. a rival's appetite as an acquisition candidate. D. a rival's geographic market, product offerings, and strategic grouping. E. All of these.

A. a rival's current strategy, objectives, capabilities, and assumptions about itself and the industry.

Changing circumstances and ongoing managerial efforts to improve the strategy A. account for why a company's strategy evolves over time. B. explain why a company's strategic vision undergoes almost constant change. C. make it very difficult for a company to have concrete strategic objectives. D. make it very hard to know what a company's strategy really is. E. All of the above.

A. account for why a company's strategy evolves over time.

The payoff of good scouting reports on rivals is an improved ability to: A. anticipate what moves rivals are likely to make next, thereby providing a valuable assist in outmaneuvering them in the marketplace. B. determine which rivals are in the best strategic group. C. figure out how many key success factors a rival has. D. determine whether a rival is gaining or losing market share. E. determine whether a rival has the best strategy and is the industry leader.

A. anticipate what moves rivals are likely to make next, thereby providing a valuable assist in

The most important aspect(s) of a company's business strategy A. are the actions and moves in the marketplace that managers take to gain a sustainable competitive advantage. B. is figuring out how to maximize profits and shareholder value. C. concerns how to improve the efficiency of its business model. D. deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner. E. is figuring out how to become the industry's low-cost provider.

A. are the actions and moves in the marketplace that managers take to gain a sustainable competitive advantage.

The key success factors in an industry: A. are those competitive factors that most affect industry members' abilities to prosper in the marketplace— the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak one, and between profit and loss. B. are determined by the industry's driving forces, which are essential to surviving and thriving in the industry. C. hinge on how many different strategic groups the industry has operating within the industry and their level of profitability and sustainable advantages. D. depend on how many rivals are trying to move from one strategic group to another without losing momentum. E. are a function of such considerations as how many firms are in the industry, how many have market shares above 5 percent, and whether the business models being used are similar or diverse.

A. are those competitive factors that most affect industry members' abilities to prosper in the marketplace— the particular strategy elements, product attributes, operational approaches, resources, and competitive capabilities that spell the difference between being a strong competitor and a weak one, and between profit and loss.

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should A. be hard for competitors to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals. B. be something that a company does internally rather than in collaborative arrangements with outsiders. C. be patentable. D. be an industry key success factor and occupy a prime position in the company's value chain. E. have the potential for lowering the firm's unit costs.

A. be hard for competitors to copy, be rare and something rivals lack, be competitively valuable, and not be easily

A "think local, act local" multicountry type of strategy A. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions. B. always makes a company vulnerable to rivals employing "think global, act global" strategies. C. protects a multinational firm against fluctuating exchange rates. D. is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy. E. employs essentially the same basic competitive strategy theme in all country markets.

A. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions.

Crafting a strategy involves A. blending deliberate/planned initiatives with emergent/unplanned reactive responses to changing circumstances, while abandoning planned strategy elements that have failed in the marketplace. B. developing a five-year strategic plan and then fine-tuning it during the remainder of the plan period. C. trying to imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. D. doing everything possible (in the way of price, quality, service, warranties, advertising, and so on) to make sure the company's product/service is very clearly differentiated from the product/service offerings of rivals. E. All of these accurately characterize the managerial process of crafting a company's strategy.

A. blending deliberate/planned initiatives with emergent/unplanned reactive responses to changing circumstances, while abandoning planned strategy elements that have failed in the marketplace.

Using the Five Forces model of competition to determine the character and strength of the competitive forces within a given industry involves: A. building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry. B. building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits. C. evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors. D. assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures. E. gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

A. building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.

Using domestic plants as a production base for exporting goods to selected foreign country markets A. can be an excellent initial strategy to pursue international sales. B. can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country. C. works well when a firm does not have the financial resources to employ cross-market subsidization. D. is usually a weak strategy when competitors are pursuing multicountry strategies. E. can be a powerful strategy because the company is not vulnerable to fluctuating exchange rates.

A. can be an excellent initial strategy to pursue international sales.

Benchmarking involves A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities. B. checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with. C. studying whether a company's resource strengths are more/less powerful than the resource strengths of rival companies. D. studying how a company's competitive capabilities stack up against the competitive capabilities of selected companies known to have world class competitive capabilities. E. comparing the best practices in one industry against the best practices in another industry.

A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities.

When evaluating whether an industry's environment presents a company with an above-average profitability and an attractive business opportunity, it primarily involves: A. determining the industry outlook for future profitability. B. determining which firms in the industry have a competitive advantage and how they got their advantage. C. determining the overall strength of the five competitive forces. D. constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group to determine the overall attractiveness of all the strategic groups. E. using value chain analysis to determine the relative cost positions of rival firms and to learn who the industry's low-cost producer is.

A. determining the industry outlook for future profitability.

For a company to translate its performance of value chain activities into competitive advantage, it must A. develop core competencies and maybe a distinctive competence over rivals and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities. B. have more core competencies than rivals. C. have at least three distinctive competencies. D. have competencies that allow it to produce the highest quality product in the industry. E. have more competitive assets than competitive liabilities.

A. develop core competencies and maybe a distinctive competence over rivals and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities.

Sizing up a company's overall resource strengths and weaknesses A. essentially involves constructing a "strategic balance sheet" where the company's resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities. B. is called benchmarking. C. is called competitive strength assessment. D. is focused squarely on ascertaining whether the company has more/less resource strengths than weaknesses. E. is called company resource mapping.

A. essentially involves constructing a "strategic balance sheet" where the company's resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities.

The competitive threat that outsiders will enter a market is weaker when: A. financially strong incumbents send strong signals that they will launch strategic initiatives to combat the entry of newcomers. B. the industry is characterized by the lack of sizable scale economies and learning/experience curve effects. C. the industry's market growth is rapid. D. the capital requirements for entering the market are within acceptable levels to provide acceptable returns on investment. E. buyers have little loyalty to the brands and product offerings of existing industry members.

A. financially strong incumbents send strong signals that they will launch strategic initiatives to combat the entry of newcomers.

Acquisition of an existing firm rather than going de novo may be the least risky and cost-efficient means of overcoming entry barriers such as A. gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials. B. moving directly to the task of transferring resources and personnel, integrating and redirecting activities into its own operation. C. putting its own strategy into place. D. accelerating efforts to build a strong market presence. E. All of these.

A. gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials.

Companies racing for global market leadership A. generally have to consider establishing competitive positions in the markets of emerging countries. B. are well-advised to avoid all the risks and problems of competing in emerging country markets. C. seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D. can usually be expected to earn sizable profits quickly in emerging country markets. E. usually encounter very low barriers in entering the markets of emerging countries.

A. generally have to consider establishing competitive positions in the markets of emerging countries.

Companies racing for global market leadership A. generally have to consider establishing competitive positions in the markets of emerging countries. B. are well advised to avoid all the risks and problems of competing in emerging country markets. C. seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D. can usually be expected to earn sizable profits quickly in emerging country markets. E. usually encounter very low barriers in entering the markets of emerging countries.

A. generally have to consider establishing competitive positions in the markets of emerging countries.

A core competence A. gives a company competitive capability and is a genuine company strength and resource. B. typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company's balance sheet. C. usually is grounded in the technological expertise of a particular department or work group. D. is more difficult for rivals to copy than a distinctive competence. E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

A. gives a company competitive capability and is a genuine company strength and resource.

Supplier bargaining power is weaker when A. good substitute inputs exist or new ones emerge. B. the cost of switching from one supplier to another is high. C. suppliers furnish a critical part or component. D. buying firms are looking for suppliers with good just-in-time supply capabilities. E. a few large suppliers are the primary sources of a particular item.

A. good substitute inputs exist or new ones emerge

The competitive pressures from substitute products tend to be stronger when: A. good substitutes are readily available and priced above the market. B. there are more than 10 sellers of substitute products. C. the quality and performance and other attributes of the substitutes is viewed as being comparable or better in meeting buyer's requirements. D. buyers have high psychic costs in severing existing brand relationships and establishing new ones. E. Switching costs are high, thereby making it easier for the sellers of attractive substitutes to lure buyers to the offering.

A. good substitutes are readily available and priced above the market.

Supplier bargaining power is weaker when: A. good substitutes for supplier products/services exists. B. the cost of switching from one supplier to another is high. C. suppliers furnish a critical part or component. D. buying firms are looking for suppliers with good just-in-time supply capabilities. E. a few large suppliers are the primary sources of a particular item.

A. good substitutes for supplier products/services exists.

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include A. having a high level of control and speed as an entry strategy to overcome trade barriers. B. allowing a company to achieve scalable economies. C. eliminating the costs and risks associated with establishing a foreign business location. D. being able to achieve variable product quality and competitive product performance. E. being able to export goods at higher costs than rivals in those locations.

A. having a high level of control and speed as an entry strategy to overcome trade barriers.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. B. being particularly well suited to the global expansion efforts of companies with multidomestic strategies. C. allowing a company to achieve scale economies. D. being well suited to companies who employ cross-border transfer strategies. E. being well suited to the global expansion efforts of manufacturers.

A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support foreign franchisees. B. being particularly well suited to the global expansion efforts of companies with multicountry strategies. C. helping build multiple profit sanctuaries. D. being well suited to companies that employ cross-market subsidization. E. being well suited to the global expansion efforts of manufacturers.

A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support foreign franchisees.

In analyzing driving forces, the strategist's role is to A. identify the driving forces and evaluate their impact on (1) demand for the industry's product, (2) the intensity of competition, and (3) industry profitability. B. predict future marketing innovations and how fast the industry is likely to globalize. C. evaluate what stage of the life cycle the industry is in and when it is likely to move to the next stage. D. determine who is likely to exit the industry and what changes can be expected in the industry's strategic group map. E. forecast fluctuations in product demand and how buyer needs will most likely change.

A. identify the driving forces and evaluate their impact on (1) demand for the industry's product, (2) the intensity of competition, and (3) industry profitability.

The three steps of SWOT analysis are A. identifying the company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation, and translating the conclusions into strategic actions to improve the company's strategy. B. pinpointing the company's competitive assets, pinpointing its competitive deficiencies, and determining whether it enjoys a competitive advantage. C. determining whether the company has more competitive assets than competitive liabilities, determining whether the company has good market opportunities, and evaluating the seriousness of the threats to the company's future profitability. D. matching the company's strategy to its resource strengths, correcting the company's important resource weaknesses, and identifying the company's best market opportunities. E. benchmarking the company's strengths and weaknesses against those of key rivals, identifying its market opportunities and the external threats it faces, and determining the company's potential for establishing a competitive advantage over rivals.

A. identifying the company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation, and translating the conclusions into strategic actions to improve the company's strategy.

To determine how strong the threat of substitutes will be entails: A. identifying the relative price/performance relationship of the substitutes, the switching costs and the overall buyer demand for the substitute. B. identifying the attractiveness of other industries. C. measuring Coke as a substitute for Pepsi and applying dynamic simulation modeling techniques. D. adopting a substitute product concentration factor to the buyer volume. E. All of these.

A. identifying the relative price/performance relationship of the substitutes, the switching costs and the overall buyer demand for the substitute.

Potential entrants are more likely to be deterred from actually entering an industry when: A. incumbent firms are willing and able to be aggressive in defending their market positions against entry. B. incumbent firms are complacent. C. buyers are not particularly price sensitive and the industry already contains a dozen or more rivals. D. the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage. E. buyer switching costs are moderately low because of strong product differentiation among incumbent firms.

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

Driving forces analysis A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces. B. identifies which strategic group is the most powerful. C. helps managers identify which industry member is likely to become (or remain) the industry leader and why. D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage. E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.

A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.

Driving forces analysis: A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces. B. identifies which strategic group is the most powerful. C. helps managers identify which industry member is likely to become (or remain) the industry leader and why. D. helps managers identify which key success factors are most likely to help their company gain a competitive advantage. E. helps managers identify which of the five competitive forces will be the strongest driver of industry change.

A. involves identifying the driving forces, assessing whether their impact will make the industry more or less attractive, and determining what strategy changes a company may need to make to prepare for the impacts of the driving forces.

Calculating competitive strength ratings for a company and its rivals using the industry's most telling measures of competitive strength or weakness A. is a way of determining which competitor has the biggest overall competitive advantage in the marketplace and which competitor is faced with the biggest overall competitive disadvantage. B. is the most reliable indicator of which industry member has the highest overall product quality. C. is a powerful way of revealing which competitors are in the best and worst strategic groups. D. is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader. E. pinpoints which industry rivals are most insulated from the industry's driving forces.

A. is a way of determining which competitor has the biggest overall competitive advantage in the marketplace and which competitor is faced with the biggest overall competitive disadvantage.

Activity-based costing A. is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost. B. involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival. C. is a powerful tool for identifying the different pieces of a company's value chain and classifying them as primary activities and support activities. D. involves determining which value chain activities represent variable costs and which represent fixed costs. E. is a tool for identifying the activities that cause a company's product to be strongly differentiated from the products of rivals.

A. is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost.

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: A. is competitively unattractive from the standpoint of earning good profits. B. offers little ability to build a sustainable competitive advantage. C. is highly conducive to achieving strong product differentiation and high customer loyalty to the company's brand. D. offers moderate to good prospects for making a reasonable profit and building a sustainable competitive advantage. E. requires that industry members have a strongly differentiated product offering in order to be profitable.

A. is competitively unattractive from the standpoint of earning good profits.

Properly managing the value chain activities in comparison to the rivals A. is one of the most dependable ways a company can build a competitive advantage over rivals. B. allows a company to avoid the impact of the five competitive forces. C. is one of the best ways for a company to avoid being impacted by the industry's driving forces. D. allows a company to move into a higher strategic group. E. helps neutralize external threats to a company's future business prospects.

A. is one of the most dependable ways a company can build a competitive advantage over rivals.

The strength of a "think local, act local" multidomestic strategy is that A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country. B. each of a company's country strategies is almost totally different from and unrelated to its strategies in other countries. C. the plants located in different countries can be operated independent of one another, thus promoting greater achievement of scale economies. D. it avoids host country ownership requirements and import quotas. E. it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country.

The strength of a "think local, act local" multidomestic strategy is that A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market. B. each of a company's country strategies is almost totally different from and unrelated to its strategies in other countries. C. the plants located in different countries can be operated independent of one another, thus promoting greater achievement of scale economies. D. it avoids host-country ownership requirements and import quotas. E. it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

A. it matches a company's competitive approach to prevailing market and competitive conditions in each country market.

The elements of a company's business model are A. its customer value proposition as well as the company's profit formula. B. its business strategy, its collection of competitively valuable resources, and a strong management team. C. its deliberate strategy, its emergent strategy, and its realized strategy. D. its actions to capture emerging market opportunities and defend against threats to the company's business prospects, its actions to strengthen competitiveness via strategic alliances, and its actions to enter new geographic or product markets. E. management's answers to "Where are we now?" "Where do we want to go?" and "How are we going to get there?"

A. its customer value proposition as well as the company's profit formula.

The higher the switching costs for industry members, the more it can: A. limit supplier bargaining power. B. provide a stronger bargaining power for suppliers. C. enhance the quality of parts and components being supplied, and in effect reduce defect rates. D. provide important cost savings for the collaborative supplier-seller relationship. E. All of these.

A. limit supplier bargaining power.

The market opportunities most relevant to a particular company are those that A. offer the best growth and profitability. B. provide a strong defense against threats to the company's profitability. C. hold the most potential for product innovation. D. provide avenues for taking market share away from close rivals. E. hold the most potential to reduce costs.

A. offer the best growth and profitability.

A greenfield venture in a foreign market is A. one where the company creates a subsidiary business by setting up all aspects of the operation upon entering the market from the ground up. B. one where foreign facilities and marketing strategies are shared with local businesses. C. one where the company learns through training by the foreign entity on how to compete. D. one that supports exports into a foreign market by marketing indirectly thru local rivals. E. one that offers lower risk and a faster path to returns.

A. one where the company creates a subsidiary business by setting up all aspects of the operation upon entering the market from the ground up.

The difference between political risks and economic risks is that A. political risks stem from instability or weakness in national governments while economic risks stem from the stability of a country's monetary system, economic and regulatory policies. B. political risks stem from stability in foreign business and economic risks stem from an excess of property right protections. C. political rights stem from hostility to foreign business while economic risks stem from the instability of the monetary system. D. political risks stem from risks due to exchange rate fluctuations and economic risks stem from hostility to foreign business. E. political risks stem from stability of a country's monetary system and economic risks stem from instability in national business

A. political risks stem from instability or weakness in national governments while economic risks stem from the stability of a country's monetary system, economic and regulatory policies.

The market size and market growth rates in the foreign market can be influenced negatively by A. population sizes, income levels and cultural influences, the current state of the infrastructure and distribution and retail networks available. B. the ability of management to tailor a strategy to take into consideration all the country difference. C. the large size of emerging markets such as China and India. D. competitive rivalry that is only moderate in some countries. E. All of these.

A. population sizes, income levels and cultural influences, the current state of the infrastructure and distribution and retail networks available.

Resource and capability analysis is achieved by A. probing the caliber of a firm's competitive assets relative to those of rival firms. B. achieving price stability. C. analyzing only internal strengths and weaknesses through a matrix comparison model. D. cost-benefit analysis of the company's core product sales. E. Performing resource specific activities within the organization to allocate available capital.

A. probing the caliber of a firm's competitive assets relative to those of rival firms.

Driving forces analysis helps managers identify whether: A. the collective impact of the driving forces will act to increase/decrease market demand, increase/ decrease competition, and raise/lower industry profitability in the years ahead. B. it will become more or less important to aim the company's strategy at being the industry's low-cost producer. C. the driving forces will have a bigger impact on company profitability than competitive forces. D. the industry is likely to become more or less vertically integrated and why. E. competitive advantages are likely to grow or diminish in importance.

A. the collective impact of the driving forces will act to increase/decrease market demand, increase/ decrease competition, and raise/lower industry profitability in the years ahead.

The intensity of rivalry among competing sellers does NOT depend on whether: A. the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups. B. competitors are diverse in terms of long-term directions, objectives, strategies, and countries of origin. C. strong companies outside the industry have acquired weak firms in the industry and are launching aggressive moves to transform the acquired companies into strong market contenders. D. one or two rivals have particularly powerful and successful strategies to grow the business, attract and retain buyers, and develop a sustained competitive advantage. E. industry conditions attract industry members to use price cuts or other competitive weapons to boost total sales volume and market share.

A. the industry has more than two strong driving forces and whether the industry has more than two diverse and capable strategic groups.

A company's strategy is a "work in progress" and evolves over time because of A. the ongoing need of company managers to react and respond to changing industry and competitive conditions. B. the ongoing need to imitate the new strategic moves of the industry leaders. C. the need to make regular adjustments in the company's strategic vision. D. the importance of developing a fresh strategic plan every year. E. the frequent need to modify key elements of the company's business model.

A. the ongoing need of company managers to react and respond to changing industry and competitive conditions.

The bargaining leverage of suppliers is greater when: A. there suppliers products/services account for a small percentage of industry members' costs. B. industry members incur low costs in switching their purchases from one supplier to another. C. industry members account for a big fraction of supplier's sales. D. there is extensive seller-supplier collaboration. E. the supplier industry is composed of a large number of relatively small suppliers.

A. there suppliers products/services account for a small percentage of industry members' costs.

One of the keys to successful strategy-making is A. to come up with one or more strategy elements that act as a magnet to draw customers and yield a lasting competitive edge. B. to aggressively pursue all of the growth opportunities the company can identify. C. to develop a product/service with more innovative performance features than what rivals are offering and to provide customers with better after-the-sale service. D. to come up with a business model that enables a company to earn bigger profits per unit sold than rivals. E. to charge a lower price than rivals and thereby win sales and market share away from rivals.

A. to come up with one or more strategy elements that act as a magnet to draw customers and yield a lasting competitive edge.

A key approach for a company to grow sales and profits in several country markets is to A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities. B. employ a multidomestic strategy rather than a global strategy. C. locate technical after-sale services close to buyers. D. minimize transportation costs among these markets. E. take advantage of less restrictive restrictions and requirements of host governments

A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.

The options for remedying a supplier-related cost disadvantage include A. trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs. B. forward vertical integration. C. shifting into the production of substitute products. D. shifting from a low-cost leadership strategy to a differentiation or focus strategy. E. cutting selling prices and trying to win a bigger market share.

A. trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs.

The real payoff of driving forces is to help managers understand: A. what strategy changes are needed to prepare for the impacts of the driving forces. B. the overall strength of the five competitive forces. C. whether the industry's strategic group map will be static or dynamic. D. what conditions exist in the economy at large. E. the extent to which rivals have more than two competitively valuable competencies or capabilities

A. what strategy changes are needed to prepare for the impacts of the driving forces.

Rivalry increases: A. when buyer demand is growing fast or increasing. B. as it becomes more costly for buyers to switch brands. C. as the products of rival sellers becomes more strongly differentiated. D. when there is excess supply of unused production capacity, especially if high fixed costs exist. E. All of these.

A. when buyer demand is growing fast or increasing.

The rivalry among competing firms tends to be more intense: A. when demand for the product is growing slowly, buyers have low switching costs, and the actions of any one company to attract more customers and boost market share have strong direct impact on their rivals. B. when the products/services of rival sellers are more strongly differentiated and buyer demand is strong and growing rapidly. C. when rivals are relatively content with their market position. D. when there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members. E. the smaller the number of firms in the industry and the more unequal their market shares.

A. when demand for the product is growing slowly, buyers have low switching costs, and the actions of any one company to attract more customers and boost market share have strong direct impact on their rivals.

The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of: A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. B. whether suppliers self-manufacture what they supply or source their items from other manufacturers. C. the industry's position in the growth cycle. D. whether technological change in the businesses of suppliers is rapid or slow. E. whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.

A. whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product.

One of the biggest strategic challenges to competing in the international arena include A. whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers. B. whether to charge the same price in all country markets. C. whether the company should engage in exporting, licensing, or franchising to enter new country markets. D. how to take advantage of the low wage rates prevailing in some countries. E. whether to pursue a global strategy or an international strategy.

A. whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.

Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully. B. which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups. C. which competitors are employing offensive strategies and which competitors are employing defensive strategies. D. which competitors are likely to make money and which are likely to lose money in the years ahead. E. what the industry's key success factors are.

A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully.

A company's business model A. zeros in on how and why the business will generate revenues sufficient to cover costs and produce attractive profits and return on investment. B.is management's storyline for how the strategy will result in achieving the targeted strategic objectives. C.details the ethical and socially responsible nature of the company's strategy. D.explains how it intends to achieve high profit margins. E.sets forth the actions and approaches that it will employ to achieve market leadership.

A. zeros in on how and why the business will generate revenues sufficient to cover costs and produce attractive profits and return on investment.

ENTERING A NEW LINE OF BUSINESS THROUGH INTERNAL DEVELOPMENT - ADVANTAGES / DISADVANTAGES

Advantages of new venture development - Avoids pitfalls and uncertain costs of acquisition - Allows entry into a new or emerging industry where there are no available acquisition candidates Disadvantages of intrapreneurship - Must overcome industry entry barriers - Requires extensive investments in developing production capacities and competitive capabilities - May fail due to internal organizational resistance to change and innovation

DIVERSIFICATION BY ACQUISITION OF AN EXISTING BUSINESS - ADVANTAGES / DISADVANTAGES

Advantages: - Quick entry into an industry - Barriers to entry avoided - Access to complementary resources and capabilities Disadvantages: - Cost of acquisition—whether to pay a premium for a successful firm or seek a bargain in a struggling firm - Underestimating costs for integrating acquired firm - Overestimating the acquisition's potential to deliver added shareholder value

What is a spinoff?

An independent company created when a corporate parent divests a business by distributing to its stock holders new shares in this business.

An umbrella brand

An umbrella brand is a corporate brand name that can be applied to a wide assortment of business types. As such, it is a generalized resource that can be leveraged in unrelated diversification.

Resource and capabilities analysis

Analyse to see if that segment will be competitive and sustainable on the long term, done by finding all your resources than applying the four tests of a resource power.

A company's business model A. Concerns the actions and business approaches that will be used to grow the business, conduct operations, please customers and compete successfully B. Is management's storyline for how it will generate revenues ample to cover costs and produce a profit—absent the ability to deliver good profitability, the strategy is not viable and the survival of the business is in doubt C. Concerns what combination of moves in the marketplace it plans to make to outcompete rivals D. Deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible E. Concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets

B

A company's strategy can be considered "ethical" A. If each element of its strategy is "legal." B. If it does not entail actions or behaviors that cross the moral line from "can do" to "should not do" (because such actions are unsavory, unconscionable, injurious to others or unnecessarily harmful to the environment) and if it allows management to fulfill its ethical duties to all stakeholders (shareholders, employees, customers, suppliers, the communities in which it operates and society at large) C. If its actions and behaviors fall within the bounds of "fair competition." D. So long as leading religious authorities find nothing "morally wrong" in the company's actions E. So long as the company's strategic actions do not injure the business of rival firms or the well-being of customers

B

A company's strategy is most accurately defined as A. Management's approaches to building revenues, controlling costs and generating an attractive profit B. Management's commitment to pursue a particular set of actions in growing the business, attracting and pleasing customers, competing successfully, conducting operations and improving the company's financial and market performance C. Management's concept of "who we are, what we do and where we are headed." D. The business model that a company's board of directors has approved for outcompeting rivals and making the company profitable E. The choices management has made regarding what financial plan to pursue

B

An industry's driving forces A. Are generally determined by competitive pressures, the sizes of strategic groups and the power of rival firms' competitive strategies B. Generally act in ways which will strengthen or weaken market demand, competition and industry profitability in future years C. Frequently cause a leveling off of industry growth and a reduction in the bargaining power of buyers

B

As a rule, the stronger the collective impact of competitive pressures associated with the five competitive forces, A. The stronger are the industry's driving forces B. The lower the combined profitability of industry members C. The fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader

B

Company objectives A. Are needed only in those areas directly related to a company's short-term and long-term profitability B. Need to be broken down into performance targets for each of its separate businesses, product lines, functional departments and individual work units C. Play the important role of establishing the direction in which it needs to be headed D. Are important because they help guide managers in deciding what the company's strategic intent should be

B

Corporate strategy for a diversified or multi-business enterprise A. Is orchestrated by the CEO and other senior corporate executives and focuses on how to create a competitive advantage in each specific line-of-business the total enterprise is in B. Is orchestrated by the CEO and other senior corporate executives and centers around the kinds of initiatives the company uses to establish business positions in different industries and efforts to boost the combined performance of the set of businesses the company has diversified into C. Concerns how best to allocate resources across the departments of each line of business the company is in

B

Having good competitive intelligence about rivals' strategies, latest actions and announcements, resource strengths and weaknesses and moves to improve their situation is important because A. It identifies who the industry's current market share leaders are B. It helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence about what market maneuvers to expect from its rivals

B

In a single-business company, the strategy-making hierarchy consists of A. Business strategy, divisional strategies and departmental strategies B. Business strategy, functional strategies and operating strategies C. Business strategy and operating strategy D. Managerial strategy, business strategy and divisional strategies E. Corporate strategy, divisional strategies and departmental strategies

B

In identifying an industry's key success factors, strategists should A. Try to single out all factors which play a major role in shaping whether buyer demand grows rapidly or slowly B. Consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful and what shortcomings are almost certain to put a company at a significant competitive disadvantage

B

In which of the following instances are industry members not subject to stronger competitive pressures from substitute products? A. The costs to buyers of switching over to the substitutes are low B. Buyers are dubious about using substitutes C. The quality and performance of the substitutes is well matched to what buyers need to meet their requirements

B

Just how strong the competitive pressures are from substitute products depends on A. Whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently B. Whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes C. Whether the available substitutes are products or services

B

Management's story line for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment A. Describes what is meant by a company's strategy B. Best describes what is meant by a company's business model C. Accounts for why a company's financial objectives are at the stated level D. Portrays the essence of a company's business purpose or mission E. Is what is meant by the term strategic intent

B

Strategy-making is A. Primarily the responsibility of key executives rather than a task for a company's entire management team B. More of a collaborative group effort that involves, to some degree, all managers and sometimes key employees, as opposed to being the function and responsibility of a few high-level executives C. First and foremost the function and responsibility of a company's strategic planning staff

B

The concept of strategic groups is relevant to industry and competitive analysis because A. Firms in the same strategic groups are rarely close competitors—a firm's closest competitors are usually in distant strategic groups B. Strategic group maps help identify each company's market position and its closest competitors C. Competition grows in intensity as the number and diversity of the strategic groups in an industry increases

B

What a company's top executives are saying about where the company is headed and about what the company's future product-customer-market-technology will be A. Indicates what kind of business model the company is going to have in the future B. Constitutes their strategic vision for the company C. Signals what the firm's strategy will be D. Serves to define the company's mission E. Indicates what the company's long-term strategic plan is

B

What separates a powerful strategy from a run-of-the-mill or ineffective one is A. The ability of the strategy to keep the company profitable B. Management's ability to forge a series of moves, both in the marketplace and internally, that sets the company apart from rivals, tilts the playing field in the company's favor and produces sustainable competitive advantage over rivals C. The speed with which it helps the company achieve its strategic vision D. The proven ability of the strategy to generate maximum profits E. Whether it allows the company to maximize shareholder value in the shortest possible time

B

When there's an order of magnitude change in a company's environment that dramatically alters its prospects and mandates radical revision of its strategic course, the company is said to have encountered A. An opportunity to pursue a new strategic vision B. A strategic inflection point C. A strategic roadblock D. A new strategic opportunity E. A fork in the road that gives the company an opening to change to a different business model

B

Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of A. The speed with which general economic conditions and interest rates are changing B. The extent to which buyers can exercise enough bargaining power to influence the terms and conditions of sale in their favor and whether the extent of collaboration between certain sellers and certain buyers in the industry places rivals lacking such collaborative arrangements at a competitive disadvantage

B

Which of the following factors is not a relevant consideration in determining the strength of buyer bargaining power? A. Whether winning the business of prestigious customers gives a seller important market exposure and heightens its brand name B. Whether the seller is a manufacturer or a wholesaler/distributor C. Whether buyers pose a major threat to integrate backward into the product market of sellers

B

Which of the following is a good example of a manufacturing-related key success factor? A. Global distribution capabilities B. High labor productivity (especially if the production process has high labor content) C. Low distribution costs

B

Which of the following is an integral part of the managerial process of crafting and executing strategy? A. Developing a proven business model B. Setting objectives and using them as yardsticks for measuring the company's performance and progress C. Deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage D. Communicating the company's mission and purpose to all employees E. Deciding on the company's strategic intent

B

Which of the following is most likely to qualify as a driving force? A. Increases in price-cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals B. Wildly successful introduction of innovative new products by one or more industry rivals that force other rivals to respond quickly or lose a major share of their customers to the innovating rival(s) C. An increase in the prices of substitute products

B

Which of the following is not a common shortcoming of company vision statements? A. Vague or incomplete—short on specifics B. Too narrow—doesn't leave enough room for future growth C. Bland or uninspiring D. Not distinctive—could apply to most any company (or at least several others in the same industry) E. Too reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers)

B

Which of the following is not something a company's strategy is concerned with? A. Management's choices about how to attract and please customers B. How quickly and closely to copy the strategies being used by successful rival companies C. Management's choices about how to grow the business D. Management's choices about how to compete successfully E. Management's action plan for conducting operations and improving the company's financial and market performance

B

Which one of the following does not account for why a company's strategy evolves from one version to another? A. The need to abandon some strategy elements that are no longer working well B. A desire on the part of company managers to develop new strategy elements on the fly C. A need to respond to changing customer requirements and expectations D. A need to react to fresh strategic maneuvers on the part of rival firms E. The proactive efforts of company managers to improve this or that aspect of the strategy

B

Which one of the following is not an integral part of driving forces analysis? A. Identifying the specific factors causing fundamental changes in industry conditions and/or the industry's competitive structure B. Determining whether the driving forces are acting to cause one or more industry rivals to shift to a different strategic group C. Determining whether the driving forces are acting to strengthen or weaken market demand

B

Which one of the following questions can be used to test the merits of one strategy over another and distinguish a winning strategy from a mediocre or losing strategy? A. How good is the company's business model? B. How well does the strategy fit the company's situation? C. Does the company have low prices in comparison to rivals? D. Is the company putting too little emphasis on behaving in an ethical and socially responsible manner? E. Is the company a technology leader?

B

Which of the following is not accurate as concerns entering a new business via acquisition, internal start-up, or a joint venture? A) The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price. B) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up. C) Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurdle entry barriers. D) Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market. E) The big drawbacks to entering a new industry via internal start-up include the costs of overcoming entry barriers, building an organization from the ground up, and the extra time it takes to build a strong and profitable competitive position.

B) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up.

Which one of the following is the best guideline for deciding what the priorities should be for allocating resources to the various businesses of a diversified company? A) Businesses with high industry attractiveness ratings should be given top priority and those with low industry attractiveness ratings should be given low priority. B) Business subsidiaries with the brightest profit and growth prospects and solid strategic and resource fits generally should head the list for corporate resource support. C) The positions of each business in the nine-cell attractiveness-strength matrix should govern resource allocation. D) Businesses with the most strategic and resource fits should be given top priority and those with the fewest strategic and resource fits should be given low priority. E) Businesses with high competitive strength ratings should be given top priority and those with low competitivestrength ratings should be given low priority

B) Business subsidiaries with the brightest profit and growth prospects and solid strategic and resource fits generally should head the list for corporate resource support.

Which one of the following is not a reasonable option for deploying a diversified company's financial resources? A) Making acquisitions to establish positions in new businesses or to complement existing businesses B) Concentrating most of a company's financial resources in cash cow businesses and allocating little or no additional resources to cash hog businesses until they show enough strength to generate positive cash flows C) Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses D) Paying down existing debt, increasing dividends, or repurchasing shares of the company's stock E) Investing in ways to strengthen or grow existing businesses

B) Concentrating most of a company's financial resources in cash cow businesses and allocating little or no additional resources to cash hog businesses until they show enough strength to generate positive cash flows

Which of the following is not a way that a company can try to manage the costs of its value chain activities downward and thus be more cost-efficient than rivals? A) Striving to capture all available economies of scale and taking full advantage of experience and learning-curve effects B) Having outsiders perform all those value chain activities in which a company odes not have either a core competence or a distinctive competence C) Substituting the use of low-cost for high-cost raw materials or component parts D) Using the company's bargaining power vis-à-vis suppliers to gain concessions and trying to operate facilities at full capacity E) Adopting labor-saving operating methods and using online systems and sophisticated software to achieve operating efficiencies

B) Having outsiders perform all those value chain activities in which a company odes not have either a core competence or a distinctive competence

Which of the following is NOT one of the managerial considerations in determining how to compete successfully? A) How can a company attract, keep, and please customers? B) How can the company modify its entire product line to emphasize their internal service attributes? C) How should the company respond to changing economic and market conditions? D) How should the company be competitive against rivals? E) How should the company position itself in the marketplace?

B) How can the company modify its entire product line to emphasize their internal service attributes?

Which one of the following is not related to actions and approaches that comprise a company's strategy? A) How to attract and please customers. B) How to prove to shareholders that the company's business model is viable C) How to compete against rivals. D) How to capitalize on attractive opportunities to grow the business. E) How to achieve the company's performance targets.

B) How to prove to shareholders that the company's business model is viable

The strategic options to improve a diversified company's overall performance do not include which of the following categories of actions? A) Broadening the company's business scope by making new acquisitions in new industries B) Increasing dividend payments to shareholders and/or repurchasing shares of the company's stock C) Restructuring the company's business lineup with a combination of divestitures and acquisitions to put a whole new face on the company's business makeup D) Pursuing multinational diversification and striving to globalize the operations of several of the company's business units E) Divesting weak-performing businesses and retrenching to a narrower base of business operations

B) Increasing dividend payments to shareholders and/or repurchasing shares of the company's stock

Which of the following statements about a company's strategy is true? A) Crafting an excellent strategy is more important than executing it well. B) Managers at all companies face three central questions in thinking strategically about their company's present circumstances and prospects: What's the company's present situation? Where does the company need to go from here? How should it get there? C) A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. D) Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers. E) Whether a company's strategy is ethical or not does not matter a lot because most customers and most suppliers are relatively unconcerned whether a company they do business with engages in sleazy practices or turns a blind eye to below-board behavior on the part of its employees.

B) Managers at all companies face three central questions in thinking strategically about their company's present circumstances and prospects: What's the company's present situation? Where does the company need to go from here? How should it get there?

Which one of the following groups of characteristics is least likely to represent company strengths or competitive assets? A) Physical assets such as state-of-the-art plants, attractive real estate locations, and worldwide distribution facilities B) More plants than rivals, more employees than rivals, being in business more years than rivals, and smaller capital investment expenditures than rivals C) A well-known brand name, a highly motivated workforce, and the collective learning embedded in the organization D) Short development times in bringing new products to market, a strong dealer network, strong collaborative partnerships with key suppliers, and an experienced and capable workforce E) Proven quality control skills, good supply chain management capabilities, state-of-the-art systems for doing business via the Internet, and a strong balance sheet

B) More plants than rivals, more employees than rivals, being in business more years than rivals, and smaller capital investment expenditures than rivals

Which of the following is not a viable strategy option for a local company in competing against global challengers? A) Developing business models to exploit shortcoming in local distribution networks or infrastructure B) Preparing to compete on the basis of price and modifying elements of the company's business model to better defend against strong multinational competitors C) Taking advantage of low-cost labor and other competitively important local work-force qualities D) Transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale E) Using acquisitions and rapid growth strategies to defend against expansion-minded multinationals

B) Preparing to compete on the basis of price and modifying elements of the company's business model to better defend against strong multinational competitors

Which of the following is an important appeal of a related diversification strategy? A) Related diversification is an effective way of capturing valuable financial fit benefits. B) Related diversification offers more competitive advantage potential than does unrelated diversification. C) Related diversification offers significant opportunities to strongly differentiate a company's product offerings from those of rivals. D) Related diversification is more likely to pass the cost-of-entry test and the capital gains test than unrelated diversification. E) Related diversification is typically more profitable than unrelated diversification, which is a major factor in helping related diversification pass the attractiveness test.

B) Related diversification offers more competitive advantage potential than does unrelated diversification.

Which of the following is an important appeal of a related diversification strategy? A) Related diversification is an effective way of capturing valuable financial fit benefits. B) Related diversification offers more competitive advantage potential than does unrelated diversification. C) Related diversification offers significant opportunities to strongly differentiate a company's product offerings from those of rivals. D) Related diversification is more likely to pass the cost-of-entry test and the capital gains test than unrelated diversification. E) Related diversification is typically more profitable than unrelated diversification, which is a major factor in helping related diversification pass the attractiveness test.

B) Related diversification offers more competitive advantage potential than does unrelated diversification.

Which of the following is not a major consideration in evaluating the pluses and minuses of a diversified company's strategy? A) Checking whether the company's resources fit the requirements of its present business lineup B) Scrutinizing each industry/business to determine where driving forces are strongest/weakest and how many profitable strategic groups the company has diversified into C) Ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses D) Checking the competitive advantage potential of cross-business strategic fits E) Assessing the competitive strength of each business the company has diversified into and determining which ones are strong/weak contenders in their respective industries

B) Scrutinizing each industry/business to determine where driving forces are strongest/weakest and how many profitable strategic groups the company has diversified into

Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following? A) Broadening the firm's business scope by diversifying into additional businesses. B) Shifting from a multi-country to a global strategy. C) Restructuring the company's business line-up with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup. D) Pursuing multinational diversification and striving to globalize the operations of several of the company's business units. E) Divesting some businesses and retrenching to a narrower base of business operations.

B) Shifting from a multi-country to a global strategy.

Which of the following is not usually a characteristic of competing in an emerging industry? A) There's much speculation about how the industry will function, how fast it will grow, and how big it will get. B) Technological know-how is freely shared and exchanged among the early participants, with no competitive advantage attached to patents and proprietary technology. C) There is uncertainty regarding which of several competing technologies will win out or which product attributes will win the greatest buyer favor and drive buyer purchases. D) Many potential buyers expect first-generation products to be rapidly improved and delay their purchase until technology and product design mature. E) Entry barriers tend to be relatively low.

B) Technological know-how is freely shared and exchanged among the early participants, with no

A winning strategy must pass which three tests? A) The Dominant Market Test, the Sustainable Advantage Test, and the Profit Test B) The Fit Test, the Competitive Advantage Test, and the Performance Test C) The Sustainable Advantage Test, the Fit Test, and the Profit Test D) The Performance Test, the Dominant Market Test, and the Fit Test E) The Fit Test, the Sustainable Advantage Test, and the Dominant Market Test

B) The Fit Test, the Competitive Advantage Test, and the Performance Test

Which one of the following statements does not represent one of the typical fundamental changes in an industry as it approaches maturity? A) Firms encounter growing difficulty in coming up with new product innovations and developing new uses and applications for the product B) The established rules of competition disintegrate, market conditions become quite turbulent, and business risk increases because of growing uncertainty about whether the industry will stagnate C) Industry profitability falls temporarily or permanently, international competition increases, and mergers and acquisitions that drive industry consolidation to a smaller number of larger players D) Greater head-to-head competition for market share and increased competitive emphasis on lowering costs and improving service E) Buyers become more sophisticated and often drive a hard bargain on repeat purchases

B) The established rules of competition disintegrate, market conditions become quite turbulent, and business risk increases because of growing uncertainty about whether the industry will stagnate

Which of the following statements about a company's strategy is true? A) Crafting an excellent strategy is more important than executing it well. B) The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company's future over the long C) A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. D) Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers. E) Whether a company's strategy is ethical or not does not matter a lot because most customers and most suppliers are relatively unconcerned whether a company they do business with engages in sleazy practices or turns a blind eye to below-board behavior on the part of its employees.

B) The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company's future over the long

Which of the following is not one of the principal offensive strategy options? A) Pursuing continuous product innovation to draw sales and market share away from less innovative rivals B) Trying to take market share away from the industry leaders by significantly undercutting the prices they are charging C) Offering an equally good or better product at a lower price D) Leapfrogging competitors by being the first adopter of next-generation technologies or being first to market with next generation products Attacking the competitive weakness of rivals E) Adopting and improving on the good ideas of other companies (rivals or otherwise)

B) Trying to take market share away from the industry leaders by significantly undercutting the prices they are charging

Which of the following is not one of the questions that needs to be answered in thinking strategically about a company's industry and competitive environment? A) What kinds of competitive forces are industry members facing, and how strong is each force? B) What emerging opportunities and threats are evident in the industry environment? C) What market positions do industry rivals occupy—who is strongly/weakly positioned and who is not? D) What are the key factors for future competitive success? E) What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

B) What emerging opportunities and threats are evident in the industry environment?

In which of the following instances is retrenching to a narrower diversification base not likely to be an attractive or advisable strategy for a diversified company? A) When a diversified company has struggled to make certain businesses attractively profitable B) When a diversified company has too many cash cows C) When one or more businesses are cash hogs with questionable long-term potential D) When businesses in once-attractive industries have badly deteriorated E) When a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on

B) When a diversified company has too many cash cows

A focused strategy based on low-cost can lead to attractive competitive advantage when A) buyers in the target market niche are looking for a no-frills product at a rock-bottom price. B) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment that is less costly to satisfy as compared to other parts of the market. C) buyers are not very brand loyal and are always on the lookout for something new and different at a bargain price. D) demand in the target market niche is growing rapidly and no other rivals are very cost-conscious. E) there are few, if any, rivals offering low-priced products.

B) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment that is less costly to satisfy as compared to other parts of the market.

The difference between a merger and an acquisition is that A) a merger involves one company purchasing the assets of another company with cash, whereas an acqui- sition involves a company acquiring another company by buying all of the shares of its common stock. B) a merger is a pooling of equals whereas an acquisition involves one company, the acquirer, purchasing and absorbing the operations of another company, the acquired. C) in a merger the companies retain their original names whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D) a merger is a combination of three or more companies whereas an acquisition is a pooling of interests of just two companies E) a merger involves two or more companies deciding to adopt the same strategy whereas an acquisition involves one company taking over the strategy-making function of another company.

B) a merger is a pooling of equals whereas an acquisition involves one company, the acquirer, purchasing

A company can best accomplish diversification into new industries by A) outsourcing most of the value chain activities that have to be performed in the target business/industry. B) acquiring a company already operating in the target industry, creating a new business subsidiary internally to compete in the target industry, or forming a joint venture with another company to enter the target industry. C) integrating forward or backward into the target industry. D) shifting from a strategic group comprised mostly of single-business companies to a strategic group comprised of diversified companies. E) employing an offensive strategy with new product innovation as its centerpiece.

B) acquiring a company already operating in the target industry, creating a new business subsidiary internally to compete in the target industry, or forming a joint venture with another company to enter the target industry.

Strategic alliances A) are the cheapest means of developing new technologies and getting new products to market quickly. B) are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes. C) are a proven means of reducing the costs of performing value chain activities. D) are best used to insulate a company from the impact of the five competitive forces. E) help insulate a firm from the adverse impacts of industry driving forces.

B) are collaborative arrangements where two or more companies join forces to achieve mutually beneficial

Profit sanctuaries A) are markets where prices and competitive conditions are strongly linked across country markets to form a world market. B) are country markets in which a company derives substantial profits because of its protected market position or unassailable competitive advantage. C) are markets where the risk of fluctuating exchange rates is very high. D) are not valuable competitive assets, providing financial weaknesses and hinder a company's race for world-market leadership. E) are markets where competitive conditions make it infeasible to employ a profit strategy and an export strategy.

B) are country markets in which a company derives substantial profits because of its protected market position or unassailable competitive advantage.

An industry's key success factors A) can best be determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. B) are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure. C) are mainly a function of an industry's macro-environment and dominant economic features. D) can best be determined by identifying the similarities in the strategies of rival companies—those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors. E) usually relate to technology and manufacturing-related capabilities and rarely to distribution or marketing capabilities.

B) are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure.

The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to A) determine which business unit has the greatest number of resource strengths, competencies, and competitive capabilities and which one has the least. B) assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender. C) rank the each business unit's strategic fits from highest to lowest. D) rank the each business unit's resource fits from highest to lowest. E) rank each business unit's strategy from best to worst.

B) assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender.

The Achilles heel (or biggest disadvantage/pitfall)of relying heavily on alliances and cooperative strategies is A) that partners will not fully cooperate or share all they know, preferring instead to guard their most valuable information and protect their more valuable know-how. B) becoming dependent on other companies for essential expertise and capabilities. C) the added time and extra expenses associated with engaging in collaborative efforts. D) having to compromise the company's own priorities and strategies in reaching agreements with partners. E) the collaborative arrangements will not live up to expectations.

B) becoming dependent on other companies for essential expertise and capabilities.

Management's blueprint for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment: A) best describes what is meant by a company's strategy. B) best describes what is meant by a company's business model. C) accounts for why a company's financial objectives are at the stated level. D) portrays the essence of a company's business purpose or mission. E) is what is meant by the term strategic intent.

B) best describes what is meant by a company's business model.

In trying to cope with a turbulent, high-velocity market environment, a company A) should usually put a strong emphasis on short-term profitability rather than worrying excessively about building and strengthening the company's long-term market position—the direction of market change is too volatile and unknowable to put much time into worrying about the long-term. B) can assume any of three strategic postures—it can react to change, it can anticipate change, and it can lead change; typically all three postures will have to be employed at one time or another (though not in the same proportion). C) should strive to be a fast follower and occasionally a slow-mover (like when the actions of early movers involve adoption of a radically different technological approach)—being an aggressive first mover carries too much risk and can dismay shareholders. D) generally needs to put most of its strategic emphasis on defensive-type strategies because offensive strategies are so risky. E) is well-advised to compete with a broad differentiation or best-cost strategy.

B) can assume any of three strategic postures—it can react to change, it can anticipate change, and it can lead change; typically all three postures will have to be employed at one time or another (though not in the same proportion).

In trying to deal with turbulent and rapid changes in the marketplace, a company A) can either pursue profitability or market share, but not both. B) can react to change, anticipate change, and/or try to lead change. C) should be a first-mover, a fast follower, or a slow-mover-as may be most expedient. D) can play offense, play defense, or utilize end-run offensives to compete in those market segments where change occurs at a more leisurely pace. E) should be a technological leader, a product quality leader, or a customer service leader-whichever is most appealing to buyers.

B) can react to change, anticipate change, and/or try to lead change.

A strategy of being a best-cost provider A) is the easiest of the five generic types of competitive strategies to copy or imitate. B) combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance. C) is almost always more profitable than focused or market niche strategies because of the potential for selling more units and realizing higher revenues. D) is the most attractive of all the competitive strategies because it combines the best features of the four other generic types of competitive strategies. E) is usually somewhat less profitable than either top-of-the-line differentiation or low-cost leadership strategies because it is based on achieving a weaker type of competitive advantage.

B) combines a strategic emphasis on low cost with a strategic emphasis on more than minimally acceptable quality, service, features, and performance.

Entering into strategic alliances and collaborative partnerships can be competitively valuable because A) working closely with outsiders is essential in developing new technologies and new products in virtually every industry. B) cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology. C) they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages. D) they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations. E) they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

B) cooperative arrangements with other companies are very helpful in racing against rivals to build a

In companies pursuing a strategy of unrelated diversification, A) the main basis for competitive advantage and improved shareholder value is increased ability to achieve economies of scope. B) each business is on its own in trying to build a competitive edge and the consolidated performance of the businesses is likely to be no better than the sum of what the individual businesses could achieve if they were independent. C) there is a strong chance that the combined competitive advantages of the various businesses will produce a 1 + 1 = 3 performance outcome as opposed to just a 1 + 1 = 2 performance outcome. D) the main basis for improved shareholder value is strong cross-business financial fits. E) the main basis for improved shareholder value is increased ability to achieve economies of scale in the businesses it has entered.

B) each business is on its own in trying to build a competitive edge and the consolidated performance of the businesses is likely to be no better than the sum of what the individual businesses could achieve if they were independent.

An end-game strategy in a stagnant or declining industry usually involves A) stressing differentiation based on quality improvement and product innovation. B) either a fast-exit/sell-out quickly strategy or a slow exit strategy that involves a gradual phasing down of operations coupled with an objective of getting the most cash flow from the business. C) pursuing a focused strategy aimed at the fastest-growing or slowest-decaying market segments. D) becoming a lower-cost producer. E) initiating price cuts, boosting advertising, adding new features and more models, and stressing improved customer service so as to achieve strong product differentiation.

B) either a fast-exit/sell-out quickly strategy or a slow exit strategy that involves a gradual phasing down

The trick to a profitable broad differentiation strategy is A) to concentrate differentiation efforts on superior technology and product innovation. B) either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits. C) to concentrate differentiation efforts on superior customer service and appealing to sophisticated and prestigious buyers. D) differentiating on the basis of attributes that enhance product performance. E) having as many differentiating features as management can think up.

B) either to keep the costs of achieving differentiation below the price premium the differentiating attributes can command in the marketplace (thus increasing the profit margin per unit sold) or to offset thinner profit margins with enough added volume to increase total profits.

Mergers and acquisitions A) are nearly always successful in achieving their desired purpose. B) frequently do not produce the hoped-for outcomes. C) are generally less effective than forming alliances or partnerships with these same companies. D) are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. E) are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

B) frequently do not produce the hoped-for outcomes.

Companies opt to expand into foreign markets for such reasons as to A) boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape having to deal with strong labor unions. B) gain access to new customers, achieve lower costs and enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base. C) grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances. D) avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multicountry strategy. E) raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.

B) gain access to new customers, achieve lower costs and enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.

Crafting and executing strategy are top-priority managerial tasks because: A) they are necessary ingredients of a sound business model. B) good strategy coupled with good strategy execution are the most telling signs of good management and greatly raises the chances that a company will be a standout performer in the marketplace. C) the management skills of top executives are sharpened as they work their way through the strategymaking, strategy-executing process. D) doing these tasks helps executives develop an appropriate strategic vision, strategic intent, and a set of strategic objectives. E) of the contribution they make to maximizing value for shareholders.

B) good strategy coupled with good strategy execution are the most telling signs of good management and greatly raises the chances that a company will be a standout performer in the marketplace.

The transition to a slower-growth, maturing industry environment tends to result in A) a greater emphasis on backward vertical integration. B) growing buyer sophistication and more head-to-head competition for market share. C) rising industry profitability as rivalry tapers off and there's less head-to-head competition for market share among rival firms. D) reduced risks associated with capacity additions and significantly faster rates of product innovation as sellers endeavor to rekindle buyer interest. E) reduced emphasis on mergers and acquisitions.

B) growing buyer sophistication and more head-to-head competition for market share.

A diversified company that leverages the strategic fits of its related businesses into competitive advantage A) has a distinctive competence in its related businesses. B) has a clear path to achieving 1 + 1 = 3 gains in shareholder value. C) has a clear path to global market leadership in the industries where it has related businesses. D) passes the value chain test and the profit expectations test for building shareholder value. E) achieves economies of scope and passes the reduced-costs test for crafting a diversification strategy capable of creating added shareholder value.

B) has a clear path to achieving 1 + 1 = 3 gains in shareholder value.

Retrenching to a narrower diversification base A) is usually the most attractive long-run strategy for a broadly diversified company confronted with recession, high interest rates, mounting competitive pressures in several of its businesses, and sluggish growth. B) has the advantage of focusing a diversified firm's energies on building strong positions in a few core businesses rather the stretching its resources and managerial attention too thinly across many businesses. C) is an attractive strategy option for revamping a diverse business lineup that lacks strong cross-business financial fit. D) is sometimes an attractive option for deepening a diversified company's technological expertise and supporting a faster rate of product innovation. E) is a strategy best reserved for companies in poor financial shape.

B) has the advantage of focusing a diversified firm's energies on building strong positions in a few core businesses rather the stretching its resources and managerial attention too thinly across many businesses.

The big risk of employing an outsourcing strategy is A) causing the company to become partially integrated instead of being fully integrated. B) hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success. C) hurting a company's R&D capability. D) putting the company in the position of being a late mover instead of an early mover. E) increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

B) hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute

A company's cost competitiveness is largely a function of A) whether it does a good enough job of benchmarking its value chain activities against the value chains of competitors so that it knows exactly how low to drive its costs to be cost-competitive. B) how efficiently it manages its overall value chain activities relative to how efficiently competitors manage theirs. C) whether it does a better job of building its resource strengths more cost effectively than rivals. D) whether it possesses more core competencies and competitive capabilities than rivals. E) how closely its internally-performed activities are linked to the activities performed by suppliers and to the activities performed by forward channel allies.

B) how efficiently it manages its overall value chain activities relative to how efficiently competitors manage theirs.

The essential difference between multicountry competition and global competition is that A) in multicountry competition, the market battle among rivals is mainly among companies in several neighboring countries whereas in global competition the market battle is among countries from many different parts of the world. B) in multicountry competition the markets of different countries are not closely linked and rivals battle for "national market championships" whereas in global competition the markets of different countries are closely linked and form a world market, thus pitting rivals in a battle for the "world market championship." C) in multicountry competition, rival companies focus on competing in a few country markets (2 to perhaps as many as 10) whereas in global competition companies strive to compete in 50 to 100 or more country markets. D) in multicountry competition rivals are positioned in strategic groups consisting of companies from the same geographic area of the world (for example, Europe or Africa or the Middle East or Latin America or North America or the Asian-Pacific) whereas in global competition rival companies are positioned in global strategic groups. E) None of the above are really good ways of distinguishing between multicountry and global competition.

B) in multicountry competition the markets of different countries are not closely linked and rivals battle for "national market championships" whereas in global competition the markets of different countries are closely linked and form a world market, thus pitting rivals in a battle for the "world market championship."

The essential difference between multidomestic competition and global competition is that A) in multidomestic competition, the market battle among rivals is mainly among companies in several neighboring countries whereas in global competition the market battle is among countries from many different parts of the world. B) in multidomestic competition the markets of different countries are not closely linked and rivals battle for "national market championships" whereas in global competition the markets of different countries are closely linked and form a world market, thus pitting rivals in a battle for the "world market championship." C) in multidomestic competition, rival companies focus on competing in a few country markets (2 to perhaps as many as 10) whereas in global competition companies strive to compete in 50 to 100 or more country markets. D) in multidomestic competition rivals are positioned in strategic groups consisting of companies from the same geographic area of the world (for example, Europe or Africa or the Middle East or Latin America or North America or the Asian-Pacific) whereas in global competition rival companies are positioned in global strategic groups. E) None of the above are really good ways of distinguishing between multicountry and global competition.

B) in multidomestic competition the markets of different countries are not closely linked and rivals battle for "national market championships" whereas in global competition the markets of different countries are closely linked and form a world market, thus pitting rivals in a battle for the "world market championship."

The businesses in a diversified company's lineup exhibit good resource fit when A) the resource requirements of each business exactly match the resources the company has available. B) individual businesses add to a company's resource strengths and when a company has the resources to adequately support the requirements of its businesses as a group without spreading itself too thin. C) each business is generates just enough cash flow annually to fund its own capital requirements and thus does not require cash infusions from the corporate parent. D) each business unit produces sufficient cash flows over and above what is needed to build and maintain the business, thereby providing the parent company with enough cash to pay shareholders a generous and steadily increasing dividend. E) there are enough cash cow businesses to support the capital requirements of the cash hog businesses.

B) individual businesses add to a company's resource strengths and when a company has the resources to adequately support the requirements of its businesses as a group without spreading itself too thin.

The most appealing approaches to broad differentiation A) are those that hinge upon first-rate R&D and frequent product innovation. B) involve features or attributes that (1) have considerable buyer appeal and (2) are hard or expensive for rivals to duplicate. C) are those that either lower buyer switching costs or enhance the differentiator's brand image. D) generally relate to product superiority or clever merchandising. E) are typically based on either superior product quality or superior customer service.

B) involve features or attributes that (1) have considerable buyer appeal and (2) are hard or expensive for rivals to duplicate.

Diversification merits strong consideration whenever a single-business company A) has integrated backward and forward as far as it can. B) is faced with diminishing market opportunities and stagnating sales in its principal business. C) has achieved industry leadership in its main line of business. D) encounters declining profits in its mainstay business. E) faces strong competition and is struggling to earn a good profit.

B) is faced with diminishing market opportunities and stagnating sales in its principal business.

A company's business model: A) concerns the actions and business approaches that will be used to grow the business, conduct operations, please customers, and compete successfully. B) is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit. C) concerns what combination of moves in the marketplace it plans to make to outcompete rivals. D) deals with how it can simultaneously maximize profits and operate in a socially responsible manner that keeps its prices as low as possible. E) concerns how management plans to pursue strategic objectives, given the larger imperative of meeting or beating its financial performance targets.

B) is management's blueprint for how it will generate revenues sufficient to cover costs and yield an attractive profit.

The five generic types of competitive strategies include A) offensive strategies, defensive strategies, differentiation strategies, low-cost strategies, and first-mover strategies. B) low-cost provider strategies, broad differentiation strategies, best-cost provider strategies, focused low-cost strategies, and focused differentiation strategies. C) offensive strategies, defensive strategies, striving to be a market leader, technological leadership strategies, and product innovation strategies. D) low-price strategies, premium price strategies, middle-of-the-road strategies, product leadership strategies, and market share leadership strategies. E) attacking competitor strengths, attacking competitor weaknesses, market leadership strategies, low-cost leadership strategies, and product superiority strategies.

B) low-cost provider strategies, broad differentiation strategies, best-cost provider strategies, focused low-cost strategies, and focused differentiation strategies.

A focuser's basis for competitive advantage is A) nearly always created in the distribution channel portion of the industry value chain. B) lower costs than competitors in serving the target market niche or else an ability to outmatch other competitors in offering niche members something they perceive is better suited to their own unique tastes and preferences. C) being fully vertically integrated and thus in position to perform all of the value chain activities needed to serve the target market niche. D) being the only company serving buyers in the target market niche. E) delivering more value for the money than other competitors.

B) lower costs than competitors in serving the target market niche or else an ability to outmatch other competitors in offering niche members something they perceive is better suited to their own unique tastes and preferences.

Young companies in fast-growing, emerging markets face such hurdles as A) learning to be a courageous first-mover, becoming skilled cost-cutters, and developing mass merchandising skills. B) managing rapid expansion, defending against competitors trying to horn in on their success, and building a strong competitive position for the long term. C) acquiring an intuitive feel for what buyers will like and how they will use the product. D) learning to conduct reliable market research, figuring out how to build scale economies, and becoming adept at product innovation. E) deciding which of the five generic competitive strategies to adopt, whether to be a risk-taker or risk- avoider, and what balance to strike between offensive and defensive strategies.

B) managing rapid expansion, defending against competitors trying to horn in on their success, and

Merger and acquisition strategies A) are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. B) may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C) are a particularly effective way of pursuing a blue ocean strategy and outsourcing strategies. D) seldom are a superior strategic alternative to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E) are one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

B) may offer considerable cost-saving opportunities and can also be beneficial in helping a company try

A preemptive strike type of offensive strategy entails: A) attacking an industry leader's most profitable market segment via deep price discounts and heavy advertising. B) moving first to secure an advantageous position that rivals are foreclosed or discouraged from duplicating. C) using a distinctive competence that rivals can't match to take sales and market share away from competitively weak rivals. D) surprise introductions of new and very innovative products to secure market share leadership and then informing shocked rivals that the attacker will use deep price cuts, if necessary, to defend its newly-won market-leading position. E) leading the industry in introducing next-generation products and putting rivals in the position of being market followers and having to scramble to imitate the leader's innovations.

B) moving first to secure an advantageous position that rivals are foreclosed or discouraged from duplicating.

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company A) must first be a proficient manufacturer. B) must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality. C) must have excess production capacity, so that it has ample in-house ability to undertake additional production activities. D) needs to have a wide product line, so that it can supply parts and components for many products. E) should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

B) must be able to achieve the same scale economies as outside suppliers and match or beat suppliers'

Assessments of how a diversified company's subsidiaries compare in competitive strength should be based on such factors as A) vulnerability to seasonal and cyclical downturns, vulnerability to driving forces, and vulnerability to fluctuating interest rates and exchange rates. B) relative market share, ability to match or beat rivals on key product attributes, brand image and reputation, costs relative to competitors, and ability to benefit from strategic fits with sister businesses. C) the appeal of its strategy, relative number of competitive capabilities, the number of products in each businesses product line, which businesses have the highest/lowest market shares, and which businesses earn the highest/lowest profits before taxes. D) the ability to hurdle barriers to entry, value chain attractiveness, and business risk. E) cost reduction potential, customer satisfaction potential, and comparisons of annual cash flows from operations.

B) relative market share, ability to match or beat rivals on key product attributes, brand image and reputation, costs relative to competitors, and ability to benefit from strategic fits with sister businesses.

For a best-cost provider strategy to be successful, a company must have A) excellent marketing and sales skills in convincing buyers to pay a premium price for the attributes/ features incorporated in its product. B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. C) access to greater learning/experience curve effects and scale economies than rivals. D) one of the best-known and most respected brand names in the industry. E) a short, low-cost value chain.

B) resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.

The typical strategic mistakes companies can make during the transition from fairly rapid growth to industry maturity include A) pursuing a differentiation strategy instead of a low-cost strategy; not capitalizing on economies of scale; and failing to adequately broaden the product line. B) steering a middle course between low-cost, differentiation, and focusing; being slow to respond to stiffening competition; and overexpanding in the face of slowing growth. C) pursuing a low-cost leadership strategy; spending too little on marketing and advertising efforts; and putting too much emphasis on new product R&D and product innovation. D) sacrificing long-term competitive position for short-term profits; outsourcing too many value chain activities to allies and partners, and not pursuing aggressive acquisition of weaker rival firms. E) merging with weaker rather than stronger rivals; failing to pursue product differentiation; and abandoning strategic alliances with outsiders.

B) steering a middle course between low-cost, differentiation, and focusing; being slow to respond to stiffening competition; and overexpanding in the face of slowing growth.

One of the most significant contributions to strategy-making in diversified companies that the 9-cell industry attractiveness/competitive strength matrix provides is A) identifying which businesses have strategies that should be continued, which business have strategies that need fine-tuning, and which businesses have strategies that need major overhaul. B) that businesses having the greatest competitive strength and positioned in the most attractive industries should have the highest priority for corporate resource allocation and that competitively weak businesses in relatively unattractive industries should have the lowest priority and perhaps even be considered for divestiture. C) pinpointing what strategies are most appropriate for businesses positioned in the four corners of the matrix (although the matrix reveals little about the best strategies for businesses positioned in the remainder of the matrix). D) its ability to pinpoint what kind of competitive advantage or disadvantage each business has. E) pinpointing which businesses to keep and which ones to divest.

B) that businesses having the greatest competitive strength and positioned in the most attractive industries should have the highest priority for corporate resource allocation and that competitively weak businesses in relatively unattractive industries should have the lowest priority and perhaps even be considered for divestiture.

The two big drivers of outsourcing are A) increased ability to cut R&D expenses and increased ability to avoid the problems of strategic alliances. B) that outsiders can often perform certain activities better or cheaper and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies). C) a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities. D) the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences. E) that a smaller in-house work force and a low investment in intellectual capital produce cost savings.

B) that outsiders can often perform certain activities better or cheaper and outsourcing allows a firm to focus

A company's value chain consists of A) the activities a company performs in converting its resource weaknesses into resource strengths. B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service and delivering value to customers. C) those activities a company performs that represent "best practices"—only best practice activities are capable of delivering value to customers and thus qualify to be part of a company's value chain. D) the activities that a company performs in developing a distinctive competence. E) the activities that represent a company's competencies, core competencies, distinctive competencies, and competitive capabilities—it is these activities that underpin a company's efforts to create value for customers and shareholders.

B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service and delivering value to customers.

A company's value chain consists of A) the activities a company performs in converting its resource weaknesses into resource strengths. B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service and delivering value to customers—these activities can be grouped into (a) the primary activities that are foremost in creating value for customers and (b) the related support activities that facilitate and enhance the performance of the primary activities. C) those activities a company performs that represent "best practices"—only best practice activities are capable of delivering value to customers and thus qualify to be part of a company's value chain. D) the activities that a company performs in developing a distinctive competence. E) the activities that represent a company's competencies, core competencies, distinctive competencies, and competitive capabilities—it is these activities that underpin a company's efforts to create value for customers and shareholders.

B) the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service and delivering value to customers—these activities can be grouped into (a) the primary activities that are foremost in creating value for customers and (b) the related support activities that facilitate and enhance the performance of the primary activities.

What makes related diversification an attractive strategy is A) the ability to broaden the company's product line. B) the opportunity to convert cross-business strategic fits into competitive advantages over business rivals whose operations don't offer comparable strategic fit benefits. C) the potential for improving the stability of the company's financial performance. D) the ability to serve a broader spectrum of buyer needs. E) the added capability it provides in overcoming the barriers to entering foreign markets.

B) the opportunity to convert cross-business strategic fits into competitive advantages over business rivals whose operations don't offer comparable strategic fit benefits.

A company's realized strategy evolves from one version to the next due to: A) changing management direction because of understanding several appealing strategy alternatives. B) the proactive efforts of company managers to improve the current strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategic maneuvers on the part of rival firms. C) ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy). D) pressures from shareholders to boost profit margins and pay higher dividends. E) the importance of keeping the company's business model fresh and up-to-date.

B) the proactive efforts of company managers to improve the current strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategic maneuvers on the part of rival firms.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is A) the extra attention paid to establishing a distinctive competence. B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C) greater opportunity for brand loyalty. D) their suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor. E) their bold strategic intent of global market leadership via heavy advertising.

B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall market.

Multinational competitors tend to concentrate activities in a limited number of locations when A) prices and competitive conditions are strongly linked across country markets to form a world market. B) there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. C) the risk of fluctuating exchange rates is very high. D) host country governments can be persuaded to erect high tariff barriers to protect the company's operations from foreign competitors and when it is not imperative to be responsive to buyer needs and competitive conditions in each country. E) competitive conditions make it infeasible to employ a profit sanctuary strategy or an export strategy.

B) there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.

In trying to deal with a turbulent, fast-changing market, a company's three strategic options are A) to pursue low-cost, differentiation, or best-cost strategies. B) to react to change, to anticipate change, and/or to try to lead change. C) to be a first-mover, a fast follower, or a slow-mover-whichever is most expedient. D) play offense, play defense, or utilize focus strategies to compete in those market segments where change occurs at a more leisurely pace. E) to pursue short-term profitability, intermediate-term profitability, or long-term profitability.

B) to react to change, to anticipate change, and/or to try to lead change.

In a turbulent, fast-changing industry environment, a company's approach to coping with rapid change should, ideally, A) strive to compete on the basis of low-cost/low-price rather than on the basis of strong product differentiation or best-cost. B) try to lead change with proactive strategic moves while at the same time trying to anticipate and prepare for upcoming changes and being quick to react to unexpected developments. C) be a consistent first-mover or a consistent fast follower or a consistent slow-moverwhichever best fits management's temperaments and shareholder expectations. D) involve pursuing a focused niche strategy aimed at the fastest-growing market segments. E) place strong emphasis on building and strengthening the company's long-term market position rather than worrying excessively about short-term profitability and ROE.

B) try to lead change with proactive strategic moves while at the same time trying to anticipate and prepare for upcoming changes and being quick to react to unexpected developments.

Which one of the following is inaccurate as concerns a distinctive competence? A. A distinctive competence is a competitively important activity that a company performs better than its competitors. B. A distinctive competence is typically less difficult for rivals to copy than a core competence. C. A distinctive competence can be a basis for sustainable competitive advantage. D. A distinctive competence can underpin and add real punch to a company's strategy. E. A distinctive competence gives a company competitively valuable capability that is unmatched by rivals.

B. A distinctive competence is typically less difficult for rivals to copy than a core competence.

A company's strategic plan consists of A. Its objectives and its strategy for achieving them B. A vision of where it is headed, a set of performance targets and a strategy to achieve them C. Its strategy and management's specific, detailed plans for implementing it

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

Which of the following statements is false? A. The higher a company's costs are above those of close rivals, the lmore competitively vulnerable it becomes. B. Because the value chains of rival companies tend to be quite similar, costs outside a company's own value chain do not affect whether it is a cost advantage or disadvantage vis-a-vis key rivals. C.A company's cost competitivenss depends not only on the costs of internally performed value chain activities but also on the costs of activities performed by its suppliers and forward channel allies. D. The stronger a company's financial performance and market position, the more likely it has a well-conceived, well-executed strategy. E. A competence is something a company is good at doing whereas a core competence is a proficiently performed internal activity that is central to a company's strategy and competitivenes.

B. Because the value chains of rival companies tend to be quite similar, costs outside a company's own value chain do not affect whether it is a cost advantage or disadvantage vis-a-vis key rivals.

Which one of the following is not part of conducting a SWOT analysis? A. Identifying a company's resource strengths and competitive capabilities B. Benchmarking the company's resource strengths and competitive capabilities against industry key success factors C. Identifying a company's market opportunities D. Drawing conclusions about the company's overall business situation—what is attractive and what is unattractive about the company's circumstances? E. Translating the results of the analysis into actions for improving the company's strategy and market position

B. Benchmarking the company's resource strengths and competitive capabilities against industry key success factors

In which of the following instances are industry members NOT subject to stronger competitive pressures from substitute products? A. The costs to buyers of switching over to the substitutes are low. B. Buyers are dubious about using substitutes. C. The quality and performance of the substitutes is well-matched to what buyers need to meet their requirements. D. Buyer brand loyalty is weak. E. Substitutes are readily available at competitive prices.

B. Buyers are dubious about using substitutes.

Which of the following is NOT a factor that causes buyer bargaining power to be stronger? A. Some buyers are a threat to integrate backward into the business of sellers and become an important competitor. B. Buyers are small and numerous relative to sellers. C. Buyers have considerable discretion over whether and when they purchase the product. D. Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. E. The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.

B. Buyers are small and numerous relative to sellers.

Perceived value and signaling value are often an important part of a successful differentiation strategy because A. Of the diversity of buyer needs and preferences B. Buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be C. Most buyers are heavily influenced by clever ads that signal value

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

Which of the following can aid industries in identifying key success factors? A. Global distribution capabilities B. Crucial product attributes and service characteristics C. Low distribution costs D. Accurate filling of buyer orders E. Short delivery time capability

B. Crucial product attributes and service characteristics

Management is obligated to monitor new external developments, evaluate the company's progress and make corrective adjustments in order to A. Determine whether the company has a balanced scorecard for judging its performance B. Decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods C. Keep the company's board of directors well-informed about the company's future outlook

B. Decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods

While there are many routes to competitive advantage, they all involve A. Building a brand name image that buyers trust B. Delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match C. Achieving lower costs than rivals and becoming the industry's sales and market share leader D. Finding effective and efficient ways to strengthen the company's competitive assets and to reduce its competitive liabilities. E. Getting in the best strategic group and dominating it.

B. Delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match

Which one of the following is NOT an integral part of driving forces analysis? A. Determining whether forces are acting to cause fundamental changes in industry conditions and/or the industry's competitiveness B. Determining whether forces are acting to cause industry rivals to shift to a different strategic group C. Determining whether forces are acting to strengthen or weaken market demand D. Determining whether forces are acting to make competition more or less intense E. Determining whether forces are acting to raise or lower industry profitability

B. Determining whether forces are acting to cause industry rivals to shift to a different strategic group

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by A. Cutting its price to levels significantly below the prices of rivals B. Either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold C. Going all out to use its cost advantage to capture a dominant share of the market D Spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry -- it can then use this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long-term E Outproducing rivals and thus having more units available to sell

B. Either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold

Business strategy, as distinct from corporate strategy, is chiefly concerned with A. Deciding what new businesses to enter, which existing businesses to get of and which existing business to remain in B. Forging actions and approaches to compete successfully in a particular line of business C. Making sure the strategic intent of a particular business is in step with the company's overall strategic intent and strategy D. Coordinating the competitive approaches of a company's different business units E. What business model to employ in each of the company's different businesses

B. Forging actions and approaches to compete successfully in a particular line of business

A company's biggest vulnerability in employing a best-cost provider strategy is A. Relying too heavily on outsourcing B. Getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies C. Getting trapped in a price war with low-cost leaders

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

In doing SWOT analysis and trying to identify a company's market opportunities, which of the following is not an example of a potential market opportunity that a company may have? A. Serving additional customer groups or market segments B. Growing buyer preferences for substitutes for the industry's product C. Acquiring rival firms or companies with attractive technological expertise or capabilities D. Expanding into new geographic markets E. Openings to win market share away from rivals

B. Growing buyer preferences for substitutes for the industry's product

A company pursuing a low-cost leadership strategy must generally A. Have products with good-to-excellent attributes so that its low prices will provide customers with more value for the money B. Have acceptable quality products that incorporate a good basic design with few frills and offer a limited number of models/styles to select from C. Have a wide selection of products that are of average or better quality

B. Have acceptable quality products that incorporate a good basic design with few frills and offer a limited number of models/styles to select from

In doing SWOT analysis, which one of the following is not an example of a potential resource weakness or competitive deficiency that a company may have? A. Less productive R & D efforts than rivals B. Having a single, unified functional strategy instead of several distinct functional strategies C. Lack of a strong brand image and reputation (as compared to rivals) D. Higher overall unit costs relative to rivals E. Too narrow a product line relative to rivals

B. Having a single, unified functional strategy instead of several distinct functional strategies

The competitive power of a company resource strength is not measured by which one of the following tests? A. Is the resource rare and something rivals lack? B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders? C. Is the resource strength easily trumped by the substitute resources/capabilities of rivals? D. Is the resource strength hard to copy? E. Is the resource strength competitively valuable, having the potential to contribute to a competitive advantage?

B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders?

The best evidence that a company is the industry's low-cost provider is that A. It sells more of its product/service than its key competitors and is the market share leader B. It has lower overall per unit costs for its product/service than other competitors in the industry C. It has lower total operating costs on its income statement than do its competitors

B. It has lower overall per unit costs for its product/service than other competitors in the industry

The objective of competitive strategy is to A. Contend successfully with the industry's 5 competitive forces B. Knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences C. Get the company into the best strategic group and then dominate it

B. Knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences

Which of the following is not something to look for in identifying a company's strategy? A. Actions to respond to changing market conditions or other external factors. B. Management actions to revise the company's financial and strategic performance targets. C. Actions to strengthen competitive capabilities and correct competitive weaknesses. D. Actions to capture emerging market opportunities and defend against external threats to the company's business prospects. E. Actions to gain sales and market share via lower prices, more performance features, more appealing design, or other such actions.

B. Management actions to revise the company's financial and strategic performance targets.

Which of the following is not something a company's strategy is concerned with? A. Management's choices about how to attract and please customers B. Management's choices about how quickly and closely to copy the strategies being used by successful rival companies C. Management's choices about how to grow the business D. Management's choices about how to outcompete rivals E. Management's action plan for conducting operations and improving the company's strategic and financial performance

B. Management's choices about how quickly and closely to copy the strategies being used by successful rival companies

What is the framework that comprises a set of major factors (that vary from country to country) that describe the nature of each country's business environment? A. Porter's five forces model. B. Porter's Diamond of National Competitive Advantage. C. Ricardo's economic rule of comparative advantage. D. International Business Agenda for Global Environment (IBAGE). E. All of these

B. Porter's Diamond of National Competitive Advantage.

Factors that tend to result in weak rivalry among competing sellers include A. Low buyer switching costs and low barriers to entry B. Rapid growth in buyer demand, high buyer costs to switch brands and so many industry rivals that any one company's actions have little impact on rivals' businesses C. Weakly differentiated products among rival sellers

B. Rapid growth in buyer demand, high buyer costs to switch brands and so many industry rivals that any one company's actions have little impact on rivals' businesses

Which of the following is not a component of evaluating a company's resources and competitive position? A. Evaluating how well the present strategy is working B. Scanning the environment to determine a company's best and most profitable customers C. Assessing whether the company's costs and prices are competitive D. Evaluating whether the company is competitively stronger or weaker than key rivals E. Pinpointing what strategic issues and problems merit front-burner managerial attention

B. Scanning the environment to determine a company's best and most profitable customers

Which of the following is the most unlikely element of a "think global, act global" approach to crafting a global strategy? A. Minimal responsiveness to buyer tastes, cultural traditions, and market conditions in each country market B. Scattering plants across many countries, with each plant producing product versions for local area markets C. Utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide D. Requiring local managers in host countries to stick close to the chosen global strategy E. Selling much the same products under same brand names worldwide

B. Scattering plants across many countries, with each plant producing product versions for local area markets

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is not accurate? A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to. D. The advantages of manufacturing goods in a particular country can be undermined when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.

Which one of the following statements about pursuing a broad differentiation strategy is false? A. Any differentiating feature that works well is a magnet for imitators B. The best opportunities for achieving strong product differentiation are in the production technology and marketing portions of the value chain C. A low-cost provider strategy can defeat a broad differentiation strategy when buyers are satisfied with a basic product and don't think "extra" attributes are worth paying a higher price

B. The best opportunities for achieving strong product differentiation are in the production technology and marketing portions of the value chain

The most powerful of the five competitive forces is usually A. The competitive pressures that stem from the ready availability of attractively-priced substitute products B. The competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry C. The benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates

B. The competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry

Which of the following factors is NOT a relevant consideration in determining the strength of buyer bargaining power? A. The relationship between the buyer market and seller market B. The degree to which the seller is a manufacturer of goods and services in substantial quantities C. The degree to which buyers pose a credible threat to integrate backward into the product market of sellers D. The degree to which buyers are well-informed about a seller's products, prices and costs E. The degree to which industry goods are standardized and undifferentiated

B. The degree to which the seller is a manufacturer of goods and services in substantial quantities

) In analyzing the strength of competition among rival firms, an important consideration is A. The potential for buyers to exercise strong bargaining power B. The diversity of competitors in terms of visions, strategic intents, objectives, strategies, resources and countries of origin C. The number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies

B. The diversity of competitors in terms of visions, strategic intents, objectives, strategies, resources and countries of origin

Which of the following is not an example of a threat to a company's future profitability? A. Likely entry of potent new competitors B. The lack of a well-known brand name with which to attract new customers and help retain existing customers C. Shifts in buyer needs and tastes away from the industry's product D. Costly new regulatory requirements E. Growing bargaining power on the part of the company's major customers and major suppliers

B. The lack of a well-known brand name with which to attract new customers and help retain existing customers

Which of the following is not a typical reason for a company to expand into the markets of foreign countries? A. To gain access to new customers B. To strengthen its capability to employ offensive strategies, especially those that involve preemptive strikes C. To achieve lower costs and enhance the firm's competitiveness D. To capitalize on company competencies and capabilities E. To spread business risk across a wider geographic market base

B. To strengthen its capability to employ offensive strategies, especially those that involve preemptive strikes

The marketing emphasis of a company pursuing a broad differentiation strategy usually is to A. Underprice rival brands with comparable features B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features C. Out-advertise rivals and make frequent use of discount coupons

B. Tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features

Which of the following is not one of the central questions in evaluating a company's business prospects? A. What is the company's present situation? B. What are the key products or service attributes demanded by consumers? C. Where does the company need to go from here? D. How should it get there? E. All of these are pertinent in evaluating a company's business prospects.

B. What are the key products or service attributes

In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage? A. When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others B. When a company has competitively superior patented technology that it can license to foreign partners C. When there is a steep learning or experience curve associated with performing an activity in a single location D. When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages E. When there are significant scale economies in performing the activity

B. When a company has competitively superior patented technology that it can license to foreign partners

In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage? A. When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others B. When a company has competitively superior patented technology that it can license to foreign partners C. When there is a steep learning or experience curve associated with performing an activity in a single location D. When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages E. When there are significant scale economies in performing the activity

B. When a company has competitively superior patented technology that it can license to foreign partners

Which is not one of the four conditions that make an internal start-up strategy appealing? A. When creating an internal start-up is cheaper than making an acquisition B. When adding new production capacity will adversely impact the supply-demand balance in the local market C. Having the ability to gain good distribution access D. Having scale economies to compete against local rivals E. All of these

B. When adding new production capacity will adversely impact the supply-demand balance in the local market

Which one of the following does NOT intensify the competitive pressures associated with the threat of entry? A. When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers B. When industry members are struggling to earn good profits C. When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly D. When existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence E. When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

B. When industry members are struggling to earn good profits

Which one of the following does not intensify the competitive pressures associated with the threat of entry? A. When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers B. When industry members are struggling to earn good profits C. When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly

B. When industry members are struggling to earn good profits

Which one of the following is not something that can be learned from doing a competitive strength assessment? A. The factors on which a company is competitively strongest and weakest vis-à-vis key rivals B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain C. Which of the rated companies is competitively strongest and what size competitive advantage it enjoys D. Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (with the size of the advantage/disadvantage being indicated by the differences among the companies' competitive strength scores) E. Which rival company is competitively weakest and the areas where it is most vulnerable to competitive attack

B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain

Which one of the following is not a reliable measure of how well a company's current strategy is working? A. Whether the company's sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product C. The firm's image and reputation with its customers D. Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals E. How well the firm stacks up against rivals on technology, product innovation, customer service, product quality, price, speed in getting newly developed products to market, and other relevant factors on which buyers base their choice of which brand to purchase

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

Which of the following factors is not a relevant consideration in determining the strength of buyer bargaining power? A. Whether winning the business of prestigious customers gives a seller important market exposure and heightens its brand name B. Whether the seller is a manufacturer or a wholesaler/distributor C. Whether buyers pose a major threat to integrate backward into the product market of sellers D. Whether sellers' products are weakly differentiated, making it easy for buyers to switch to competing brands E. Whether collaborative partnerships and alliances between particular sellers and buyers put rivals lacking such collaborative relationships at a competitive disadvantage

B. Whether the seller is a manufacturer or a wholesaler/distributor

Which of the following statements regarding multidomestic competition is false? A. One of the features of multidomestic competition is that buyers in different countries are attracted to different product attributes. B. With multidomestic competition, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets. C. One of the features of multidomestic competition is that industry conditions and competitive forces in each national market differ in important respects. D. One of the features of multidomestic competition is that the mix of competitors in each country market varies from country to country. E. With multidomestic competition, rivals battle for national championships and winning in one country market does not necessarily signal the ability to fare well in other countries.

B. With multidomestic competition, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.

When a company has real proficiency in performing a competitively important value chain activity, it is said to have A. a distinctive competence. B. a core competence. C. a key value chain proficiency. D. a competitive advantage over rivals. E. a company competence.

B. a core competence.

The extent to which firms are meeting objectives (good performance) suggests they: A. are likely to prosper in the future. B. are likely to continue their present strategy with only minor fine-tuning. C. are virtually certain to make fresh strategic moves. D. recognize "status quo" as the best course of action to adopt. E. realize refocusing will ensure competitive gains.

B. are likely to continue their present strategy with only minor fine-tuning.

Resource and capability analysis is designed to A. ascertain the internal market place of non-distinct divisions of the company. B. ascertain which of a company's resources and capabilities are competitively valuable. C. stimulate demand for a product. D. ascertain to what extent a competitor can sustain a competitive advantage. E. stimulate economic growth for companies within the industry.

B. ascertain which of a company's resources and capabilities are competitively valuable.

The value chains of rival companies A. tend to be essentially the same—any differences are typically minor. B. can differ substantially, reflecting differences in the evolution of each company's own particular business, differences in strategy, and differences in the approaches being used to execute strategy. C. are fairly similar or fairly different, depending on how many activities are performed internally and how many are outsourced. D. can be either fairly similar or fairly different, depending on the extent to which each company's primary and support activities are comprised of fixed cost activities and variable cost activities. E. are fairly similar except when rival companies have quite different product designs.

B. can differ substantially, reflecting differences in the evolution of each company's own particular business, differences in strategy, and differences in the approaches being used to execute strategy.

Multidomestic competition refers to situations where A. no domestic companies have king-sized market shares and each national market has many competitors. B. competition in one national market is independent of competition in other national markets and, as a consequence, there is strictly speaking no "international or world market." C. domestic rivals pursue focused or market niche strategies and do not compete internationally. D. domestic companies have a competitive disadvantage in competing with foreign rivals that operate in many different countries. E. most competitors operate in more than two country markets but rarely in more than 20.

B. competition in one national market is independent of competition in other national markets and, as a consequence, there is strictly speaking no "international or world market."

To use location to build competitive advantage when competing in both domestic and foreign markets, a company must A. scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers. B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities. C. concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies. D. disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments. E. avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.

B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

To use location to build competitive advantage when competing in both domestic and foreign markets, a company must A. scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers. B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities. C. concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies. D. disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments. E. avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.

B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

In identifying an industry's key success factors, strategists should: A. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. C. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. D. consider what it will take to overtake the company with the industry's overall best strategy. E. focus their attention on what it will take to capitalize on the impacts of the industry's driving forces.

B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage.

A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when A. a big majority of the company's rivals are pursuing localized multidomestic strategies. B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. C. plants need to be scattered across many countries to avoid high shipping costs. D. market growth rates vary considerably from country to country. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

A "think global, act global" approach to strategy-making is preferable to a "think local, act local" approach when A. a big majority of the company's rivals are pursuing localized multidomestic strategies. B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. C. plants need to be scattered across many countries to avoid high shipping costs. D. market growth rates vary considerably from country to country. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs is an example of A. a profit sanctuary. B. cross-border coordination. C. an international strategic alliance. D. cross-market subsidization. E. cross-market differences in cultural, demographic, and market conditions.

B. cross-border coordination.

As a rule, the collective impact of competitive pressures associated with the five competitive forces: A. determines the strength of the industry's driving forces. B. determines the extent of the competitive pressure on industry profitability. C. means that fewer companies can achieve a competitive advantage via anything other than being the industry's low-cost leader. D. means there will be a larger number of competitive advantage opportunities for industry members. E. means there will be a greater number of industry key success factors.

B. determines the extent of the competitive pressure on industry profitability.

A rival's strategic moves and countermoves are both: A. indicators and a strategic sign for the visualization of strategic mapping techniques. B. enabled and constrained by the set of capabilities they have at hand and thus serve as a strong signal of future strategic actions. C. measured by the extent to which they can unveil strategic and financial objectives. D. responses to the broader definition of the industry opportunities. E. All of these.

B. enabled and constrained by the set of capabilities they have at hand and thus serve as a strong signal of future strategic actions.

Information regarding the four components of the framework for Competitor Analysis can NOT: A. be gleaned from company press releases. B. gathered from rivals internal proprietary strategic information. C. assembled from website data (especially management reports and presentations given to financial analysts). D. observed from public information (especially annual reports and 10K financial reports). E. garnered from competitive intelligent departments assigned the task to monitor rivals.

B. gathered from rivals internal proprietary strategic information.

Evaluating the industry's driving forces, as a whole, requires understanding their influence on the attractiveness of industry environment and: A. generally are determined by the sizes of strategic groups and the power of rival firms' competitive strategies. B. generally are defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years. C. frequently cause a reduction in the bargaining power of buyers. D. normally are triggered by movement in the economy, higher or lower interest rates, or important new strategic alliances. E. can be triggered by such factors as growing competitive pressures from substitute products, and the efforts of rival firms to employ new or different offensive strategies.

B. generally are defined in ways that will strengthen or weaken market demand, competition, and industry profitability in future years.

A "think-local, act local" multidomestic strategy entails A. a narrow product line aimed at serving buyers in the same segments of country markets worldwide. B. giving local managers considerable strategy-making latitude and often producing different product versions for different countries. C. aggressive efforts to locate facilities in those country markets which have superior resources. D. pursuing strong product differentiation and competing in many buyer segments. E. extensive efforts to transfer a company's competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.

B. giving local managers considerable strategy-making latitude and often producing different product versions for different countries.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include A. being particularly well suited to the international expansion efforts of companies with global strategies. B. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. C. helping build brand awareness in international markets D. being well suited to companies who employ cross-market subsidization. E. gaining support from local governments in the form of subsidies and meeting local content requirements.

B. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.

A country's business climate is not a function of the political and economic risk factors, such as: A. instability or weaknesses inherent with the national government. B. host-government hostility toward allowing foreign businesses market entry, often requiring local produced parts and components to be included in manufacturing, allowing for ease of funds transfers from the host country, and often requiring local ownership. C. Stability of country's monetary system. D. Lack of property rights protections and compliance with local environmental regulation. E. All of these.

B. host-government hostility toward allowing foreign businesses market entry, often requiring local produced parts and components to be included in manufacturing, allowing for ease of funds transfers from the host country, and often requiring local ownership.

The competitive power of a company's core competence or distinctive competence depends on A. whether it helps differentiate a company's product offering from the product offerings of rival firms. B. how hard it is to copy and how easily it can be trumped by substitute resource strengths and competitive capabilities of rivals. C. whether customers are aware of the competence and view the competence positively enough to boost the company's brand name reputation. D. whether the competence is one of the industry's key success factors. E. whether the competence is technology-based or based on superior marketing know-how.

B. how hard it is to copy and how easily it can be trumped by substitute resource strengths and competitive capabilities of rivals.

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world A. is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real. B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real. E. is unaffected by changes in the valuation of foreign currencies against the Brazilian real—all that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.

Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because: A. it identifies who the industry's current market share leaders are. B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence about what market maneuvers to expect from its rivals. C. good scouting reports help identify which rival is in which strategic group. D. it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. E. it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.

B. it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence about what market maneuvers to expect from its rivals.

A company's strategy evolves from one version to the next because of A. changing management conclusions about which of several appealing strategy alternatives is actually best. B. management's ongoing efforts to fine-tune the strategy and to adjust certain strategy elements in response to new learning and unfolding events. C. ongoing turnover in the managerial and executive ranks (new managers often decide to shift to a different strategy). D. pressures from shareholders to boost profit margins and pay higher dividends. E. the importance of keeping the company's business model fresh and up-to-date.

B. management's ongoing efforts to fine-tune the strategy and to adjust certain strategy elements in response to new learning and unfolding events.

The advantages of using an export strategy to build a customer base in foreign markets include A. being able to minimize shipping costs, avoid tariffs, and curb the effects of fluctuating exchange rates. B. minimizing capital requirements and involvement in foreign markets. C. being cheaper and more cost effective than licensing and franchising. D. being cheaper and more cost effective than a multicountry strategy. E. facilitating the establishment of profit sanctuaries in foreign countries and being more suited to accommodating local buyer tastes than a global strategy.

B. minimizing capital requirements and involvement in foreign markets.

Advantages of using an export strategy to build a customer base in foreign markets include A. being able to minimize shipping costs, avoid tariffs, and curb the effects of fluctuating exchange rates. B. minimizing risk and capital requirements. C. being cheaper and more cost effective than licensing and franchising. D. being cheaper and more cost effective than a multicountry strategy. E. being more suited to accommodating local buyer tastes and host government regulations than a global strategy.

B. minimizing risk and capital requirements.

The lower the price of product substitutes, the higher their quality and performance and the lower the user's switching costs, the A. harder it is for the sellers of attractive substitutes to lure buyers to their offering. B. more intense the competitive pressures posed by substitute products. C. less intense the competitive pressures posed by substitute products. D. greater rival sellers experience strong bargaining power from both suppliers and influential customers. E. less rival sellers experience weak bargaining power from both suppliers and influential customers.

B. more intense the competitive pressures posed by substitute products.

Quantitative measures of a company's competitive strength A. signal which competitor has the most distinctive competencies and which competitor has the fewest. B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival. C. reveal which competitors are in the best and worst strategic groups. D. show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities. E. pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces.

B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival.

Doing a competitive strength assessment entails A. determining whether a company has a cost-effective value chain. B. ranking the company against major rivals on each of the important factors that determine market success and ascertaining whether the company has a net competitive advantage or disadvantage versus major rivals. C. identifying a company's core competencies and distinctive competencies (if any). D. analyzing whether a company is well positioned to gain market share and be the industry's profit leader. E. developing quantitative measures of a company's chances for future profitability.

B. ranking the company against major rivals on each of the important factors that determine market success and ascertaining whether the company has a net competitive advantage or disadvantage versus major rivals.

Factors that cause the rivalry among competing sellers to be weaker include: A. low buyer switching costs and rival sellers that are relatively equal in size and capability. B. rapid growth in buyer demand and high buyer switching costs. C. few industry rivals, causing any one company's actions to be easily anticipated and countered by its rivals. D. low barriers to entry and weakly differentiated products among rival sellers. E. slow growth in buyer demand and strongly differentiated products.

B. rapid growth in buyer demand and high buyer switching costs.

Factors that tend to result in weak rivalry among competing sellers include: A. less costly buyer switching costs and when low exit-barriers exist keep unprofitable firms from leaving the industry. B. rapid growth in buyer demand, high buyer costs to switch brands, and more strongly differentiated products. C. less strongly differentiated products among rival sellers. D. rivals that are quite diverse in terms of their strategies, objectives, and countries of origin. E. conditions where outsiders have recently acquired weak competitors and are challenged in migrating them into major contenders.

B. rapid growth in buyer demand, high buyer costs to switch brands, and more strongly differentiated products.

A company's strategy is increasingly effective the more it can match the company strategy to competitive conditions, so the firm can: A. pursue avenues that expose the firm to as many of the different competitive pressures as possible. B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces. C. pursue ways to identify and complement the five forces contradictions and inferences to attract competitive growth opportunities. D. pursue avenues that promote strategic thinking about how to contest competitor strengths and weaknesses and to create a checklist of potential profitability preferences. E. None of these.

B. shift the competitive battle in favor of the firm by altering the underlying factors driving the five forces.

SWOT analysis is a powerful tool for A. gauging whether a company has a cost competitive value chain. B. sizing up a company's resource capabilities and deficiencies, its market opportunities, and the external threats to its future well-being. C. evaluating whether a company is in the most appropriate strategic group. D. determining a company's competitive strength vis-à-vis close rivals. E. identifying the market segments in which a company is strongly positioned and weakly positioned.

B. sizing up a company's resource capabilities and deficiencies, its market opportunities, and the external threats to its future well-being.

Not all buyers of an industry's product have equal degrees of bargaining power with sellers, because: A. sellers in an industry provide similar products and generally their cost structures are different because of competitive advantages in their operation. B. some sellers may be less sensitive than others to price, quality, or service differences. C. along the various stages of the value chain sellers are conducive to earning attractive profits. D. the industry is a highly cohesive structure with limited fragmentation and few industry members. E. All of these.

B. some sellers may be less sensitive than others to price, quality, or service differences.

A company that does a first-rate job of managing its value chain activities relative to competitors A. is likely to have more distinctive competencies than rivals. B. stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost. C. is almost certainly going to have a longer and more profitable value chain. D. usually has strong proficiencies in activity-based costing and benchmarking. E. usually has the fewest primary activities and the lowest costs in the industry.

B. stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost.

The concept of strategic groups is relevant to industry and competitive analysis because: A. firms in the same strategic groups are rarely close competitors—a firm's closest competitors are usually in distant strategic groups. B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors. C. competition grows in intensity as the number and diversity of the strategic groups in an industry increases. D. the profit potential of firms in the same strategic group is usually very similar. E. competitive pressures tend to be weaker within strategic groups than across strategic groups.

B. strategic group maps help identify how each competing firm is positioned and the relationship to their closest competitors.

Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because A. without a precise fix on what problems/issues a company confronts, managers cannot know what the industry's key success factors are. B. the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook. C. without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark. D. the "worry list" helps company managers clarify their thinking about how best to modify the company's value chain. E. these issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue.

B. the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook.

The most powerful of the five competitive forces is USUALLY: A. the competitive pressures that stem from the ready availability of attractively priced substitute products. B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. C. the benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates. D. the competitive pressures associated with the potential entry of new competitors. E. the bargaining power and leverage that large customers are able to exercise.

B. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry.

What makes the marketplace a competitive battlefield is: A. the race of industry members to build strong defenses against the industry's driving forces. B. the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals. C. the ongoing race among rival sellers to have the highest-quality product. D. the ongoing efforts of industry members to introduce new and improved products/services at a faster rate than their rivals. E. the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits.

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

In analyzing the strength of competition among rival firms, an important consideration is: A. the potential for buyers to exercise strong bargaining power. B. the diversity of competitors in terms of long-term direction objectives, strategies, and countries of origin. C. the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies. D. the extent to which some rivals have more than two competitively valuable competencies or capabilities. E .whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.

B. the diversity of competitors in terms of long-term direction objectives, strategies, and countries of origin.

Whether buyer-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of: A. the speed with which general economic conditions and interest rates are changing. B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members. C. how many buyers purchase all of their requirements from a single seller versus how many purchase from several sellers. D. the number of buyers versus the number of sellers. E. whether industry members are spending more or less on advertising.

B. the extent to which buyers can exercise enough bargaining power to influence the conditions of sale in their favor and whether strategic partnerships between certain industry members can adversely affect other industry members.

As a rule, the stronger the collective impact of competitive pressures associated with the five competitive forces, A. the stronger are the industry's driving forces. B. the lower the combined profitability of industry members. C. the fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader. D. the larger the number of competitive advantage opportunities for industry members. E. the greater the number of industry key success factors.

B. the lower the combined profitability of industry members.

In global competition A. the leading companies compete for having the biggest share of the world market, but only occasionally compete head-to-head in different countries. B. the markets in various countries are part of the world market and competitive conditions across country markets are strongly linked. C. a company's overall market strength is the sum of its market shares in each country market where it has a presence. D. the industry leaders are foreign companies; domestic companies are relegated to runner-up status. E. a firm's overall competitive advantage is determined by the size of the competitive advantage it has in each of its profit sanctuaries.

B. the markets in various countries are part of the world market and competitive conditions across country markets are strongly linked.

A company's value chain identifies A. the steps it goes through to convert its net income into value for shareholders. B. the primary activities it performs in creating value for its customers and the related support activities. C. the series of steps it takes to get a product from the raw materials stage into the hands of end-users. D. the activities it performs in transforming its competencies into distinctive competencies. E. the competencies and competitive capabilities that underpin its efforts to create value for customers and shareholders.

B. the primary activities it performs in creating value for its customers and the related support activities.

A company's resource strengths are important because A. they pave the way for establishing a low-cost advantage over rivals. B. they represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace. C. they provide extra muscle in helping lengthen the company's value chain. D. they give it competitive protection against the industry's driving forces. E. they provide extra organizational muscle in turning a core competence into a key success factor.

B. they represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace.

Companies that compete on an international basis have a competitive advantage over their purely domestic rivals A. to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success. B. to benefit from coordinating activities across different countries' domains. C. solely for the benefit of their shareholders. D. that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid. E. All of these.

B. to benefit from coordinating activities across different countries' domains.

A resource analysis A. is often based on cross-department combinations of intellectual capital and expertise. B. uses a company's valuable and rare resource strengths and competitive capabilities to deliver value to customers that rivals have difficulty matching. C. is typically based on a stand-alone resource strength such as technological expertise. D. refers to a company's most efficiently executed value-chain activity. E. uses industry key success factors to provide a company with a core competence that rivals cannot effectively imitate.

B. uses a company's valuable and rare resource strengths and competitive capabilities to deliver value to customers that rivals have difficulty matching.

Just how strong the competitive pressures are from substitute products depends on: A. whether the substitutes are strongly or weakly differentiated and whether the relative frequency of buyer purchases is high or low. B. whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes. C. whether the available substitutes are products or services. D. whether the producers of substitutes have ample budgets for new product R&D. E. the speed with which buyer needs and expectations are changing.

B. whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.

One of the most telling signs of whether a company's market position is strong or precarious is A. whether its product is strongly or weakly differentiated from rivals. B. whether its prices and costs are competitive with those of key rivals. C. whether it has a lower stock price than key rivals. D. the opinions of buyers regarding which seller has the best product quality and customer service. E. whether it is in a bigger or smaller strategic group than its closest rivals.

B. whether its prices and costs are competitive with those of key rivals.

When a company operates in the markets of two or more different countries, its foremost strategic issue is A. whether to use strategic alliances to help defeat its rivals. B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries. C. whether to maintain a national (one-country) manufacturing base and export goods to the other countries. D. choosing which foreign companies to team up with via strategic alliances or joint ventures. E. whether to test the waters with an export strategy before committing to some other competitive approach.

B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.

When a Best-Cost Provider Strategy Works Best

Best-cost provider needs to position itself near middle of the market with either a medium quality product at a below average price OR high quality product at an average or slightly higher price Create a strong value proposition, when compared to others on the scale

Capturing the Cross-Business Strategic-Fit Benefits of Related Diversification

Builds more shareholder value than owning a stock portfolio Only possible via a strategy of related diversification Yields value in the application of specialized resources and capabilities Requires that management take internal actions to realize them

As per Figure 2.2, the strategy-making hierarchy in a single business company consists of

Business strategy, functional strategies, and operating strategies, whereas in a diversified company it consists of corporate strategy, business strategies (one for each business the diversified company is in), functional strategies, and operating strategies.

A company's business model A. Details the ethical and socially responsible nature of the company's strategy B. Is management's storyline for how the strategy will result in achieving the targeted strategic objectives C. Zeros in on how and why the business will generate revenues sufficient to cover costs and produce attractive profits and return on investment D. Explains how it intends to achieve high profit margins E. Sets forth the actions and approaches that it will employ to achieve market leadership

C

A company's strategic vision A. Is management's story line for how it plans to implement and execute a profitable business model B. Sets forth what business the company is presently in and why it uses particular operating practices in trying to please customers C. Delineates management's aspirations for the business, providing a panoramic view of "where we are going" and a convincing rationale for why this makes good business sense D. Defines "who we are and what we do." E. Spells out a company's strategic intent, its strategic and financial objectives and the business approaches and operating practices that will underpin its efforts to achieve sustainable competitive advantage

C

A company's strategy and its quest for competitive advantage are tightly connected because A. Without a competitive advantage a company cannot become the industry leader B. Without a competitive advantage a company cannot have a profitable business model C. 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 D. A competitive advantage is what enables a company to achieve its strategic objectives E. How a company goes about trying to please customers and outcompete rivals is what enables senior managers choose an appropriate strategic vision for the company

C

A creative, distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage A. Is a reliable indicator that the company has a profitable business model B. Is every company's strategic vision C. Is a company's most reliable ticket to above-average profitability—indeed, the tight connection between competitive advantage and profitability means that the quest for sustainable competitive advantage always ranks center stage in crafting a strategy D. Signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives E. Is the best indicator that the company's strategy and business model are well-matched and properly synchronized

C

A strategic group A. Consists of those industry members that are growing at about the same rate and have similar product line breadth B. Includes all rival firms having comparable profitability C. Is a cluster of industry rivals that have similar competitive approaches and market positions

C

An industry's key success factors A. Are a function of market share, entry barriers, economies of scale, degree of vertical integration and industry profitability B. Vary according to whether an industry has high or low long-term attractiveness C. Can be determined from an analysis of an industry's dominant economic characteristics, what competition is like, the impacts of the driving forces, the comparative market positions of industry members and the likely next moves of industry rivals

C

Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when A. Virtually all buyers have strong brand attachments and are highly brand loyal B. Demand for the product is growing rapidly C. One or more rival sellers form mutually advantageous partnerships with important or prestigious buyers such that rivals lacking such partnerships are placed at a competitive disadvantage

C

Competitive pressures stemming from buyer bargaining power tend to be weaker when A. The number of buyers is small, such that each customer's business tends to be particularly important to a seller B. Buyer demand is growing slowly or maybe even declining C. The costs incurred by buyers in switching to competing brands or to substitute products are relatively high

C

Competitive pressures stemming from the threat of entry are weaker when A. There are fewer than 20 potential entry candidates and more than 10 firms already in the industry B. There are more than 3 entry barriers C. The industry outlook is risky or uncertain

C

In mapping strategic groups A. One strategic variable and one financial variable should be used as axes for the map B. It is important for the variables used as axes to be highly correlated C. The best variables to use as axes for the map are those that differentiate how rivals have positioned themselves in the marketplace

C

Increasing globalization of the industry can be a driving force because A. The products of foreign competitors are nearly always cheaper or of better quality than those of domestic companies B. Foreign producers typically have lower costs, greater technological expertise and more product innovation capabilities than domestic firms C. It tends to increase rivalry among industry members and often shifts the pattern of competition among an industry's major players, favoring some and disadvantaging others

C

Strategic group mapping is a technique for displaying A. How many rivals are pursuing each type of strategy B. Which companies have the biggest market share and who the industry leader really is C. The different market or competitive positions that rival firms occupy in an industry and identifying each rival's closest competitors

C

The "driving forces" in an industry A. Are usually triggered by changing technology or stronger learning/experience curve effects B. Usually are spawned by growing demand for the product, the outbreak of price-cutting and big reductions in entry barriers C. Are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions

C

The strategy-making, strategy-executing process A. Is usually delegated to members of a company's board of directors so as not to infringe on the time of busy executives B. Includes establishing a company's mission, developing a business model aimed at making the company an industry leader and crafting a strategy to implement and execute the business model C. Embraces the tasks of developing a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy and then monitoring developments and initiating corrective adjustments in light of experience, changing conditions, new ideas and new opportunities D. Is principally concerned with sizing up an organization's internal and external situation, so as to be prepared for the challenge of developing a sound business model E. Is primarily the responsibility of top executives and the board of directors; very few managers below this level are involved

C

Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? A. Changes in who buys the product and how they use it, changes in the long-term industry growth rate and changes in cost and efficiency B. Entry or exit of major firms, product innovation and marketing innovation C. Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration and growing buyer-seller collaboration

C

Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak? A. Whether certain customers offer sellers important market exposure or prestige B. Whether customers are relatively well informed about sellers' products, prices and costs C. Whether buyer needs and expectations are changing rapidly or slowly

C

Which of the following is not a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage B. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority or unusually good value for the money C. Striving to be more profitable than rivals and aiming for a competitive edge based on bigger profit margins D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche E. Developing expertise and resource strengths that give the company competitive capabilities that rivals can't easily imitate or trump with capabilities of their own

C

Which of the following is not an appropriate guideline for developing a strategic group map for a given industry? A. The variables chosen as axes for the map should indicate big differences in how rivals have positioned themselves to compete in the marketplace B. The variables chosen as axes for the map can be either quantitative or qualitative C. The variables chosen as axes for the map should be highly correlated

C

Which of the following is not one of the basic reasons that a company's strategy evolves over time? A. An ongoing need to abandon those strategy features that are no longer working well B. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy C. The need on the part of company managers to make regular adjustments in the company's strategic vision and also to initiate fresh strategic actions so as to keep employees from becoming bored with having to execute the same strategy month after month D. The need to respond to the actions and competitive moves of rival firms E. The need to keep strategy in step with changing market conditions and changing customer needs and expectations

C

Which of the following is the best example of a well-stated strategic objective? A. Increase revenues by more than the industry average B. Be among the top 5 five companies in the industry on customer service C. Overtake key competitors on product quality within three years D. Improve manufacturing performance by 5% within 12 months E. Obtain 150 new customers during the current fiscal year

C

Which one of the following is not a factor in causing supplier bargaining power to be relatively strong? A. The inputs needed from suppliers are in short supply B. Suppliers are a strong threat to integrate forward into the business of industry members C. The input being supplied is a commodity

C

Which of the following is not an accurate characterization of a strategy to be the industry's overall low-cost provider? A) A low-cost provider strategy works well in market situations where many buyers are price-sensitive and price competition among rival sellers is especially vigorous. B) A low-cost provider strategy entails pursuing cost-saving initiatives that are difficult for rivals to copy or match. C) A low-cost provider strategy entails making a product with minimal features so as to keeps cost per unit as low as absolutely possible. D) A low-cost provider strategy is quite suitable for situations where there are few ways to achieve product differentiation that have value to buyers, where most buyers utilize the product in the same ways, and buyers incur low costs in switching their purchases from one seller to another. E) A low-cost provider strategy is a particularly powerful strategy when the industry's product is essentially the same from rival to rival, many buyers are price sensitive, and industry newcomers use low introductory prices to attract buyers and build a customer base.

C) A low-cost provider strategy entails making a product with minimal features so as to keeps cost per unit as low as absolutely possible.

Which of the following is not a part of checking a diversified company's business units for cross-business competitive advantage potential? A) Ascertaining the extent to which sister business units have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs B) Ascertaining the extent to which sister business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another C) Ascertaining the extent to which sister business units are making maximum use of the parent company's competitive advantages D) Ascertaining the extent to which sister business units have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources E) Ascertaining the extent to which sister business units present opportunities to share use of a well-respected brand name

C) Ascertaining the extent to which sister business units are making maximum use of the parent company's competitive advantages

Which one of the following statements about merger and acquisition strategies is true? A) Merger and acquisition strategies are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. B) Merger and acquisition strategies tend to be far more successful that forming strategic alliances and cooperative partnerships with other companies. C) Despite many successes, mergers and acquisitions do not always produce the hoped-for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may never materialize at all. D) Mergers and acquisition strategies are a very high-risk strategy because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E) Merger and acquisition strategies are one of the best ways for helping a company strengthen its brand image.

C) Despite many successes, mergers and acquisitions do not always produce the hoped-for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may never materialize at all.

Which one of the following is not part of the task of checking a diversified company's business line-up for adequate resource fit? A) Determining whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses B) Determining whether recently acquired businesses are acting to strengthen a company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thinly across its businesses C) Determining whether some business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another D) Determining whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating E) Determining whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into

C) Determining whether some business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another

Which one of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A) Domestic companies trying to combat competition from foreign imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made. B) Fluctuating foreign exchange rates greatly reduce the risks of competing in foreign markets—the big problem occurs when exchange rates are fixed at unreasonably low levels. C) Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made. D) Manufacturers that are exporting much of what they produce are benefited when their country's currency grows stronger relative to the currencies of the countries that the goods are being exported to. E) If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25 per euro, then it is correct to say that the U.S. dollar has grown stronger.

C) Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Which of the following is not usually a promising option for competing in a fragmented industry? A) Specializing by product type or by customer type B) Becoming a low-cost operator C) Employing a best-cost provider strategy aimed at giving buyers more value for their money and trying to appeal to a broader customer base D) Focusing on a limited geographic area E) Constructing and operating "formula" facilities at many different locations

C) Employing a best-cost provider strategy aimed at giving buyers more value for their money and trying

Competitive pressures associated with the threat of new entrants grow stronger when A) buyer demand is growing slowly and the pool of entry candidates is small. B) the number of customers for the industry's product is large and the product offerings of rival sellers are strongly differentiated. C) Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence yet. D) there are not many competitors already in the industry, their products are highly differentiated, and buyers are brand loyal. E) a small percentage of companies in the industry are currently earning above-average profits, entry barriers are high, and buyers are not brand loyal.

C) Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence yet.

Which of the following is not likely to command much strategic attention from the top executives of companies pursuing an unrelated diversification strategy? A) Acquiring new businesses with attractive profit prospects B) Whether existing businesses should be retained or divested based on their ability to meet corporate targets for profit and returns on investment C) Looking for new businesses that present good opportunities for achieving economies of scope D) Identifying acquisition candidates that are financially distressed, can be acquired at a bargain price, and whose operations can, in management's opinion, be turned around with the aid of the parent company's financial resources and managerial know-how E) Identifying opportunities to acquire new businesses in industries with bright growth prospects

C) Looking for new businesses that present good opportunities for achieving economies of scope

Which of the following is not an aspect of a company's strategy? A) Striving for a competitive edge over rivals B) How to achieve targeted objectives C) Making a profit D) How to respond to changing market conditions E) How to manage each functional piece of the business and develop needed organizational capabilities

C) Making a profit

Which of the following is not one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits? A) Picking a good partner B) Recognizing that the alliance must benefit both sides C) Minimizing the amount of resources that the partners commit to the alliance D) Ensuring that both parties live up to their commitments E) Structuring the decision-making process so that actions can be taken swiftly when needed

C) Minimizing the amount of resources that the partners commit to the alliance

Which one of the following statements does not represent one of the typical fundamental changes in an industry as it approaches maturity? A) Industry profitability falls temporarily or permanently B) International competition increases C) New scale economies develop and overall costs per unit produced and sold drop significantly D) Increased competitive emphasis is placed on lowering costs and improving service E) Firms encounter growing difficulty in coming up with new product innovations and developing new uses and applications for the product

C) New scale economies develop and overall costs per unit produced and sold drop significantly

Companies competing in rapid growth industries are not well-advised to consider which one of the following strategy elements in crafting their strategy? A) Expanding the company's geographic coverage B) Gaining access to additional distributional channels and sales outlets C) Pushing hard to develop a distinctive competence in new technology R&D D) Expanding the product line to add models/styles that appeal to a wider range of buyers E) Driving down costs per unit so as to enable price reductions that attract droves of new customers

C) Pushing hard to develop a distinctive competence in new technology R&D

Which of the following is not one of the appeals of related diversification? A) It can offer opportunities for transferring expertise, technology, and other capabilities from one business to another. B) It can offer opportunities for reducing costs and for leveraging use of a competitively powerful brand name. C) Related diversification is particularly well-suited for the use of first-mover strategies and capturing valuable financial fits. D) It may present opportunities for cross-business collaboration to create valuable new competencies and capabilities. E) The relatedness among the different businesses provides sharper focus for managing diversification and a useful degree of strategic unity across the company's various business activities.

C) Related diversification is particularly well-suited for the use of first-mover strategies and capturing valuable financial fits.

Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A) Picking the new industries to enter and deciding on the means of entry B) Initiating actions to boost the combined performance of the businesses the firm has entered C) Standardizing the resource fits across the group of businesses the company has diversified into D) Establishing investment priorities and steering corporate resources into the most attractive business units E) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage

C) Standardizing the resource fits across the group of businesses the company has diversified into

Which of the following is not one of the appeals of an unrelated diversification strategy? A) The ability to spread business risk over truly diverse industries (as compared to related diversification which is limited to spreading risk only among businesses with strategic fit) B) An ability to employ the company's financial resources to maximum advantage by investing in whatever industries/businesses offer the best profit prospects C) Superior top management ability to cope with the wide variety of problems encountered in managing a broadly diversified group of businesses D) A potential for achieving somewhat more stable corporate sales and profits over the course of economic upswings and downswings (to the extent the company diversifies into businesses whose ups and downs tend to occur at different times) E) The potential to grow shareholder value by investing in bargain-priced or struggling companies with big upside profit potential, turning their operations around fairly quickly with infusions of cash and managerial know-how, and then riding the crest of higher profitability

C) Superior top management ability to cope with the wide variety of problems encountered in managing a broadly diversified group of businesses

Which one of the following is not helpful in identifying the components of a single-business company's strategy? A) Initiatives to build competitive advantage B) Efforts to expand or narrow geographic coverage C) The company's resource strengths and weaknesses D) The company's key functional strategies E) Efforts to build competitively valuable partnerships and strategic alliances with other enterprises within its industry

C) The company's resource strengths and weaknesses

Which of the following is not generally something that ought to be considered in evaluating the attractiveness of a diversified company's business makeup? A) Market size and projected growth rate, industry profitability, and the intensity of competition B) Industry uncertainty and business risk C) The frequency with which strategic alliances and collaborative partnerships are used in each industry, the extent to which firms in the industry utilize outsourcing, and whether the industries a company has diversifiedinto have common key success factors D) Seasonal and cyclical factors, resource requirements, and whether an industry has significant social, political, regulatory, and environmental problems E) The presence of cross-industry strategic fits

C) The frequency with which strategic alliances and collaborative partnerships are used in each industry, the extent to which firms in the industry utilize outsourcing, and whether the industries a company has diversifiedinto have common key success factors

Which one of the following is not a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products? A) To improve access to new markets B) To expedite the development of promising new technologies or products C) To enable greater opportunities for employee advancement D) To improve supply chain efficiency E) To overcome disadvantages of small production volumes that limit scale economies and low production cots

C) To enable greater opportunities for employee advancement

Which of the following is not one of the hazards of pursuing a differentiation strategy? A) Trying to charge too high a price premium for the differentiating features B) Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) D) Differentiating on features or attributes that rivals can easily copy E) Overspending on efforts to differentiate the company's product offering

C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)

Which of the following is not one of the pitfalls of pursuing a differentiation strategy? A) Trying to charge too high a price premium for the differentiating features B) Over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) D) Differentiating on features or attributes that rivals can easily copy E) Overspending on efforts to differentiate the company's product offering

C) Trying to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)

Which of the following is not among the most common types of driving forces? A) Product innovation, marketing innovation, increasing globalization of the industry, and reductions in uncertainty and business risk B) Changes in the long-term industry growth rate, changes in who buys the product and how they use it, and growing buyer preferences for differentiated products C) Ups and downs in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability D) Emerging new Internet applications and capabilities, technological change, and the diffusion of technical know-how across more companies and more countries E) Changes in cost and efficiency, the entry or exit of major firms, and changing societal concerns, attitudes, and lifestyles

C) Ups and downs in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability

Which of the following analytical tools are particularly useful for determining whether a company's prices and costs are competitive? A) SWOT analysis, strategy assessment, activity-based costing analysis, and key success factor analysis. B) Best practices analysis, and value chain analysis. C) Value chain analysis and benchmarking. D) Competitive position assessment, competitive strength assessment, strategic group mapping, SWOT analysis, and value chain analysis. E) SWOT analysis, best practices analysis, activity-based costing analysis, and competitive strength assessment.

C) Value chain analysis and benchmarking.

In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? A) When pioneering helps build up a firm's image and reputation with buyers B) When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases C) When late movers can copy a successful pioneer's moves quickly and at lower cost D) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely E) When moving first can result in a cost advantage over rivals

C) When late movers can copy a successful pioneer's moves quickly and at lower cost

In which one of the following market circumstances is a broad differentiation strategy generally not well- suited? A) When buyer needs and preferences are too diverse to be fully satisfied by a standardized product B) When few rivals are pursuing a similar differentiation approach C) When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart D) When there are many ways to differentiate the product or service and many buyers perceive these differences as having value E) When technological change is fast-paced and competition revolves around rapidly evolving product features

C) When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart

Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A) How best to tailor the company's strategy to such industry conditions as rapid growth, slow growth or market stagnation B) Whether to bolster the company's market position and competitiveness via acquisition or merger C) Whether to employ a low-end strategy or a middle-of-the-road strategy or a high-end strategy D) Whether to integrate forward or backward into more stages of the industry value chain E) Whether to enter into strategic alliances or collaborative partnerships

C) Whether to employ a low-end strategy or a middle-of-the-road strategy or a high-end strategy

Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? A) Whether to enter into strategic alliances or collaborative partnerships B) Whether to outsource certain value chain activities C) Whether to employ a market share leadership strategy D) Whether to integrate forward or backward into more stages of the industry value chain E) Whether to bolster the company's market position and competitiveness via acquisition or merger

C) Whether to employ a market share leadership strategy

Which of the following statements is inaccurate in characterizing the differences between a global strategy and a multicountry strategy? A) With a global strategy a firm's product line is mostly standardized from country to country; one of the distinctive features of a localized multicountry strategy is that the company adapts its product offerings to fit the particular needs and expectations of local buyers. B) With a global strategy a firm's marketing and distribution approaches are mostly uniform and coordinated worldwide (with minor adaptations to host-country situations where required) whereas with a multicountry strategy a firm's marketing and distribution approaches are adapted to the practices and culture of each host country. C) With a global strategy a firm's strategic arena consists of all countries where there is high demand for the product whereas with a multicountry strategy a firm's strategic arena is only a few selected high-demand countries and trading areas. D) With a global strategy a firm tends to use the most attractive suppliers from anywhere in the world whereas firms with a multicountry strategy often prefer to use suppliers located in the host country. E) With a global strategy a firm's production approach is usually to scatter plants across many different countries so as to achieve balanced geographic distribution and minimize shipping costs whereas with a multicountry strategy plants are located in those countries offering the lowest unit production costs and offering the best tariff protection.

C) With a global strategy a firm's strategic arena consists of all countries where there is high demand for the product whereas with a multicountry strategy a firm's strategic arena is only a few selected high-demand countries and trading areas.

Diversification ought to be considered when A) a company's profits are being squeezed and it needs to increase its net profit margins and return on investment. B) a company lacks sustainable competitive advantage in its present business. C) a company begins to encounter diminishing growth prospects in its mainstay business. D) a company has run out of ways to achieve a distinctive competence in its present business. E) a company is under the gun to create a more attractive and cost-efficient value chain.

C) a company begins to encounter diminishing growth prospects in its mainstay business.

What sets a multinational diversification strategy apart from other diversification strategies is A) the presence of extra degrees of strategic fit and more economies of scope. B) the potential to have a higher degree of technological expertise. C) a diversity of businesses and a diversity of national markets. D) the potential for faster growth, higher rates of profitability, and more profit sanctuaries. E) greater diversity in the types of value chain activities in its different businesses.

C) a diversity of businesses and a diversity of national markets.

Transferring core competencies and resource strengths from one country market to another is A) best accomplished with a Think-Local, Act-Local strategy as opposed to a Think-Global-Act Global strategy. B) feasible only with a Think Global-Act Local strategy. C) a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. D) unlikely to result in a competitive advantage. E) nearly always the easiest and most sure-fire way to build competitive advantage in trying to compete successfully in foreign markets.

C) a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage.

A slow-exit type of end-game strategy involves A) retreating to a market niche which the firm can defend for a few years. B) selling off assets gradually and liquidating the business. C) a gradual phasing down of operations coupled with an objective of generating the greatest possible harvest of cash from the business for as long as possible. D) withdrawing, one by one, from the various market segments in which the firm competes and then selling the business to the buyer offering the highest price. E) pruning the product line down to a few select products which the firm can still market profitably for a few more years, then when they begin to decline selling out to the highest bidder.

C) a gradual phasing down of operations coupled with an objective of generating the greatest possible

Adapting to new conditions and constantly evaluating what is working and what needs to be improved are normal parts of the strategy-making process which result in: A) a profitability-driven strategy. B) a broad market entry strategy C) an evolving strategy. D) unlimited revenue generation. E) None of these.

C) an evolving strategy.

The cost-of-entry test for evaluating whether diversification into a particular industry is likely to build shareholder value involves A) determining whether a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another. B) determining whether the cost to enter the target industry will strain the company's credit rating. C) considering whether a company's costs to enter the target industry are low enough to allow for good profits or so high that potential profits would be eroded. D) determining whether the cost to enter the target industry will raise or lower the company's total profits. E) determining whether the cost a company incurs to enter the target industry will raise or lower production costs.

C) considering whether a company's costs to enter the target industry are low enough to allow for good profits orso high that potential profits would be eroded.

Crafting a deliberate strategy involves developing strategy elements that: A) imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. B) comprise a five-year strategic plan and then fine-tuning it during the remainder of the plan period; big changes in strategy are thus made only once every five years. C) consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. D) doing everything possible (in the way of price, quality, service, warranties, advertising, and so on) to make sure the company's product/service is very clearly differentiated from the product/service offerings of rivals. E) All of these accurately characterize the managerial process of crafting a company's strategy.

C) consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods.

The two biggest drawbacks or disadvantages of unrelated diversification are A) the difficulties of passing the cost-of-entry test and the ease with which top managers can make the mistake of diversifying into businesses where competition is too intense. B) the difficulties of capturing financial fit and having insufficient financial resources to spread business risk across many different lines of business. C) demanding managerial requirements and limited competitive advantage potential that cross-business strategic fit provides. D) Ending up with too many cash hog businesses and too much diversity among the competitive strategies of the businesses it has diversified into. E) the difficulties of achieving economies of scope and conflicts/incompatibility among the competitive strategies of the company's different businesses.

C) demanding managerial requirements and limited competitive advantage potential that cross-business strategic fit provides.

Evaluating a diversified company's corporate strategy and critiquing the pluses and minuses of its business lineup involves A) a SWOT analysis of each industry in which the firm has a business interest. B) applying the cost-of-entry test, the better-off test, the profitability test, and the shareholder value test to each business and industry represented in the company's business portfolio. C) evaluating the strategic fits and resource fits among the various sister businesses and deciding what priority to give each of the company's business units in allocating resources. D) looking at each industry/business to determine how many profitable strategic groups that the company has diversified into. E) determining how many of the business units are following focus strategies, differentiation strategies, best-cost provider strategies, and low-cost leadership strategies.

C) evaluating the strategic fits and resource fits among the various sister businesses and deciding what priority to give each of the company's business units in allocating resources.

A company's competitive strategy deals A) with the specific actions management plans to take to develop a better value chain than rivals. B) with how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. C) exclusively with the specifics of management's game plan for competing successfully. D) specifically with its plans for under-pricing rivals and achieving product superiority. E) with the specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry.

C) exclusively with the specifics of management's game plan for competing successfully.

A "cash cow" type of business A) generates unusually high profits and returns on equity investment. B) is so profitable that it has no long-term debt. C) generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash hog businesses, and/or paying dividends. D) is a business with such a strong competitive advantage that it generates big profits, big returns on investment, and big cash surpluses after dividends are paid. E) has good strategic fit with a cash hog business

C) generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash hog businesses, and/or paying dividends.

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to A) combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. B) help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers. C) get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. D) help wage price wars against foreign competitors. E) exercise better control over efforts to revamp the global industry value chain.

C) get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

The most telling signs of a well-managed company are: A) the eagerness with which executives set stretch financial and strategic objectives and develop an ambitious strategic vision. B) aggressive pursuit of new opportunities and a willingness to change the company's business model whenever circumstances warrant. C) good strategy-making combined with good strategy execution. D) a visionary mission statement and a willingness to pursue offensive strategies rather than defensive strategies. E) a profitable business model and a balanced scorecard approach to measuring the company's performance.

C) good strategy-making combined with good strategy execution.

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to A) discourage rival companies from merging with or acquiring the very companies that it is partnering with. B) reduce overall business risk and raise entry barriers into the newly emerging industry. C) help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry. D) help defeat competitors that are employing broad differentiation strategies. E) enhance its chances of achieving global low-cost leadership.

C) help master new technologies and build new expertise and competencies, establish a stronger beachhead

A company pursuing a related diversification strategy would likely address the issue of what additional industries/businesses to diversify into by A) locating businesses with well-known brand names and large market shares. B) identifying industries with the least competitive intensity. C) identifying an attractive industry whose value chain has good strategic fit with one or more of the firm's present businesses. D) identifying businesses with the potential to diversify the number and types of different activities in the firm's value chain make-up. E) locating new businesses with high degrees of financial fit with its present businesses.

C) identifying an attractive industry whose value chain has good strategic fit with one or more of the firm's present businesses.

The types of strategic initiatives that seem to offer the best payoff in fast-changing markets include A) being clever at being a fast follower, doing a better job than rivals in anticipating and planning for change, and striving for a low-cost edge over rivals. B) having a wider product line than rivals, making sure the company's products are strongly differentiated, and having a shorter value chain than rivals so the company has fewer activities to revamp as the market changes. C) investing aggressively to stay on the leading edge of technological know-how; launching fresh actions every few months; having quick-response capabilities; and keeping the company's products fresh and exciting enough to stand out in the midst of all the change that is taking place. D) doing a better job than rivals of leading industry change and being a successful first mover; having sufficient internal resources and competencies so the company does not need to have many strategic partners; and outspending rivals on new product R&D. E) doing a better job than rivals of reacting and responding to rapid change, concentrating on a few crucial value chain activities and farming the rest out to strategic partners, and being a fast follower as opposed to a first-mover in technology.

C) investing aggressively to stay on the leading edge of technological know-how; launching fresh actions

A creative distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage: A) is a reliable indicator that the company has a profitable business model. B) is every company's strategic vision. C) is a company's most reliable ticket to above-average profitability and a competitive advantage, despite the best efforts of competitors to match or surpass this advantage. D) signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. E) is the best indicator that the company's strategy and business model are well-matched and properly synchronized.

C) is a company's most reliable ticket to above-average profitability and a competitive advantage, despite the best efforts of competitors to match or surpass this advantage.

A strategic alliance A) is a collaborative arrangement where companies join forces to defeat mutual competitive rivals. B) involves two or more companies joining forces to pursue vertical integration. C) is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence. D) is a partnership between two companies that is typically intended to eliminate the need to engage in outsourcing. E) is usually a cheaper and more effective way for companies to join forces than is merger.

C) is a formal agreement between two or more companies in which there is strategically relevant

Benchmarking A) is inherently unethical if it involves companies that are direct competitors because it involves gathering competitively sensitive information about the operations and costs of rivals. B) is not a valid tool for measuring the cost-effectiveness of an activity unless it is restricted to companies in the same industry. C) is a potent tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing "best practices". D) loses much of its managerial usefulness if it is done with the aid of third-party organizations who insist on protecting the confidentiality of individual company data; moreover, benchmarking is not used very often by companies because of "borderline" ethical considerations and because most of the time the information and data used in doing benchmarking studies has turned out to be unreliable and untrustworthy. E) entails calculating the costs of performing each of the primary and related support activities in a company's value chain.

C) is a potent tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing "best practices".

A company's business model A) determines whether its strategy will be ethical or not and meet government regulations. B) is management's storyline for how the strategy will result in achieving sustainable competitive advantage and delivering superior customer satisfaction over the long-term. C) is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit 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) is management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit

Crafting and executing strategy are top-priority managerial tasks because: A) it helps management create tight fits between a company's strategic vision and business model. B) it allows all company personnel, and especially senior executives, to know the answer to "who are we, what do we do, and where are we headed?" C) it is management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance. D) it provides clear guidance as to what the company's business model and strategic intent are, and helps keep managerial decision-making from being rudderless. E) it establishes how well executives perform these tasks and are the key determinants of executive compensation.

C) it is management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance.

A company's strategies stand a better chance of succeeding when: A) it is developed through a collaborative process involving all managers and staff from all levels of the organization. B) managers employ conservative strategic moves based on past experience and form an underlying basis of control. C) it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals. D) managers copy the strategic moves of successful companies in its industry. E) managers focus on meeting or beating shareholder expectations.

C) it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals.

The competitive advantage of a best-cost provider is A) having the best value chain in the industry. B) its brand name reputation. C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. D) a distinctive competence in delivering top-notch quality and customer service. E) a distinctive competence in supply chain management.

C) its capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes.

A core competence A) is a more durable company resource than a "distinctive competence." B) usually resides in a company's technology and physical assets (state-of-the-art plants and equipment, attractive real estate locations, modern distribution facilities, and so on) whereas a company competence usually resides in a company's human assets. C) may evolve into a distinctive competence, giving the company superiority over rivals in performing an important value chain activity D) is usually tied closely to the caliber of a company's manufacturing capability and/or its proprietary technology and know-how. E) is better suited to helping a company defend against external threats than in pursuing external market opportunities.

C) may evolve into a distinctive competence, giving the company superiority over rivals in performing an important value chain activity

C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat The competitive objective of a best-cost provider strategy is to A) outmatch the resource strengths of both low-cost providers and differentiators. B) position the company outside the competitive arena of low-cost producers and differentiators. C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes). D) deliver superior value to buyers by doing such a good job of cost control that it ends up with the best cost (as compared to rivals) in performing each activity in its value chain. E) identify and concentrate on those differentiating features that are inexpensive to incorporate.

C) meet or exceed buyer expectations on key quality/performance/features/service attributes and beat their expectations on price (given what rivals are charging for much the same attributes).

Company strategies evolve because A) it is a bad idea to do too much strategizing until a company has been in business long enough to know what strategies will work best. B) most managers like to develop the strategy in bits and pieces rather than all at once. C) of changing circumstances and ongoing management efforts to improve the strategy D) many managers are conservative, preferring to carefully contemplate the best responses to new developments and avoiding the risks associated with developing a complete strategy too quickly. E) a strategy does not really transition to a well-crafted stage until a company has been trying to execute it for a number of years and has learned what works and what doesn't.

C) of changing circumstances and ongoing management efforts to improve the strategy

A focused differentiation strategy aims at securing competitive advantage by A) providing buyers in the target market niche with the best performance features at a price they perceive as fair.. B) catering to buyers looking for a medium-quality product at an average price. C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences. D) developing unique product attributes. E) convincing buyers that the company is a true leader in product innovation.

C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.

A focused strategy based on differentiation aims at securing competitive advantage by A) providing buyers in the target market niche with the best performance features at the best price. B) catering to buyers looking for a medium-quality product at an average price. C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences. D) developing unique product attributes. E) convincing buyers that the company is a true leader in product innovation.

C) offering buyers in the target market niche a product which they perceive is uniquely well suited to their tastes and preferences.

Achieving a cost advantage over rivals entails A) concentrating on the primary activities portion of the value chain and outsourcing all support activities. B) being a first-mover in pursuing backward and forward integration and controlling as much of the industry value chain as possible. C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or bypass some cost-producing activities altogether. D) minimizing R&D expenses and paying below-average wages and salaries to conserve on labor costs. E) producing a standard product, redesigning the product infrequently, and having minimal advertising.

C) performing value chain activities more cost-effectively than rivals and finding ways to eliminate or

A competitive strategy predicated on low-cost leadership tends to work best when A) there are widely varying needs and preferences among the various buyers of the product or service. B) there are many market segments and market niches, such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product. C) price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products. D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices. E) buyers have high switching costs and there is considerable diversity in how buyers use the product.

C) price competition is especially vigorous and the offerings of rival firms are essentially identical,

To be successful in emerging industries, companies usually have to fashion a strategy that includes such strategic elements as A) avoiding the "first mover disadvantages" associated with making early commitments to alternative technologies, wider product selection, different styling, or new distribution channels. B) building core competencies and competitive capabilities rapidly so as to avoid having to enter into strategic alliances and partnerships and thus share the firm's potential long-term profitability with outsiders. C) pushing hard to perfect the technology, improve product quality, and develop additional attractive performance features. D) charging first-time buyers a premium price (to help grow revenues quickly) and being a technological follower (so as to conserve scarce financial resources). E) not cutting prices until buyer demand really mushrooms and being a late-mover in introducing new products (so as to avoid the costs and risks of introducing something that turns out to be a bust in the marketplace).

C) pushing hard to perfect the technology, improve product quality, and develop additional attractive performance features.

Being the overall low-cost provider in an industry has the attractive advantage of A) building strong customer loyalty and locking customers into its product (because customers have such high switching costs). B) giving the firm a very appealing brand image. C) putting a firm in position to win the business of price sensitive customers, set the floor on market price, and still earn a profit. D) putting the company in strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of key suppliers.

C) putting a firm in position to win the business of price sensitive customers, set the floor on market price, and still earn a profit.

Calculating quantitative competitive strength ratings for each of a diversified company's business units involves A) determining each industry's key success factors, rating the ability of each business to be successful on each industry KSF, and adding the individual ratings to obtain overall measures of each business's ability to compete successfully. B) identifying the competitive forces facing each business, rating the strength of these competitive forces industry-by-industry, and then ranking each business's ability to be profitable, given the strength of the competition it faces. C) selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each business unit to obtain an overall competitive strength score, and using the overall competitive strength scores to evaluate the competitive strength of all the businesses, both individually and as a group. D) determining which businesses possess good strategic fit with other businesses, identifying the portion of the value chain where this fit occurs, and evaluating the strength of the competitive advantage attached to each of the strategic fits to get an overall measure of competitive advantage potential—businesses with the highest/lowest competitive advantage potential have the most/least competitive strength. E) rating the caliber of each businesses strategic and resource fits, weighting the importance of each type of strategic/resource fit, calculating weighted strategic/resource fit scores, and adding the weighted ratings for each business to obtain an overall strength score for each business unit that indicates whether the company has adequate strategic/resource fits to be a strong market contender in each of the industries where it competes.

C) selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each business unit to obtain an overall competitive strength score, and using the overall competitive strength scores to evaluate the competitive strength of all the businesses, both individually and as a group.

Ranking a diversified company's businesses in terms of priority for resource allocation and new capital investment A) should be done chiefly on the basis of appealing industry attractiveness and resource fit and secondarily on the basis of competitive strength and strategic fit with other businesses. B) entails arraying the various businesses from the biggest cash hog down to the biggest cash cow; big cash hogs get the highest priority for resource allocation and big cash cows get the lowest priority. C) should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and, also, have solid and appealing strategic fits and resource fits. D) should be based chiefly on relative market share, recent profitability, and potential for achieving cash cow status. E) should be based primarily on cross-business resource fit considerations, each business unit's relative market share, and each business's projected ability to cover its debt payments and generate positive cash flows.

C) should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and, also, have solid and appealing strategic fits and resource fits.

Promising strategic options for companies competing in a fragmented industry include A) constructing and operating customized facilities at many different locations so as to match local buyer expectations and varying market conditions. B) becoming a best-cost provider and pursuing a multicountry strategy to achieve above-average growth. C) specializing by product type or by customer type, becoming a low-cost operator, and focusing on a limited geographic area. D) striving to become the industry's low-cost leader. E) using a broad differentiation strategy to set the company's product offering well apart from rivals and striving to sell in an ever larger number of country markets.

C) specializing by product type or by customer type, becoming a low-cost operator, and focusing on a

Economies of scope A) stem from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. B) have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. C) stem from cost-saving strategic fits along the value chains of related multiple businesses. D) refer to the cost-savings that flow from being able to combine the value chains of different businesses into a single value chain. E) are like economies of scale and arise from being able to lower costs via a larger volume operation.

C) stem from cost-saving strategic fits along the value chains of related multiple businesses.

Factors that cause the rivalry among competing sellers to be weak include: A) low buyer switching costs. B) slow growth in buyer demand. C) strong buyer loyalty, rapid growth in buyer demand, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals. D) standardized or else weakly differentiated products among rival sellers. E) the presence of one or more rivals that are dissatisfied with their current position and market share.

C) strong buyer loyalty, rapid growth in buyer demand, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals.

The most important strategy-making guidance that comes from drawing a 9-cell industry attractiveness-competitive strength matrix is A) which businesses in the portfolio have the most potential for strategic fit and resource fit. B) why cash cow businesses are more valuable than cash hog businesses. C) that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture. D) which businesses have the biggest competitive advantages and which ones confront serious competitive disadvantages. E) which businesses are in industries with profitable value chains and which are in industries with money-losing value chains.

C) that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture.

The heart and soul of any strategy is A) to identify actions and operating approaches that will validate the company's business model work. B) to identify business approaches that will produce good bottom-line results. C) the actions and moves in the marketplace that managers are taking to improve the company's financial performance, strengthen its long-term competitive position, and gain a competitive edge over rivals. D) the actions a company takes to steal substantial sales and market share away from rivals. E) pursuing competitive maneuvers that will make the company a market leader.

C) the actions and moves in the marketplace that managers are taking to improve the company's financial performance, strengthen its long-term competitive

The nitty-gritty issue surrounding a company's business model is whether A) the strategy is capable of producing sustainable competitive advantage. B) it matches the company's external and internal situation. C) the chosen strategy makes good business sense from a money-making perspective. D) the company's strategy and strategic moves are mostly proactive. E) the company's strategy stands a really good chance of hitting a home-run in the marketplace.

C) the chosen strategy makes good business sense from a money-making perspective.

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether A) many buyers view the product's differentiating features as having value. B) most buyers have similar needs and use the product in the same ways. C) the extra price the product commands exceeds the added costs of achieving the differentiation. D) buyer switching costs are low and customer loyalty to any one brand is low. E) buyers are prone to shop the market for sellers having the best price.

C) the extra price the product commands exceeds the added costs of achieving the differentiation.

As a rule, the stronger the collective impact of the five competitive forces, A) the more strategic groups there are in an industry. B) the lower the number of industry key success factors. C) the lower the combined profitability of industry participants and the more "competitively unattractive" is the industry environment. D) the weaker the industry's driving forces. E) the higher the barriers to entry and the less likely it is that industry members will make fresh strategic moves very frequently.

C) the lower the combined profitability of industry participants and the more "competitively unattractive" is the industry environment.

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when, A) new industry or market segments are yet to be developed and create altogether new consumer demand. B) fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. C) the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. D) entry barriers are high, substitute products or services or readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. E) there are nearly always big advantages to being a slow mover rather than an early mover, especially as concerns avoiding the "mistakes" of first or early movers.

C) the market depends on the development of complementary products or services that are currently not

A strategy to be the industry's overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when A) there are many ways to achieve product differentiation that buyers find appealing. B) buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. C) the offerings of rival firms are essentially identical, standardized, commodity-like products. D) entry barriers are high and competition from substitutes is relatively weak. E) the market is composed of many distinct segments with varying buyer needs and expectations.

C) the offerings of rival firms are essentially identical, standardized, commodity-like products.

The chief difference between a low-cost provider strategy and a focused low-cost strategy is A) whether the product is strongly differentiated or weakly differentiated from rivals. B) the degree of bargaining power that buyers have. C) the size of the buyer group that a company is trying to appeal to. D) the type of value chain being used to achieve a low-cost competitive advantage. E) the number of upscale attributes incorporated into the product offering.

C) the size of the buyer group that a company is trying to appeal to.

Diversifying into a new industry by forming a new internal subsidiary to enter and compete in the target industry is attractive when A) all of the potential acquisition candidates are losing money. B) it is impractical to outsource most of the value chain activities that have to be performed in the target business/industry. C) there is ample time to launch the new business from the ground up and entry barriers can be hurdled at acceptable cost. D) the company has built up a hoard of cash with which to finance a diversification effort. E) none of the companies already in the industry are attractive strategic alliance partners.

C) there is ample time to launch the new business from the ground up and entry barriers can be hurdled at acceptable cost.

Profit sanctuaries are valuable competitive assets because: A) they enable a company pursuing a "think global, act local" type of strategy to be more successful. B) a domestic competitor with multiple profit sanctuaries can wage and generally win a competitive offensive against a global competitor whose profits are scattered across many different countries. C) they provide the financial strength to support strategic offensives in selected country markets and can help fuel a company's race for global market leadership. D) without having at least two profit sanctuaries a company is virtually precluded from competing globally. E) they enable a company pursuing a global strategy to compete on an equal footing with companies employing a multicountry strategy.

C) they provide the financial strength to support strategic offensives in selected country markets and can help fuel a company's race for global market leadership.

A focused differentiation strategy aims at securing competitive advantage A) by providing niche members with a top-of-the-line product at a premium price. B) by catering to buyers looking for an upscale product at an attractively low price. C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D) by developing product attributes that no other company in the industry has. E) by convincing a narrow, well-defined group of buyers that the company has a true world class product.

C) with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.

A company's "macroenvironment" refers to A. The industry and competitive arena in which the company operates B. General economic conditions plus the factors driving change in the markets where a company operates C. All the relevant forces and factors outside a company's boundariesgeneral economic conditions, population demographics, societal values and lifestyles, technological factors, governmental legislation and regulation and closer to home, the industry and competitive arena in which it operates

C. All the relevant forces and factors outside a company's boundariesgeneral economic conditions, population demographics, societal values and lifestyles, technological factors, governmental legislation and regulation and closer to home, the industry and competitive arena in which it operates

Which is false as concerns use of an export strategy to compete in foreign markets? A. One advantage of an export strategy is the ability to test the international waters before having to commit substantial sums to establishing operations in foreign countries—the amount of capital required to begin exporting is frequently quite minimal. B. Exporting carries the risk of being vulnerable to adverse shifts in currency exchange rates. C. An export strategy is especially well suited to accommodating the different needs and preferences of buyers in different countries. D. An export strategy may allow a company to gain additional scale economies from centralizing production in one or several giant plants. E. An export strategy is disadvantageous when costs in the country where the goods are being manufactured for export are higher than the costs in those locations where rivals have their plants.

C. An export strategy is especially well suited to accommodating the different needs and preferences of buyers in different countries.

Opportunities to differentiate a company's product offering A. Are most reliably found in the R&D portion of the value chain B. Are typically located in the sales and marketing portion of the value chain C. Can exist in activities all along an industry's value chain

C. Can exist in activities all along an industry's value chain

Which of the following do NOT qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? A. Changes in who buys the product and how they use it, and changes in the long-term industry growth rate B. Changes brought about by the entry or exit of major firms, product innovation, and marketing innovation and cost efficiency. C. Changes in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration D. Changes in buyer preferences for differentiated products instead of mostly standardized or identical products E. Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilities

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

Which of the following is NOT a good example of a substitute product that triggers stronger competitive pressures? A. A salad as a substitute for French fries B. Wireless phones as a substitute for wired telephones C. Coca-Cola as a substitute for Pepsi D. Snowboards as a substitute for snow skis E. Video-on-demand services from a cable TV company as a substitute for going to the movies

C. Coca-Cola as a substitute for Pepsi

Companies pursuing a focused low-cost or focused differentiation strategy strive to A. Build a value-based competitive advantage keyed to product uniqueness B. Develop the capability to simultaneously serve buyers in a variety of distinct and different market segments C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry

C. Do a better job of serving the needs and expectations of buyers in the target market niche than other competitors in the industry

The production emphasis of a company pursuing a broad differentiation strategy usually involves A. A search for continuous cost reduction without sacrificing acceptable quality and essential features B. Strong efforts to be a leader in manufacturing process innovation C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority

C. Efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority

Which of the following is not a good example of a company's strength? A. More intellectual capital and better e-commerce capabilities than rivals B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance C. Having higher earnings per share and a higher stock price than key rivals D. A well-known brand name and enjoying the confidence of customers E. A lower-cost value chain than rivals

C. Having higher earnings per share and a higher stock price than key rivals

Managers in all types of businesses must address the central strategic question A. Where are we now? B. Where do we want to go from here? C. How are we going to get there? D. When will we know we are there? E. All of these

C. How are we going to get there?

Which of the following is not a relevant consideration in identifying an industry's dominant economic features? A. Market size and growth rate, the geographic scope of competitive rivalry and demand-supply conditions B. The extent to which economies of scale and learning/experience curve effects are present C. How many strategic groups the industry has and which ones are most profitable and least profitable

C. How many strategic groups the industry has and which ones are most profitable and least profitable

Which of the following is not a relevant consideration in identifying an industry's dominant economic features? A. Market size and growth rate, the geographic scope of competitive rivalry, and demand-supply conditions B. The extent to which economies of scale and learning/experience curve effects are present C. How many strategic groups the industry has and which ones are most profitable and least profitable D. The number and sizes of buyers, the number of rivals, and the pace of product innovation E. The prevalence of vertical integration and the pace of technological change

C. How many strategic groups the industry has and which ones are most profitable and least profitable

Which of the following is not a good option for trying to remedy high internal costs vis-à-vis rivals firms? A. Investing in productivity-enhancing, cost-saving technological improvements B. Redesigning the product or some of its components to permit more economical manufacture or assembly C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction D. Outsourcing high-cost activities to vendors or contractors who can perform them more economically E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin America or Eastern Europe) where they can be performed more cheaply

C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction

Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? A. Changes in who buys the product and how they use it and changes in the long-term industry growth rate B. Entry or exit of major firms, product innovation, and marketing innovation C. Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration D. Growing buyer preferences for differentiated products instead of mostly standardized or identical products E. Changes in economies of scale and experience curve effects brought on by changes in manufacturing technology and new Internet capabilitie

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

Which of the following is not one of the ways that a company can achieve a cost advantage by revamping its value chain? A. Cutting out distributors and dealers by selling direct to customers B. Replacing certain value chain activities with faster and cheaper online technology C. Increasing production capacity and then striving hard to operate at full capacity D) Relocating facilities so as to curb the need for shipping and handling activities E) Streamlining operations by eliminating low value-added or unnecessary work steps and activities

C. Increasing production capacity and then striving hard to operate at full capacity

The rivalry among competing sellers tends to be less intense when A. Industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales B. Buyer demand is weak and many sellers have excess capacity and/or inventory C. Industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance

C. Industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance

A company can be said to have competitive advantage if A. It is the acknowledged leader in product quality B. It has a different value chain than rivals C. It has some type of edge over rivals in attracting customers and coping with competitive forces D. It has a well-known and well-regarded brand name, prefers offensive strategies to defensive strategies, and has a strong balance sheet E. It has more resource strengths than weaknesses

C. It has some type of edge over rivals in attracting customers and coping with competitive forces

A company's strategy is not at full power until A. The company's board of directors eliminates any conflicts and inconsistencies in the missions, objectives and strategies of all the company's various organizational units B. The CEO and other senior executives review the entire strategy piece by piece and make any needed adjustments in those strategy pieces which are not in sync C. Its many pieces are united and fit together like a jigsaw puzzle

C. Its many pieces are united and fit together like a jigsaw puzzle

A company's strategy concerns A. Its market focus and plans for offering a more appealing product than rivals B. How it plans to make money in its chosen business C. Management's action plan for running the business and conducting operations—its commitment to pursue a particular set of actions in growing the business, staking out a market position, attracting and pleasing customers, competing successfully, conducting operations and achieving targeted objectives D. The long-term direction that management believes the company should pursue E. Whether it is employing an aggressive offense to gain market share or a conservative defense to protect its market position

C. Management's action plan for running the business and conducting operations—its commitment to pursue a particular set of actions in growing the business, staking out a market position, attracting and pleasing customers, competing successfully, conducting operations and achieving targeted objectives

The primary roles/obligations of a company's board of directors in the strategy-making, strategy-executing process include A. Playing the lead role in forming the company's strategy and then directly supervising the efforts and actions of senior executives in implementing and executing the strategy B. Providing guidance and counsel to the CEO in carrying out his/her duties as chief strategist and chief strategy implementer C. Overseeing the company's direction, strategy and business approaches and evaluating the caliber of senior executives' strategy-making and strategy-executing skills

C. Overseeing the company's direction, strategy and business approaches and evaluating the caliber of senior executives' strategy-making and strategy-executing skills

Being the overall low-cost provider in an industry has the attractive advantage of A. Building strong customer loyalty and locking customers into its product (because customers have such high switching costs) B. Giving the firm a very appealing brand image C. Putting a firm in position to compete offensively on the basis of low price, win the business of price sensitive customers, set the floor on market price and defend against price war conditions should they arise D) putting the company in strong position to be more profitable than companies pursuing a differentiation strategy. E) greatly reducing the strong bargaining power of key suppliers.

C. Putting a firm in position to compete offensively on the basis of low price, win the business of price sensitive customers, set the floor on market price and defend against price war conditions should they arise

Rivalry among competing sellers tends to be more intense when A. Competitors are very unequal in size and capability, such that small competitors must really scramble to even survive B. Buyer switching costs are high and market demand is growing rapidly C. Several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position

C. Several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position

Which of the following is not a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A. Aiming for a cost-based competitive advantage B. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, or more attractive styling C. Striving to be more profitable than rivals by aiming for a competitive edge based on bigger profit margins D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche E. Developing expertise and resources that give the company competitive capabilities that rivals can't easily imitate or trump with capabilities of their own

C. Striving to be more profitable than rivals by aiming for a competitive edge based on bigger profit margins

Which of the following is not part of the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. Analyzing the company's external environment B. Evaluating the company's own resources and competitive position C. Surveying a company's board members, managers, select employees, and key investors regarding what strategic issues they think the company faces D. Developing a "worry list" of "how to...," "whether to....," and "what to do about....." E. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead

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

Which of the following is not among the principal managerial tasks associated with managing the strategy execution process? A. Ensuring that policies and procedures facilitate rather than impede effective execution B. Creating a company culture and work climate conducive to successful strategy implementation and execution C. Surveying employees on how they think costs can be reduced and how employee morale and job satisfaction can be improved

C. Surveying employees on how they think costs can be reduced and how employee morale and job satisfaction can be improved

The big danger or risk of a best-cost provider strategy is A. That buyers will be highly skeptical about paying a relatively low price for upscale attributes/features B. Not establishing strong alliances and partnerships with key suppliers C. That low-cost leaders will be able to steal away some customers on the basis of a lower price and high-end differentiators will be able to steal away customers with the appeal of better product attributes

C. That low-cost leaders will be able to steal away some customers on the basis of a lower price and high-end differentiators will be able to steal away customers with the appeal of better product attributes

Which of the following is not pertinent in identifying a company's present strategy? A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing B. Management's planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on) C. The company's mission, strategic objectives, and financial objectives D.Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions E. The strategic role of its collaborative partnerships and strategic alliances with others

C. The company's mission, strategic objectives, and financial objectives

Which one of the following is NOT a factor in causing supplier bargaining power to be stronger? A. The products/services needed from suppliers are in short supply. B. Industry members can't integrate backward and self-supply themselves. C. The item being supplied is a commodity. D. The item being supplied significantly enhances the quality or performance of the products of industry members. E. Suppliers are not dependent on the industry for a large portion of their revenues.

C. The item being supplied is a commodity.

Which of the following is not one of the basic reasons that a company's strategy evolves over time? A. An ongoing need to abandon those strategy features that are no longer working well B. The proactive efforts of company managers to improve the company's financial performance and secure a competitive advantage C. The need on the part of company managers to make regular adjustments in the company's business model D. The need to respond to the actions and competitive moves of rival firms E. The need to keep strategy in step with changing industry and competitive conditions

C. The need on the part of company managers to make regular adjustments in the company's business model

Which one of the following is part of a company's macro-environment? A. Conditions outside the market. B. European culture, values, and lifestyles. C. The pace of technological change factors and legal and regulatory conditions. D. The industry and competitive environment arena outside the company's operating territory. E. The company's resource strengths, resource weaknesses, and competitive capabilities.

C. The pace of technological change factors and legal and regulatory conditions.

Operating strategies concern A. What the firm's operating departments are doing and plan to do to unify the company's functional and business strategies B. The specific plans for building competitive advantage in each major department and operating unit C. The relatively narrow strategic initiatives and approaches for managing key operating units within a business (plants, distribution centers, geographic units) and for performing strategically significant operating tasks (maintenance, shipping, inventory control, purchasing, advertising) in ways that support functional strategies and the overall business strategy D. how best to carry out the company's corporate strategy. E. how best to implement and execute the company's different business-level strategies.

C. The relatively narrow strategic initiatives and approaches for managing key operating units within a business (plants, distribution centers, geographic units) and for performing strategically significant operating tasks (maintenance, shipping, inventory control, purchasing, advertising) in ways that support functional strategies and the overall business strategy

The chief difference between a low-cost leader strategy and a focused low-cost strategy is A. Whether the product is strongly differentiated or weakly differentiated from rivals B. The degree of bargaining power that buyers have C. The size of the buyer group that a company is trying to appeal to

C. The size of the buyer group that a company is trying to appeal to

Which of the following is NOT an appropriate guideline for developing a strategic group map for a given industry? A. The variables chosen as axes for the map should indicate important differences among rival approaches. B. The variables chosen as axes for the map don't have to be either quantitative or continuous. They can be discrete variables. C. The variables chosen as axes for the map should be highly correlated. D. Several maps should be drawn if more than one pair of variables give different exposures to the competitive positioning relationships present in the industry structure. E. The sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.

C. The variables chosen as axes for the map should be highly correlated.

Which of the following is not one of the objectives of benchmarking? A. To identify the best practices in performing various value chain activities B. To learn how best practice companies achieve lower costs or better results in performing benchmarked activities C. To help construct a company value chain and identify which activities are primary and which are support activities D. To develop cross-company comparisons of the costs of performing specific value chain activities E. To take actions to improve a company's cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what other companies have achieved

C. To help construct a company value chain and identify which activities are primary and which are support activities

Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether A. Many buyers view the product's differentiating features as having value B. Most buyers have similar needs and use the product in the same ways C. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

C. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

In which of the following circumstances is a low-cost leadership strategy not likely to be particularly successful? A. When the industry's product is a standardized commodity B. When buyers are looking for a good-to-excellent product at a bargain price C. When the industry is composed of more than three strategic groups and the companies in at least one of the groups are pursuing full vertical integration strategies

C. When the industry is composed of more than three strategic groups and the companies in at least one of the groups are pursuing full vertical integration strategies

The biggest and most important differences among the competitive strategies of different companies boil down to A. How they go about building a brand name image that buyers trust and whether they are a risk-taker or risk-avoider B. The different ways that companies try to cope with the five competitive forces C. Whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation D. The kinds of actions companies take to improve their competitive assets E. The relative emphasis they place on offensive versus defensive strategies

C. Whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation

Which of the following factors is NOT a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak? A. Whether certain customers offer sellers important market exposure or prestige B. Whether customers are relatively well-informed about sellers' products, prices, and costs C. Whether buyer needs and expectations are changing rapidly or slowly D. Whether sellers' products are highly differentiated, making it troublesome or costly for buyers to switch to competing brands or to substitute products E. Whether sellers pose little threat of forward integration into the product market of their customers and whether buyers pose a major threat to integrate backward into the product market of sellers

C. Whether buyer needs and expectations are changing rapidly or slowly

Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak? A. Whether certain customers offer sellers important market exposure or prestige B. Whether customers are relatively well informed about sellers' products, prices, and costs C. Whether buyer needs and expectations are changing rapidly or slowly D. Whether sellers' products are highly differentiated, making it troublesome or costly for buyers to switch to competing brands or to substitute products E. Whether sellers pose little threat of forward integration into the product market of their customers and whether buyers pose a major threat to integrate backward into the product market of sellers

C. Whether buyer needs and expectations are changing rapidly or slowly

Which one of the following is not a factor that affects the strength of supplier bargaining power? A. Whether needed inputs are in ample supply and are readily available from several different suppliers B. Whether industry members are a strong threat to integrate backward into the business of suppliers and self-manufacture their own requirements C. Whether industry members are struggling to make good profits because of slow-growing market demand D. Whether the costs of industry members to switch their purchases to alternative suppliers are high or low E. Whether the item being supplied is a commodity or is highly differentiated from supplier to supplier

C. Whether industry members are struggling to make good profits because of slow-growing market demand

Profit sanctuaries are country markets or geographic regions whereby A. a company can rank the competitive advantage opportunities in each industry. B. a company possesses good strategic fit with other businesses and identifies the value chain where this fit occurs. C. a company derives substantial profits because of its protected market position or unassailable competitive advantage. D. a company creates substantial investment strategies because it is losing competitive advantage over competitors. E. a company that invests its dividends in expanding its foreign market presence.

C. a company derives substantial profits because of its protected market position or unassailable competitive advantage.

The difference between a core competence and a distinctive competence is that A. a distinctive competence refers to a company's strongest resource or competitive capability and a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity. B. a core competence usually resides in a company's base of intellectual capital whereas a distinctive competence stems from the superiority of a company's physical and tangible assets. C. a core competence is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs, whereas a distinctive competence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes. D. a core competence represents a resource strength whereas a distinctive competence is achieved by having more resource strengths than rival companies. E. a core competence usually resides in a company's technology and physical assets whereas a distinctive competence usually resides in a company's know-how, expertise, and intellectual capital.

C. a core competence is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs, whereas a distinctive competence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes.

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have A. a company competence. B. a strategic resource. C. a distinctive competence. D. a core competence. E. a key success factor.

C. a distinctive competence.

The "driving forces" in an industry: A. are usually triggered by changing technology or stronger learning/experience curve effects. B. usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers. C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions. D. appear when an industry begins to mature but are seldom present during early stages of the industry life cycle. E. are usually triggered by shifting buyer needs and expectations or by the appearance of new substitute products.

C. are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions.

The advantages of manufacturing goods in a particular country and exporting them to foreign markets A. are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country. B. are greatest when local consumers prefer products manufactured inside the country's borders. C. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. D. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. E. are largely unaffected by tariffs or quotas.

C. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world A. is competitively disadvantaged when the euro declines in value against the Brazilian real. B. is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported. D. is competitively advantaged when the euro appreciates in value against the Brazilian real. E. has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.

A "think local, act local" multidomestic type of strategy A. is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods. B. is usually defeated by a "think global, act global" type of strategy. C. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions. D. is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy. E. can defeat a global strategy if the "think local, act local" multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.

C. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions.

A European manufacturer that exports goods made at its European plants to the United States A. is competitively disadvantaged when the euro declines in value against the U.S. dollar. B. is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar; it would, however, be affected if its plants were in the U.S. C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar. D. becomes more competitive in European markets when the euro declines in value against the U.S. dollar. E. has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar.

Using domestic plants as a production base for exporting goods to selected foreign country markets A. is usually a superior approach to competing in international markets. B. can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country. C. can be an excellent initial strategy to pursue international sales. D. is usually a weak strategy when competitors are pursuing licensing strategies. E. can be a powerful strategy because the company is not vulnerable to tariffs or quotas.

C. can be an excellent initial strategy to pursue international sales.

Which of the following is a clear representation of a company's capability? A. a company's brand. B. a productive input that is owned or controlled by the firm C. capacity of a firm to perform some activity. D. an alliance or collaboration with another firm. E. All of these.

C. capacity of a firm to perform some activity.

A company's business model A. details the manner in which the company will pass the three tests of a winning strategy. B. indicates how the strategy will result in achieving the targeted strategic objectives. C. clarifies (1) how the business will provide customers with value, and (2) why the business will generate revenues sufficient to cover costs and produce attractive profits. D. explains how it intends to achieve high profit margins. E. sets forth the actions and approaches that it will employ to achieve market leadership.

C. clarifies (1) how the business will provide customers with value, and (2) why the business will generate revenues sufficient to cover costs and produce attractive profits.

Increasing globalization of the industry can be a driving force because: A. the products of foreign competitors are nearly always cheaper or of better quality than those of domestic companies. B. foreign producers typically have lower costs, greater technological expertise, and more product innovation capabilities than domestic firms. C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities. D. it results in companies having fewer competitors and a strategic group map with fewer circles. E. market growth rates go up, product innovation speeds up, and new firms are likely to enter the industry.

C. companies need to spread their operating reach into more and more country markets to meet consumer demand and take advantage of available operating activities.

To use location to build competitive advantage, a company that operates multinationally or globally must A. employ either an export strategy or a franchising strategy. B. scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C. consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities. D. locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E. concentrate all of its value chain activities in a single country—the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.

C. consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

To use location to build competitive advantage, a company that operates multinationally or globally must A. employ either an export strategy or a franchising strategy. B. scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C. consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities. D. locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E. concentrate all of its value chain activities in a single country—the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits

C. consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

A company's value chain A. consists of the primary activities that it performs in seeking to deliver value to shareholders in the form of higher dividends and a higher stock price. B. depicts the internally performed activities associated with creating and enhancing the company's competitive assets. C. consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities. D. concerns the basic process the company goes through in performing R&D and developing new products. E. consists of the series of steps a company goes through to develop a new product, get it produced and distributed into the marketplace, and then start collecting revenues and earning a profit.

C. consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities.

A company's strategy and its quest for competitive advantage are tightly connected because A. without a competitive advantage a company cannot become the industry leader. B. without a competitive advantage a company cannot have a profitable business model. C. 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. D. a competitive advantage is what enables a company to achieve its strategic objectives. E. how a company goes about trying to please customers and outcompete rivals is what enables senior managers choose an appropriate strategic vision for the company.

C. 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.

Activity-based costing is used to A. determine whether the value chains of rival companies are similar or different. B. benchmark the costs of primary value chain activities against the costs of the support value chain activities. C. determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and make-up of a company's internal cost structure. D. determine the costs of each strategic action a company initiates. E. None of these accurately describes what activity-based costing is about.

C. determine the costs of each primary and support activity comprising a company's value chain and thereby reveal the nature and make-up of a company's internal cost structure.

Activity-based cost accounting aims at A. making cross-company comparisons of the costs of each value chain activity. B. dividing all company expenses into two categories: activities whose costs are variable and activities whose costs are fixed. C. determining the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost. D. determining the costs of each strategic action a company initiates. E. None of these accurately describes what activity-based costing is about

C. determining the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost.

To build a competitive advantage by out-managing rivals in performing value chain activities, a company must A. position itself in the industry's more favorably situated strategic group. B. develop resources strengths that will enable it to pursue the industry's most attractive opportunities. C. develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage. D. outsource all of its value chain activities to world-class vendors and suppliers. E. eliminate its resource weaknesses

C. develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage.

Driving forces analysis: A. has speculative value because it compels the firm to drive strategic intent and collective choice into operating practices. B. has theoretical value because it allows managers to visualize the many different dimensions of the preferred forces that allow for industry functionality. C. 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. D. has no real analytical value because the driving forces are already established in the marketplace and it is too late to make astute and timely strategy adjustments. E. All of these.

C. 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.

The best example of a company resource is A. having higher earnings per share and a higher return on shareholders' equity investment than key rivals. B. being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders, or strategic alliances. C. having proven technological expertise and ability to churn out new and improved products on a regular basis. D. having a larger number of competitive assets than competitive liabilities. E. having more built-in key success factors than rivals.

C. having proven technological expertise and ability to churn out new and improved products on a regular basis.

Two drawbacks of a "think local, act local" multidomestic strategy are A. that it is especially vulnerable to fluctuating exchange rates and that it can usually be defeated by companies employing cross-border coordination techniques. B. excessive vulnerability to fluctuating exchange rates and having to craft a separate strategy for each country market in which the company competes. C. hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes. D. greater exposure to both increases in tariffs and restrictive trade barriers and added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments. E. not being able to export products manufactured in one country to markets in other countries and being largely unsuitable for competing in the markets of emerging countries.

C. hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes.

Two drawbacks of a "think local, act local" multidomestic strategy are A. that it is especially vulnerable to fluctuating exchange rates and that it can usually be defeated by companies employing cross-market subsidization tactics. B. excessive vulnerability to fluctuating exchange rates and having to craft a separate strategy for each country market in which the company competes. C. hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes. D. greater exposure to both increases in tariffs and restrictive trade barriers and added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments. E. not being able to export products manufactured in one country to markets in other countries and being largely unsuitable for competing in the markets of emerging countries.

C. hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes.

Strategic alliances between domestic and foreign firms are more effective A. in building multiple profit sanctuaries than in forging a mutually supportive global strategy. B. in reducing supply chain costs than in reducing distribution costs. C. in helping establish a new beachhead of opportunity than in achieving and sustaining global market leadership. D. in helping the partners pursue a multidomestic strategy as compared to a global strategy. E. in helping the partners pursue a global strategy as compared to a multidomestic strategy.

C. in helping establish a new beachhead of opportunity than in achieving and sustaining global market leadership.

The rivalry among competing sellers tends to be less intense when: A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales. B. buyer demand is weak and many sellers have excess capacity and/or inventory. C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market standing and business performance. D. rivals have diverse strategies and objectives and are located in different countries. E. rival sellers have weakly differentiated products.

C. industry rivals are not particularly aggressive or active in making fresh moves to improve their market

A strategic group: A. consists of those industry members that are growing at about the same rate and have similar product line breadth. B. includes all rival firms having comparable profitability. C. is a cluster of industry members with similar competitive approaches and market positions in the market. D. consists of those firms whose market shares are about the same size. E. is made up of those firms having comparable profit margins.

C. is a cluster of industry members with similar competitive approaches and market positions in the market.

A creative, distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage A. is a reliable indicator that the company has a profitable business model. B. is every company's strategic vision. C. is a company's most reliable ticket to above-average profitability—indeed, the tight connection between competitive advantage and profitability means that the quest for sustainable competitive advantage always ranks center stage in crafting a strategy. D. signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. E. is the best indicator that the company's strategy and business model are well-matched and properly synchronized.

C. is a company's most reliable ticket to above-average profitability—indeed, the tight connection between competitive advantage and profitability means that the quest for sustainable competitive advantage always ranks center stage in crafting a strategy.

A "think local, act local" multidomestic type of strategy A. is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods. B. is usually defeated by a "think global, act global" type of strategy. C. is more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and marketing methods. D. is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy. E. can defeat a global strategy if the "think local, act local" multidomestic strategist concentrates its efforts exclusively in those foreign markets where it has profit sanctuaries.

C. is more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and marketing methods.

Identifying the primary and secondary activities that comprise a company's value chain A. indicates whether a company's resource strengths will ultimately translate into greater value for shareholders. B. reveals whether a company's resource strengths are well-matched to the industry's key success factors. C. is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs). D. is called benchmarking. E. is called resource value analysis.

C. is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs).

A company's strategy stands a better chance of succeeding when A. it is developed through a collaborative process involving managers from all levels of the organization. B. managers employ conservative strategic moves. C. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals. D. managers copy the strategic moves of successful companies in its industry. E. managers focus on meeting or beating shareholder expectations.

C. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals.

If a company doesn't possess stand alone resource strengths capable of contributing to competitive advantage: A. all potential for competitive advantage is lost. B. it is unlikely to survive in the marketplace and should exit the industry. C. it may have a bundle of resources that can be leveraged to develop a distinctive competence. D. it is virtually blocked from using offensive strategies and must rely on defensive strategies. E. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities.

C. it may have a bundle of resources that can be leveraged to develop a distinctive competence.

In a weighted competitive strength analysis, each strength measure is assigned a weight based on A. its percentage share of total industry revenues. B. the importance of each competitive strength measure in building a sustainable competitive advantage. C. its perceived importance in determining a company's competitive success in the marketplace. D. its percentage share of total industry profits. E. what it takes to provide better analytical balance between the companies with high ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.0.

C. its perceived importance in determining a company's competitive success in the marketplace.

Which of the following does not represents a company resource? A. a company's brand. B. a productive input that is owned by the firm. C. marketing and brand management. D. R&D teams. E. a productive input that is controlled by the firm.

C. marketing and brand management.

The external market opportunities which are most relevant to a company are the ones that A. increase market share. B. reinforce its overall business strategy. C. match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage. D. correct its internal weaknesses and resource deficiencies. E. help defend against the external threats to its well-being.

C. match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage.

The approach of a firm using a "think global, act local" version of a global strategy entails A. producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B. little or no strategy coordination across countries. C. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D. selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally-made brand. E. selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company's Web site so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

C. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.

The transnational approach of a firm using a "think global, act local" version of a global strategy entails A. producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B. little or no strategy coordination across countries. C. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D. selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally made brand. E. selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

C. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.

Collaborative relationships between particular sellers and buyers in an industry can represent a source of strong competitive pressure when: A. virtually all buyers have strong brand attachments and are highly brand loyal. B. demand for the product is growing rapidly. C. sales are made to buyer groups with either strong bargaining power or high sensitivity. D. sellers are racing to add the latest and greatest performance features so as to attract the patronage of important or prestigious buyers. E. buyers are very quality conscious.

C. sales are made to buyer groups with either strong bargaining power or high sensitivity.

Rivalry among competing sellers tends to be more intense when: A. competitors vary in size and capability, such that smaller firms must really struggle to even survive. B. buyer switching costs are high and market demand is growing rapidly. C. several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position. D. the products of rival sellers are strongly differentiated. E. All of these.

C. several competitors are under pressure to improve their market share or profitability and launch fresh strategic initiatives to attract more buyers and bolster their business position.

A company's resource and capability analysis A. represent its core competencies. B. are the most important parts of the company's value chain. C. signal whether it has the wherewithal to be a strong competitor in the marketplace. D. give it excellent ability to insulate itself against the impact of the industry's driving forces. E. combine to give it a distinctive competence.

C. signal whether it has the wherewithal to be a strong competitor in the marketplace.

An industry's key success factors can always be deduced by asking what factors: A. are a function of market share, entry barriers, and economies of scale, degree of vertical integration, and industry profitability that are advantageous. B. vary according to whether an industry has high or low long-term attractiveness. C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive disadvantage. D. can be determined from studying the "winning" strategies of the industry leaders and ruling out as potential key success factors the strategy elements of those firms considered to have "losing" strategies. E. depend on the relative competitive strengths of the industry leaders and how vulnerable they are to competitive attack.

C. such as product attributes and service characteristics are crucial, and what resources and competitive capabilities are needed, and what shortcomings are evident to put a company at a competitive disadvantage.

A viable business model includes a valuable customer value proposition that A. is always partly deliberate/planned and partly emergent/reactive. B. is an essential component of pursuing the company's strategic intent. C. suggests the greater the value provided and the lower the price, the more attractive the value proposition. D. lays out the approach to satisfying buyer wants and needs at a premium price. E. must set forth management's long-term action plan for achieving market leadership.

C. suggests the greater the value provided and the lower the price, the more attractive the value proposition

Establishing a subsidiary in a foreign market to take advantage of all essential value chain activities requires a strategy that A. establishes a wholly owned subsidiary. B. acquires a foreign company. C. supports direct control over all aspects of operating in a foreign market. D. establishes a start-up operation. E. All of these.

C. supports direct control over all aspects of operating in a foreign market.

A company requires a dynamically evolving portfolio of resources and capabilities to A. assist the strategic planning team in overall direction. B. sustain complex manufacturing systems as a strategic recoil. C. sustain its competitiveness and help drive improvements in its performance. D. sustain benefits of high market share as an interest in growth strategies. E. transform knowledge into a management style supporting competition in a globally diverse world.

C. sustain its competitiveness and help drive improvements in its performance.

The essential difference between a "think global, act global" and a "think global, act local" approach to strategy-making is that A. a "think global, act global" approach entails extensive strategy coordination across countries and a "think global, act local" approach entails little or no strategy coordination across countries. B. the former aims at implementing the same business model worldwide whereas the latter aims at implementing customized business models to better match local market circumstances. C. the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions. D. a "think global, act global" approach involves selling a mostly standardized product worldwide whereas a "think global, act local" approach entails selling products that are highly differentiated from country to country. E. a "think global, act global" approach involves selling under a single brand name worldwide whereas a "think global, act local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

C. the "think global, act local" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.

In mapping strategic groups: A. one strategic variable and one financial variable should be used as axes for the map. B. it is important for the variables used as axes to be highly correlated. C. the best variables to use as axes for the map are those that identify the competitive characteristics that delineate strategic approaches used in the industry. D. it is important to use price as the variable for the vertical axis. E. the primary objective is to determine which strategic groups are profitable and which are not.

C. the best variables to use as axes for the map are those that identify the competitive characteristics that delineate strategic approaches used in the industry.

The best quantitative evidence of whether a company's present strategy is working well is A. whether the company has more competitive assets than it does competitive liabilities. B. whether the company is in the industry's best strategic group. C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. whether the company has a shorter value chain than close rivals. E. whether the company is in the Fortune 500.

C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

One important indicator of how well a company's present strategy is working is whether A. it has more core competencies than close rivals. B. its strategy is built around at least two of the industry's key success factors. C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer. D. it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign). E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Competitive pressures stemming from buyer bargaining power tend to be weaker when: A. the number of buyers is small, such that each customer's business tends to be particularly important to a seller. B. buyer demand is growing slowly or maybe even declining. C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high. D. buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. E. the buyer group consists of a few large buyers and the seller group consists of numerous small firms.

C. the costs incurred by buyers in switching to competing brands or to substitute products are relatively high.

Strategic group mapping is a visual technique for displaying: A. how many rivals are pursuing each type of strategy. B. which companies have the biggest market share and who the industry leader really is. C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors. D. which companies have the highest degrees of brand loyalty. E. which companies have failing business models.

C. the different market or competitive positions that rival firms occupy in an industry and for identifying each rival's closest competitors.

Competitive strength can be determined by assigning measures based on perceived importance because A. it provides a more accurate assessment of the strength of competitive forces. B. it eliminates the bias introduced for those firms having large market shares. C. the different measures of competitive strength are unlikely to be equally important. D. the results provide a more reliable measure of what competitive moves rivals are likely to make next. E. weighting each company's overall competitive strength by the size of its market share produces a more accurate measure of its true competitive strength.

C. the different measures of competitive strength are unlikely to be equally important.

Competitive pressures stemming from the threat of entry are weaker when: A. the incumbents do not enjoy preferential access to distribution channels (e.g., securing adequate space on retailer shelves). B. strong network effects exist. C. the industry outlook is risky or uncertain. D. incumbent firms have little ability to leverage distributors, dealers, and/or retailers to retain their business. E. the nature of the industry entails few scale economies.

C. the industry outlook is risky or uncertain.

Thinking strategically about the industry and competitive environment involves in-depth analysis and evaluation of such consideration as: A. the strength of the equilibrium forces driving change in the environment. B. the identification of the dominant financial risk components of the industry in which the company operates. C. the market positions of industry rivals and their relative strength, and the competitive forces rivals are facing and what impact they will have on competitive intensity and industry profitability. D. the critical factors influencing past competitive success in the industry. E. All of these.

C. the market positions of industry rivals and their relative strength, and the competitive forces rivals are facing and what impact they will have on competitive intensity and industry profitability.

The three main areas in the value chain where significant differences in the costs of competing firms can occur include A. age of plants and equipment, number of employees, and advertising costs. B. operating-level activities, functional area activities, and line of business activities. C. the nature and make-up of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies. D. human resource activities (particularly labor costs), vertical integration activities, and strategic partnership activities. E. variable cost activities, fixed cost activities, and administrative activities.

C. the nature and make-up of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies.

A company's "macro-environment" refers to: A. the industry and the competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets where a company operates. C. the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, socio-cultural forces, technological factors, environmental factors, and legal/regulatory conditions. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company's industry.

C. the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, socio-cultural forces, technological factors, environmental factors, and legal/regulatory conditions.

When an industry member is a major customer of the supplier, and the relationship (partnership) is unusually effective and mutually advantageous: A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. D. there is a high likelihood of such partnerships reducing competitive pressures on ALL industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50 percent or more of total cost.

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

When one or more industry members have unusually effective and mutually advantageous partnerships with their suppliers, A. it is rare for such partnerships to have much competitive impact on those industry members not having such partnerships. B. one unfortunate outcome is that it tends to give the supply partners much enhanced bargaining power in their dealings with these industry members. C. there is a strong likelihood such partnerships will put increased competitive pressure on those industry members who lack productive collaborative relationships with their suppliers. D. there is a high likelihood of such partnerships reducing competitive pressures on all industry members, provided technological change in the suppliers' business is rapid and the item being supplied is a commodity. E. the usual result is to reduce competitive pressures on all industry members, provided the costs of the items furnished by supply chain partners amount to 50% or more of total cost.

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

The basic strategy options for local companies in competing against global challengers include A. best-cost provider, focused low cost, and low-cost leadership strategies. B. export strategies, licensing strategies, and cross-border transfer strategies. C. utilizing keen understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals. D. franchising strategies, multidomestic strategies keyed to product superiority, global low-cost leadership strategies, and cross-border coordination strategies. E. focused differentiation and broad differentiation strategies.

C. utilizing keen understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals.

Two analytical tools useful in determining whether a company's prices and costs are competitive are A. SWOT analysis and key success factor analysis. B. SWOT analysis and benchmarking. C. value chain analysis and benchmarking. D. competitive position assessment and competitive strength assessment. E. driving forces analysis and SWOT analysis.

C. value chain analysis and benchmarking.

A higher company's overall weighted strength rating does not signal A. greater implied net competitive advantage B. stronger overall competitiveness versus rivals. C. weaker overall competitiveness versus rivals. D. possession of competitive advantage. E. None of these.

C. weaker overall competitiveness versus rivals.

Activity ratio - inventory turnover

COGS / inventory -measures the number of inventory turns per year. Higher is better.

Diversification into unrelated business - Evaluating the acquisition of a new business or the divestiture of an existing business

Can it meet corporate targets for profitability and return on investment? Is it in an industry with attractive profit and growth potentials? Is it is big enough to contribute significantly to the parent firm's bottom line?

Improving internally performed value chain activities

Can reduce costs and improve competitiveness -implement best practices -redesign the product and/or some of its components -relocate high cost activities -outsource activities Improve effectiveness of CVP and enhance differentiation -adopt best practices for quality marketing and customer service -reallocate resources to activities that address buyers' most important purchase criteria -adopt new technologies that spur innovation, improve design, and enhance creativity

resource vs capability?

Capability (perform activity) is developed and enable through the deployment of a company resource (competitive asset)

If a First Mover's skills, know-how, and actions are easily copied or even surpassed, then followers and even late movers can...

Catch or overtake the First Mover in a relatively short period

______ makes it very hard to figure out how a complex resource contributes to competitive advantage and therefore exactly what to imitate.

Causal ambiguity

Companywide restructuring (corporate restructuring)

Companywide restructuring (corporate restructuring) involves making major changes in a diversified company by divesting some businesses or acquiring others, so as to put a whole new face on the company's business lineup.

Identifying Strengths

Competence: Is an activity that a firm has learned to perform with proficiency—a capability Core Competence: Is a proficiently performed internal activity that is central to a firm's strategy and competitiveness Distinctive Competence: Is a competitively valuable activity that a firm performs better than its rivals

Strategic offenses should be grounded in a company's...

Competitive assets

what creates an agenda of strategic issues that merit prompt managerial attention.

Compiling a "priority list" of problems

A company is better able to build and develop its own competitively valuable competencies and capabilities when it...

Concentrates its full resources and energies on performing those activities

Explain the Focused Differentiation competitive strategy

Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members

Focused Differentiation

Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members

Explain the Focused Low-Cost competitive strategy

Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product.

Focused Low-Cost

Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product.

Identify and describe the 4 different levels of a company's strategy making hierarchy

Corporate Strategy - Orchestrated by the CEO and other senior executives. Business Strategy (one for each business the company has diversified into) - Orchestrated by the general managers of each line of business. Functional Area Strategies (within each business) - Orchestrated by the heads of major functional activities within individual businesses. Operating Strategies (within each functional area) - Orchestrated by the brand managers, operating managers, and managers of strategically important activities.

What it corporate strategy?

Corporate strategy is strategy at the multi-business level, concerning how to improve company performance or gain competitive advantage by managing a set of businesses simultaneously.

Synergy

Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of its parts

) The managerial task of developing a strategic vision for a company A. Concerns deciding what approach the company should take to implement and execute its business model B. Entails coming up with a fairly specific answer to "who are we, what do we do and why are we here?" C. Is chiefly concerned with addressing what a company needs to do to successfully outcompete rivals in the marketplace D. Involves deciding upon what strategic course a company should pursue in preparing for the future and why this directional path makes good business sense E. Entails coming up with a persuasive storyline of how the company intends to make money

D

A company's business model A. Sets forth management's game plan for maximizing profits for shareholders B. Details exactly how management's strategy will result in the achievement of the company's strategic intent C. Explains how it will achieve high profit margins while at the same time charging relatively low prices to customers D. Sets forth the key components of the enterprise's business approach, indicates how revenues will be generated and makes a case for why the strategy can deliver value to customers in a profitable manner E. Sets forth management's long term action plan for achieving market leadership

D

A company's strategy consists of A. The actions it is taking to develop a more appealing business model than rivals B. The plans it has to outcompete rivals and establish a sustainable competitive advantage C. The offensive moves it is employing to make its product offering more distinctive and appealing to buyers D. The competitive moves and business approaches that managers are employing to grow the business, stake out a market position, attract and please customers, compete successfully, conduct operations and achieve targeted objectives E. Its strategic vision, its strategic objectives and its strategic intent

D

A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products and little bargaining leverage on the part of both suppliers and customers A. Lacks powerful driving forces B. Gives each industry competitor the best potential for building sustainable competitive advantage over rival firms C. Makes it hard for industry members to compete successfully unless they can strongly differentiate their products D. Is conducive to industry members earning attractive profits

D

A winning strategy is one that A. Builds strategic fit, is socially responsible and maximizes shareholder wealth B. Is highly profitable and boosts the company's market share C. Results in a company becoming the dominant industry leader D. Fits the company's internal and external situation, builds sustainable competitive advantage and improves company performance E. Can pass the ethical standards test, the strategic intent test and the profitability test

D

Good strategy combined with good strategy execution A. Offers a surefire guarantee for avoiding periods of weak financial performance B. Are the two best signs that a company is a true industry leader C. Are more important management functions than forming a strategic vision and setting objectives D. Are the most trustworthy signs of good management E. Signal that a company has a superior business model

D

In a diversified company, the strategy-making hierarchy consists of A. Corporate strategy and a group of business strategies (one for each line of business the corporation has diversified into) B. Corporate or managerial strategy, a set of business strategies and divisional strategies within each business C. Business strategies, functional strategies and operating strategies D. Corporate strategy, business strategies, functional strategies and operating strategies E. Its diversification strategy, its line of business strategies and its operating strategies

D

In crafting a company's strategy, A. Management's biggest challenge is how closely to mimic the strategies of successful companies in the industry B. Managers have comparatively little freedom in choosing the hows of strategy C. Managers are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility D. Managers need to come up with some distinctive "aha" element to the strategy that draws in customers and produces a competitive edge over rivals E. Managers are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-be-different" strategies rarely are successful

D

In crafting a strategy, management is in effect saying A. "This is who we are and where we are headed.'' B. "This is our model for making money in our particular line of business." C. "We intend to launch these new moves to outcompete our rivals." D. "Among all the many different business approaches and ways of competing we could have chosen, we have decided to employ this particular combination of competitive and operating approaches in moving the company in the intended direction, strengthening its market position and competitiveness and boosting performance." E. "This is our vision of what our business will be like, what products/services we will sell and who our customers will be in the years to come."

D

In endeavoring to craft an ethical strategy, company managers A. Need only take care to ensure that each piece of the strategy entails actions and behaviors that are within the letter and spirit of the law B. Are well advised to develop an ethical strategy code that clearly states which strategic actions are ethical (and which will be pursued) and which are unethical (and will not be tolerated) so that all managers and company personnel can stay within ethical bounds in developing strategic initiatives C. Are well advised to have the company's board of directors review the strategy and "certify" whether each element of the company's strategy is ethical or not D. Have to go beyond what strategic actions and behaviors are legal and address whether all the various elements of the company's strategy can pass the test of moral scrutiny E. Have to back off aggressive efforts to maximize profits (many strategic actions to maximize profits cross over the line to unsavory or shady—or, at least, are borderline unethical)

D

Industry conditions change A. Because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy and higher/lower entry barriers B. Because of newly-emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups C. Because new industry key success factors emerge D. Because important forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions

D

Industry rivals tend to experience weak competitive pressures from substitute products when A. The available substitute products are weakly differentiated from one another B. The buyers of the industry's products are few in number and they have substantial amounts of leverage with sellers C. Rival sellers experience strong bargaining power from both suppliers and influential customers D. Buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the performance they deliver

D

It is normal for a company's strategy to end up being A. A blend of offensive actions on the part of managers to improve the company's profitability and defensive moves to counteract changing market conditions B. A combination of conservative moves to protect the company's market share and somewhat more risky initiatives to set the company's product offering apart from rivals C. A close imitation of the strategy employed by the recognized industry leader D. A blend of proactive actions to improve the company's competitiveness and financial performance and as-needed reactions to unanticipated developments and fresh market conditions E. More a product of clever entrepreneurship than of efforts to clearly set a company's product/service offering apart from the offerings of rivals

D

One of the keys to successful strategy-making is A. To come up with a business model that enables a company to earn bigger profits per unit sold than rivals B. To aggressively pursue all of the growth opportunities the company can identify C. To develop a product/service with more innovative performance features than what rivals are offering and to provide customers with better after-the-sale service D. To come up with one or more differentiating strategy elements that act as a magnet to draw customers and yield a lasting competitive edge E. To charge a lower price than rivals and thereby win sales and market share away from rivals

D

One of the things that can be gleaned from a strategic group map of industry rivals is A. Which rivals have been in business longer and thus have greater access to experience curve effects B. Which rivals have newer manufacturing facilities C. Which strategic groups have the highest profit margins and the highest customer switching costs D. Whether profit prospects vary from strategic group to strategic group due to strengths and weaknesses in their respective market positions on the map (perhaps because industry driving forces and competitive pressures are acting to favor some strategic groups and to disadvantage other groups)

D

Perhaps the most important benefit of a vivid, engaging and convincing strategic vision is A. Helping to crystallize top management's own view about what strategy to employ B. Helping company personnel understand the logic of the company's business model C. Helping justify the company's mission of making a profit D. Gaining wholehearted organizational support for the vision and uniting company personnel behind managerial efforts to get the company moving in the intended direction E. Keeping company personnel well-informed

D

Strategic objectives A. Are more essential in achieving a company's strategic vision than are financial objectives B. Are generally less important than financial objectives C. Are more difficult to achieve and harder to measure than financial objectives D. Relate to strengthening a company's overall business and competitive position E. Help managers track an organization's true progress better than do financial objectives

D

The defining characteristic of a well-conceived strategic vision is A. That it be flexible and in the mainstream B. That it not stretch the company's resources too thin across different products, technologies and geographic markets C. Clarity and specificity about "who we are, what we do and why we are here." D. What it says about the company's future strategic course—"the direction we are headed and what our future product-market-customer-technology focus will be." E. That it be within the realm of what the company can reasonably expect to achieve within 2-4 years

D

The difference between a company's strategy and a company's business model is that A. A company's strategy is management's game plan for achieving strategic objectives while its business model is management's game plan for achieving financial objectives B. The strategy concerns how to compete successfully and the business model concerns how to operate efficiently C. A company's strategy is management's game plan for realizing the strategic vision whereas a company's business model is the game plan for accomplishing the business purpose or mission D. Strategy relates broadly to a company's competitive moves and business approaches (which may or may not lead to profitability) while its business model relates to whether the revenues and costs flowing from the strategy demonstrate that the business is viable from the standpoint of being able to earn satisfactory profits and returns on investment E. A company's strategy concerns how to please customers while its business model concerns how to please shareholders

D

The task of driving forces analysis is to A. Develop a comprehensive list of all the potential causes of changing industry conditions B. Predict which new driving forces will emerge next C. Determine which of the five competitive forces is the biggest driver of industry change D. Identify the driving forces, assess whether their impact will make the industry more or less attractive and determine what strategy changes are needed to prepare for the impacts of the driving forces

D

Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of A. Whether the profits of suppliers are relatively high or low B. The number of suppliers that each seller/industry member purchases from on average C. How aggressively rival industry members are trying to differentiate their products D. Whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor and the extent of seller-supplier collaboration in the industry

D

Which of the following are most unlikely to qualify as driving forces? A. Changes in the long-term industry growth rate, the entry or exit of major firms and changes in cost and efficiency B. Increasing globalization of the industry and product innovation C. New Internet technology applications, new government regulations and significant changes in government policy toward the industry D. Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances

D

Which of the following statements about a company's strategy is true? A. A company's strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level managers (so as to catch rival companies by surprise when the strategy is launched) B. A company's strategy is typically planned well in advance and usually deviates little from the planned set of actions and business approaches because of the risks of making on-the-spot changes C. A company's 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 D. A company's strategy is typically a blend of proactive and reactive strategy elements E. A company's strategy is developed mostly on the fly because of the constant efforts of managers to come up with fresh moves to keep the company's product offering clearly different and set apart from the product offerings of rival companies

D

Which one of the following is not a characteristic of an effectively-worded strategic vision statement? A. Directional (is forward-looking, describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future) B. Easy to communicate (is explainable in 10-15 minutes, can be reduced to a memorable slogan) C. Graphic (paints a picture of the kind of company management is trying to create and the market position(s) the company is striving to stake out) D. Consensus-driven (commits the company to a "mainstream" directional path that most all stakeholders will enthusiastically support) E. Focused (is specific enough to provide guidance to managers in making decisions and allocating resources)

D

Which one of the following is not a common type of driving force? A. Reductions in uncertainty and business risk B. Changing societal concerns, attitudes and lifestyles C. Diffusion of technical know-how across more companies and more countries D. Increasing efforts on the part of industry members to collaborate closely with their suppliers

D

Which one of the following is not one of the five basic tasks of the strategy-making, strategy-executing process? A. Forming a strategic vision of where the company needs to head and what its future business make-up will be B. Setting objectives to convert the strategic vision into specific strategic and financial performance outcomes for the company to achieve C. Crafting a strategy to achieve the objectives and get the company where it wants to go D. Developing a profitable business model E. Implementing and executing the chosen strategy efficiently and effectively

D

Which one of the following pairs of variables is least likely to be useful in drawing a strategic group map? A. Geographic coverage and degree of vertical integration B. Brand name reputation and distribution channel emphasis C. Product quality and product line breadth D. Level of profitability and size of market share

D

Which of the following accurately characterize a best-cost provider strategy? A) The strategic target is price-conscious buyers B) A marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes C) A product line that stresses wide selection, many product variations, and emphasis on differentiating features D) A competitive advantage based on more value for the money E) Using constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy

D) A competitive advantage based on more value for the money

Which of the following are distinguishing features of a best-cost provider strategy? A) The strategic target is price-conscious buyers B) A marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes C) A product line that stresses wide selection, many product variations, and emphasis on differentiating features D) A competitive advantage based on more value for the money E) Using constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy

D) A competitive advantage based on more value for the money

Which of the following is the best example of related diversification? A) A manufacturer of golf shoes diversifying into the production of fishing rods and fishing lures B) A homebuilder acquiring a building materials retailer C) A steel producer acquiring a manufacturer of farm equipment D) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans) E) A publisher of college textbooks acquiring a publisher of magazines

D) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans)

Divestiture can be accomplished by A) selling a business outright. B) spinning the unwanted business off as a managerially and financially independent company by selling shares to the investing public via an initial public offering of stock. C) spinning the unwanted business off as a managerially and financially independent company by distributing shares in the new company to existing shareholders of the parent company. D) All of the above. E) None of the above—the best and quickest ways to divest a business are either to close it down or else just walk away and give the keys to creditors

D) All of the above.

Checking a diversified company's business lineup for resource fit does not involve which one of the following "tests?" A) Determining whether a company has or can develop the specific resource strengths and competitive capabilities needed to be successful in each of its businesses. B) Determining whether recently acquired businesses are acting to strengthen the company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thinly. C) Determining whether each business adequately contributes to achieving companywide performance targets. D) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses. E) Determining whether the company has adequate financial strength to fund the needs of its various businesses and maintain a healthy credit rating.

D) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses.

Which of the following is not a typical reason that many alliances prove unstable or break apart? A) Diverging objectives and priorities B) An inability to work well together C) The emergence of more attractive technological paths D) Disagreement over how to divide the profits gained from joint collaboration E) Changing conditions that render the purpose of the alliance obsolete

D) Disagreement over how to divide the profits gained from joint collaboration

Which of the following is not one of the benefits of outsourcing value chain activities presently performed in-house? A) Streamlines company operations in ways that improve organizational flexibility and cut the time it takes to get new products into the marketplace B) Allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best C) Helps the company assemble diverse kinds of expertise speedily and efficiently D) Enables a company to gain better access to end users and better market visibility E) Improves a company's ability to innovate

D) Enables a company to gain better access to end users and better market visibility

Which of the following is not among the disadvantages and managerial problems encountered by companies pursuing unrelated diversification strategies? A) Knowing so little about the industries in which each business competes, that management is unable to properly evaluate strategic proposals put forth by business-unit managers B) Being too unfamiliar with the issues and problems facing each subsidiary to effectively pick business-unit heads having the requisite combination of managerial skills and know-how C) The strain it places on corporate-level management in trying to stay on top of fresh industry developments and the strategic progress and plans of each business subsidiary D) Ending up with too many cash hog businesses (as compared to related diversification strategies where cash hog businesses are rare) E) The potential that corporate management will not know how to bail a business subsidiary that runs into deep trouble—because the company has diversified into businesses that corporate management has little experience or expertise in running

D) Ending up with too many cash hog businesses (as compared to related diversification strategies where cash hog businesses are rare) D) Ending up with too many cash hog businesses (as compared to related diversification strategies where cash hog businesses are rare)

Which of the following is not a potential advantage of backward vertical integration? A) Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage B) Reduced risk of disruptions in the supply and delivery of crucial materials and components C) Reduced costs for items purchased from suppliers (if internal manufacture is more economical than buying from powerful suppliers who have big profit margins and provided entry barriers into a supplier's business are low or can be hurdled) D) Enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality E) Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity)

D) Enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality

Which of the following is a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A) Striving to be the industry's low-cost provider, thereby aiming for a product-based competitive advantage B) Outcompeting rivals on the basis of such differentiating features as same quality, narrower product selection, or same value for the money C) Developing a best-cost provider strategy that gives the company competitive capabilities so that rivals can easily imitate with capabilities of their own to even the playing field D) Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche E) All of these.

D) Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche

Which of the following conditions generally raise the barriers to entering an industry? A) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry B) Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty C) Product offerings that are pretty much standardized from rival to rival D) High capital requirements, and difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, E) The industry is not characterized by scale economies and/or sizable learning/experience curve effects and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer

D) High capital requirements, and difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves,

Which of the following is not an important factor for company managers to consider in drawing conclusions about whether the industry presents an attractive opportunity? A) Whether powerful competitive forces are squeezing industry profitability to subpar levels and whether competition appears destined to grow stronger or weaker B) The industry's growth potential and the degree of uncertainty and risk in the industry's future C) Whether industry profitability will be affected favorably or unfavorably by the prevailing driving forces D) How many of the industry's key success factors do companies in the industry typically incorporate into their strategies E) The company's ability to capitalize on the vulnerabilities of weakly positioned rivals and whether the company has sufficient competitive strength to defend against or counteract the factors that make the industry unattractive

D) How many of the industry's key success factors do companies in the industry typically incorporate into their strategies

Which of the following questions tests the merits of the firm's strategy and distinguishes it as a winning strategy? A) Is the company's strategy ethical and socially responsible and does it put enough emphasis on good product quality and good customer service? B) Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? C) Is the strategy resulting in the development of additional competitive capabilities? D) Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance? E) Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?

D) Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance?

Which one of the following is not something to look for in trying to identify and understand what a company's strategy is? A) Actions to strengthen the firm's bargaining position with suppliers, distributors, and others. B) 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. C) Actions to gain sales and market share with lower prices based on lower costs. D) Its actions to revise the company's strategic vision and business model E) Actions to enter new product or geographic markets or to exit existing ones

D) Its actions to revise the company's strategic vision and business model

Which one of the following is not a good type of rival for an offensive-minded company to target? A) Market leaders that are vulnerable B) Runner-up firms with weaknesses in areas where the challenger is strong. C) Small local and regional companies with limited capabilities D) Other offensive-minded companies with a sizable war chest of cash and marketable securities E) Struggling enterprises that are on the verge of going under

D) Other offensive-minded companies with a sizable war chest of cash and marketable securities

The options for attacking the high costs of items purchased from suppliers does not include which one of the following? A) Pressuring suppliers for more favorable prices B) Integrating backward into the business of high-cost suppliers and making the item in-house so as to better control the cost C) Switching to lower priced substitute inputs D) Raising prices to customers (so as to cover the high costs) E) Collaborating closely with suppliers to identify mutual cost-saving opportunities

D) Raising prices to customers (so as to cover the high costs)

Which of the following statements about cross-business strategic fit in a diversified enterprise is not accurate? A) Strategic fit between two businesses exists when the management know-how accumulated in one business is transferable to the other. B) Strategic fit exists when two businesses present opportunities to economize on marketing, selling, and distribution costs. C) Competitively valuable cross-business strategic fits are what enable related diversification to produce a 1 + 1 = 3 performance outcome. D) Strategic fit is primarily a byproduct of unrelated diversification and exists when the value chain activities of unrelated businesses possess economies of scope and good financial fit. E) Strategic fit exists when a company can transfer its brand name reputation to the products of a newly acquired business and add to the competitive power of the new business.

D) Strategic fit is primarily a byproduct of unrelated diversification and exists when the value chain activities of unrelated businesses possess economies of scope and good financial fit.

Which one of the following is not something to look for in identifying a company's strategy? A) Its actions to enter new geographic or product markets or exit existing ones and its actions to form strategic alliances and collaborative partnerships B) Its actions to merge with or acquire another company in order to strengthen the company's business position C) Its actions to capture emerging market opportunities and defend against external threats to the company's business prospects D) The company's actions to validate and improve upon its business model E) The actions and approaches that define how a company manages such functions as R&D, production, sales and marketing, and finance

D) The company's actions to validate and improve upon its business model

Which of the following is not a distinguishing feature of a low-cost provider strategy? A) The product line consists of a few basic models having minimal frills and acceptable quality B) The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features C) The marketing emphasis is on making virtues out of product features that lead to low cost D) The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations E) Sustaining the strategy revolves around managing costs down year-after-year and delivering good value at economical prices

D) The strategic target is value-conscious buyers and sustaining the strategy depends on frequent advances in technology and occasional product innovations

Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies? A) To gain wider access to attractive country markets B) To gain better access to scale economies in production and/or marketing C) To fill competitively important gaps in their technical expertise and/or knowledge of local markets D) To better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization E) To share distribution facilities and dealer networks, thus mutually strengthening the allies' access to buyers

D) To better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization

Which of the following is not a typical strategic objective or benefit that drives mergers and acquisitions? A) To gain quick access to new technologies or other resources and capabilities B) To create a more cost-efficient operation out of the combined companies C) To expand a company's geographic coverage D) To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy E) To extend a company's business into new product categories

D) To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy

Which one of the following is not a reason why a company decides to enter foreign markets? A) To spread business risk across a wider geographic market base B) To capitalize on company competencies and capabilities C) To achieve lower costs and enhance the firm's competitiveness D) To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation E) To gain access to more buyers for the company's products/services

D) To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation

In which of the following circumstances is a strategy to be the industry's overall low-cost provider not particularly well matched to the market situation? A) When the offerings of rival firms are essentially identical, standardized, commodity-like products B) When there are few ways to achieve differentiation that have value to buyers C) When price competition is especially vigorous D) When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high E) When entry barriers are low and there is a stream of newcomers to the industry

D) When buyers have widely varying needs and special requirements and the prices of substitute products are relatively high

In which of the following instances is being a first-mover not particularly advantageous? A) When moving first with a preemptive strike makes imitation difficult or unlikely B) When first-time buyers remain strongly loyal to pioneering firms in making repeat purchases C) When early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals D) When markets are slow to accept the innovative product offering of a first-mover and fast followers possess sufficient resources and marketing muscle to overtake a first mover E) When being a pioneer helps build a firm's image with buyers

D) When markets are slow to accept the innovative product offering of a first-mover and fast followers

n which of the following cases are late-mover advantages (or first-mover disadvantages) not likely to arise? A) When the costs of pioneering are much higher than being a follower and only negligible learning/ experience benefits accrue to the pioneer B) When the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover C) When the pioneer's products are somewhat primitive and are easily bested by late movers D) When opportunities exist to invent a new industry or distinctive market segment that creates altogether new demand E) When technological change is rapid and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own

D) When opportunities exist to invent a new industry or distinctive market segment that creates altogether

Which one of the following is not a factor that makes it appealing to diversify into a new industry by forming an internal start-up subsidiary to enter and compete in the target industry? A) When internal entry is cheaper than entry via acquisition. B) When a company possesses the skills and resources to overcome entry barriers and there is ample time to launch the business and compete effectively. C) When adding new production capacity will not adversely impact the supply demand balance in the industry by creating oversupply conditions D) When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms E) When incumbent firms are likely to be slow or ineffective in combating a new entrant's efforts to crack the market

D) When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms

Which one of the following is not a good indicator of how well a company's present strategy is working? A) Whether its sales are growing faster than, slower than, or about the same pace as the market as a whole, thus resulting in a rising, falling, or stable market share. B) How well the company stacks up against rivals on such factors as technology, product quality, customer service, product innovation, delivery time, speed in getting new products to market, and other factors on which buyers base their choice of brands C) Whether the firm's profit margins are increasing or decreasing and how well its margins compare to rival firms' margins D) Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities E) The firm's image and reputation with its customers and whether the company's overall financial strength and credit rating are improving or on the decline

D) Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities

Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures? A) Whether certain needed inputs are in short supply and whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price B) Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs C) Whether industry members are major customers of suppliers and whether suppliers' sales to members of this one industry constitute a big percentage of their total sales D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers E) Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product

D) Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers

Which of the following is not an aspect of the strategy-making challenge associated with competing in emerging industries? A) Strong learning and experience curve effects may be present, allowing significant price reductions as volume builds and costs fall B) Many potential buyers expect first-generation products to be rapidly improved and delay their purchase until technology and product design mature C) The marketing challenge is to induce first-time purchase and overcome customer concerns about product features, performance reliability, and conflicting claims of rival firms D) Whether to compete locally, regionally, nationally, internationally or globally E) There are often uncertainties surrounding an emerging industry's technology and there may also be no consensus regarding which product attributes will prove decisive in winning buyer favor

D) Whether to compete locally, regionally, nationally, internationally or globally

It is normal for a company's strategy to end up being A) little different from management's original planned set of actions and business approaches since making on-the-spot changes is too risky. B) a combination of defensive moves to protect the company's market share and offensive initiatives to set the company's product offering apart from rivals. C) pretty much like the strategies of other industry members since all companies are confronting much the same market conditions and competitive pressures. D) a blend of proactive actions to improve the company's competitiveness and financial performance and as-needed reactions to unanticipated developments and fresh market conditions. E) a mirror image of its business model, so as to avoid impairing company profitability.

D) a blend of proactive actions to improve the company's competitiveness and financial performance and as-needed reactions to unanticipated developments and fresh market conditions.

The basic premise of unrelated diversification is that A) the least risky way to diversify is to seek out businesses that are leaders in their respective industry. B) the best companies to acquire are those that offer the greatest economies of scope rather than the greatest economies of scale. C) the best way to build shareholder value is to acquire businesses with strong cross-business financial fit. D) any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity. E) the task of building shareholder value is better served by seeking to stabilize earnings across the entire business cycle than by seeking to capture cross-business strategic fits.

D) any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity.

Good strategy combined with good strategy execution: A) offers a surefire guarantee for avoiding periods of weak financial performance. B) are the two best signs that a company is a true industry leader. C) are more important management functions than forming a strategic vision and setting objectives. D) are the most telling signs of good management. E) signal that a company has a superior business model.

D) are the most telling signs of good management.

The rivalry among competing sellers in an industry intensifies A) when buyer demand for the product is growing rapidly. B) when customers are brand loyal and their costs to switch to competing brands or substitute products are relatively high. C) when buyer demand is strong and sellers have little or no excess capacity and only minimal inventories. D) as the number of rivals increases and as they become more equal in size and competitive capability. E) when the products of rival sellers are highly differentiated products and the industry consists of so many rivals that any one company's actions have little direct impact on rivals' business.

D) as the number of rivals increases and as they become more equal in size and competitive capability.

Successful differentiation allows a firm to A) be the industry's best-cost provider. B) set the industry ceiling on price. C) avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low. D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand. E) take sales and market share away from rivals by undercutting them on price.

D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.

To improve performance, there are many different avenues for outcompeting rivals such as: A) realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growth. B) achieving products analogous with competitors so as to be competitive in the same markets. C) pursing similar personalized customer service or quality dimensions as rivals. D) confining their operations to local or regional markets or developing product superiority or even concentrating on a narrow product lineup. E) None of these.

D) confining their operations to local or regional markets or developing product superiority or even concentrating on a narrow product lineup.

The objectives of a well-crafted strategy require management to strive to: A) match rival businesses products and quality dimensions in the marketplace. B) build profits for short-term success. C) realign the market to provoke change in rival companies. D) develop lasting success that can support growth and secure the company's future over the long term. E) re-create their business models regularly.

D) develop lasting success that can support growth and secure the company's future over the long term.

To create value for shareholders via diversification, a company must A) get into new businesses that are profitable. B) diversify into industries that are growing rapidly. C) spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries. D) diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses. E) diversify into businesses that have either key success factors or value chains that are similar to its present businesses

D) diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.

Strategies to restructure a diversified company's business lineup involves A) revamping the value chains of each of a diversified company's businesses. B) focusing on restoring the profitability of its money-losing businesses and thereby improving the company's overall profitability. C) revamping the strategies of its different businesses, especially those that are performing poorly. D) divesting some businesses and acquiring new ones so as to put a new face on a diversified company's business makeup. E) broadening the scope of diversification to include a larger number of smaller and more diverse businesses.

D) divesting some businesses and acquiring new ones so as to put a new face on a diversified company's business makeup.

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.

Companies racing against rivals for global market leadership often utilize strategic alliances and collaborative partnerships with companies in foreign countries in order to A) better master new technologies, combat the bargaining power of foreign suppliers and foreign buyers, and facilitate global vertical integration. B) build a bigger customer base quickly and better differentiate their product offerings. C) win stronger brand name recognition among foreign buyers. D) get into critical country markets quickly and accelerate the process of building a potent global market presence, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. E) gain better control over their foreign-related transportation and logistics costs.

D) get into critical country markets quickly and accelerate the process of building a potent global market presence, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

The most trustworthy signs of a well-managed company are A) a strong emphasis on offensive strategies rather than defensive strategies. B) a strategy matched to fast-evolving market conditions and bigger profit margins than rivals and a steady upward trend in net income. C) attractive bottom-line performance and a proven business model. D) good strategy and good strategy execution. E) having a profitable business model, a willingness to change the company's business model whenever circumstances warrant, and having a sustainable competitive advantage.

D) good strategy and good strategy execution.

Experience indicates that strategic alliances A) are generally successful. B) work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. C) work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies. D) have a high "divorce rate." E) are rarely useful in helping a company win the race for global industry leadership.

D) have a high "divorce rate."

A company achieves best-cost provider status by A) selling a product with the best cost at the best price. B) having the best cost (as compared to rivals) for each activity in the industry's value chain. C) providing buyers with the best attributes at the best cost. D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals. E) doing a better job than rivals of adopting the best operating practices.

D) incorporating attractive or upscale attributes into its product offering at a lower cost than rivals.

A blue ocean strategy A) is an offensive attack used by a market leader to steal customers away from unsuspecting smaller rivals. B) involves a preemptive strike to secure an advantageous position in a fast-growing market segment. C) works best when a company is the industry's low-cost leader. D) involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E) involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

D) involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new

In crafting a company's strategy: A) management's biggest challenge is how closely to mimic the strategies of successful companies in the industry. B) managers have comparatively little freedom in choosing the "hows" of strategy. C) managers are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility. D) managers need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals. E) managers are well-advised to be risk-averse and develop a "conservative" strategy—"dare-to-bedifferent" strategies rarely are successful.

D) managers need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals.

A low-cost provider's basis for competitive advantage is A) using an everyday low pricing strategy to gain the biggest market share. B) bigger profit margins than rival firms. C) high buyer switching costs because of the company's differentiated product offering. D) meaningfully lower overall costs than competitors. E) a reputation for charging the lowest prices in the industry.

D) meaningfully lower overall costs than competitors.

Calculating quantitative attractiveness ratings for the industries a diversified company has invested in A) allows a company to rank the competitive advantage opportunities in each industry from best to worst. B) helps identify which industries have the best/worst prospects for revenue growth. C) identifies which industry has the best/worst value chain from the standpoint of cost reduction potential. D) provides a basis for deciding whether a diversified company has good prospects for growth and profitability, given the attractiveness ratings of the industries in which it has business interests. E) helps identify which industry is likely to be the largest/smallest contributor to the company's growth and profitability

D) provides a basis for deciding whether a diversified company has good prospects for growth and profitability, given the attractiveness ratings of the industries in which it has business interests.

In a maturing market where the rates of growth are on the decline, rival firms can often improve their competitive position in the marketplace by A) pursuing backward and/or forward vertical integration to capture greater control over the industry value chain and shifting to standardized product offerings. B) concentrating on adding new models and performance features, emphasizing product innovation, and spending heavily on advertising to achieve much stronger product differentiation vis-à-vis rivals. C) shifting to focus or market niche strategies so as to concentrate exclusively on those buyers and models/ styles where demand is continuing to grow at above-average rates. D) pruning marginal products and models, improving value chain efficiency, trimming costs, acquiring rival firms at bargain prices, and building new or more flexible competitive capabilities, and expanding internationally. E) competing aggressively on the basis of superior customer service and adding new models and styles to broaden the product offering.

D) pruning marginal products and models, improving value chain efficiency, trimming costs, acquiring

Potentially promising strategy alternatives for a company that decides to stick with a declining industry, because top management is encouraged by the remaining opportunities and/or sees merit in striving for market share leadership, include A) deemphasizing superior quality and customer service and shifting to a more standardized product offering. B) concentrating on vertical integration to gain operating control over more stages of the industry's value chain. C) initiating deep price cuts to rekindle demand for the product. D) pursuing a focused strategy aimed at the fastest-growing or slowest-decaying market segments and stressing differentiation based on quality improvement and product innovation. E) steering a middle course between low-cost, differentiation and focusing and adopting a best-cost producer strategy aimed squarely at being a middle-of-the-market seller.

D) pursuing a focused strategy aimed at the fastest-growing or slowest-decaying market segments and

Assessments of the long-term attractiveness of each industry represented in a diversified company's lineup of businesses should be based on A) a complete value-chain analysis of each industry. B) whether the industries have the same kinds of driving forces. C) how many companies in each industry are making money and how many are losing money. D) quantitative industry attractiveness scores derived from rating each industry on several relevant attractiveness measures (weighted according to their relative importance in determining overall attractiveness). E) the competitive advantage potential offered by each industry's key success factors.

D) quantitative industry attractiveness scores derived from rating each industry on several relevant attractiveness measures (weighted according to their relative importance in determining overall attractiveness).

A turbulent or fast-changing industry environment is characterized by A) rapid entry and exit of participating firms (there's an unusually high competitor turnover rate compared to other industries). B) the need for industry members to change to radically different strategies several times a year (company strategies have a very short life). C) the rapid appearance and disappearance of industry driving forces (such that the industry is in constant turmoil). D) rapid technological change, short product life cycles, the entry of important new rivals, lots of competitive maneuvering by rivals, and fast-evolving customer requirements and expectations (all occurring in a manner that creates swirling market conditions). E) All of these.

D) rapid technological change, short product life cycles, the entry of important new rivals, lots of

Strategic group mapping is a helpful analytical tool for A) assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. B) determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. C) determining which company is the most profitable in the industry and why it is doing so well. D) revealing the market positions of key industry competitors. E) pinpointing which of the five competitive forces is the strongest and which is the weakest.

D) revealing the market positions of key industry competitors.

The customer value proposition lays out the company's approach to: A) meeting profitability guidelines without the risk of losing customers. B) operating efficiently given the current level of customers. C) embracing rival company approaches to gaining customers. D) satisfying buyer wants and needs at a price customers will consider a good value. E) None of the above.

D) satisfying buyer wants and needs at a price customers will consider a good value.

A firm pursuing a best-cost provider strategy A) seeks to be the low-cost provider in the largest and fastest growing (or best) market segment. B) tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C) tries to outcompete a low-cost provider by attracting buyers on the basis of charging the best price. D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/ features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes). E) seeks to achieve the best costs by using the best operating practices and incorporating the best features and attributes.

D) seeks to deliver superior value to buyers by satisfying their expectations on key quality/service/ features/performance attributes and beating their expectations on price (given what rivals are charging for much the same attributes).

Calculating quantitative attractiveness ratings for the industries a company has diversified into involves A) determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm's ability to compete successfully in each of its industries. B) determining each industry's average profit margins, calculating how far the firm's profit margins are above/below the industry averages, and then using these values to draw conclusions about industry attractiveness. C) rating the attractiveness of each industry's strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. D) selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group. E) identifying each industry's average price, rating the difficulty of charging an above-average price in each industry, and deciding whether the company's prospects for being able to charge above-average prices make the industry attractive or unattractive.

D) selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.

A company's business model: A) sets forth management's game plan for maximizing profits for shareholders. B) details exactly how management's strategy will result in the achievement of the company's strategic intent. C) explains how it will achieve high profit margins while at the same time charging relatively low prices to customers. D) sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner. E) sets forth management's long-term action plan for achieving market leadership.

D) sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner.

The success of unrelated diversification is dependent upon management's ability to A) acquire new businesses that utilize much the same technology as existing businesses. B) divest businesses whose competitive strategies do not match the overall competitive strategy of the corporation. C) acquire new businesses having attractive distribution-related and customer-related strategic fits with existing businesses. D) spotting bargain-priced companies with big upside potential and then turning around their operations quickly with the aid of the parent company's financial resources and managerial know-how. E) identify potential new acquisition candidates that are cash cows (as opposed to cash hogs)

D) spotting bargain-priced companies with big upside potential and then turning around their operations quickly with the aid of the parent company's financial resources and managerial know-how.

The two best reasons for investing company resources in vertical integration (either forward or backward) are to A) expand into foreign markets and/or control more of the industry value chain. B) broaden the firm's product line and/or avoid the need for outsourcing. C) gain a first mover advantage over rivals in revamping the industry value chain. D) strengthen the company's competitive position and/or boost its profitability. E) achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs.

D) strengthen the company's competitive position and/or boost its profitability.

The stand-out characteristic of multicountry competition is A) varying driving forces from country to country. B) varying competitive pressures from country to country. C) varying buyer requirements and expectations from country to country. D) that there is so much cross-country variation in market conditions and in the companies contending for leadership that the market contest among rivals in one country is not closely connected to the market contests in other countries—as a consequence, there is no global or world market, just a collection of self-contained country markets. E) varying degrees of product differentiation from country to country.

D) that there is so much cross-country variation in market conditions and in the companies contending for leadership that the market contest among rivals in one country is not closely connected to the market contests in other countries—as a consequence, there is no global or world market, just a collection of self-contained country markets.

The three tests for judging whether a particular diversification move can create value for shareholders are A) the attractiveness test, the profitability test, and the shareholder value test. B) the strategic fit test, the competitive advantage test, and the return on investment test. C) the resource fit test, the profitability test, and the shareholder value test. D) the attractiveness test, the cost-of-entry test, and the better-off test. E) the shareholder value test, the cost-of-entry test, and the profitability test.

D) the attractiveness test, the cost-of-entry test, and the better-off test.

To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: A) the attractiveness test, the barrier-to-entry test, and the growth test. B) the strategic fit test, the resource fit test, and the profitability test. C) the barrier-to-entry test, the growth test, and the shareholder value test. D) the attractiveness test, the cost-of-entry test, and the better-off test. E) the resource fit test, the strategic fit test, the profitability test, and the shareholder value test.

D) the attractiveness test, the cost-of-entry test, and the better-off test.

A country (or geographic region) becomes a company's profit sanctuary when: A) a majority of the company's customers are in that country. B) that country (or region) is where a company's prices are the highest of any country where it sells its product/service. C) a company pursues a "think local, act local" type of multicountry strategy in that country. D) the company earns a substantial portion of its total profits from sales in that nation due either to its strong or protected competitive position. E) the company is the market share leader in that country market.

D) the company earns a substantial portion of its total profits from sales in that nation due either to its strong or protected competitive position.

The two biggest drawbacks or disadvantages of unrelated diversification are A) under-emphasizing the importance of resource fit and the strong likelihood of diversifying into businesses that top management does not know all that much about. B) insufficient cash flows to finance so many different lines of business and a lack of uniformity among the strategies of the businesses it has diversified into. C) volatile sales and profits and making the mistake of diversifying into too many cash cow businesses. D) the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides. E) over-investing in the achievement of economies of scope and the difficulties of achieving a good mix of cash cow and cash hog businesses.

D) the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides.

Checking a diversified firm's business portfolio for the competitive advantage potential of cross-business strategic fits entails consideration of A) whether the parent's company's competitive advantages are being deployed to maximum advantage in each of its business units. B) whether the competitive strategies employed in each business act to reinforce the competitive power of the strategies employed in the company's other businesses. C) whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy. D) the extent to which there are competitively valuable relationships between the value chains of sister business units and what opportunities they present to reduce costs, share use of a potent brand name, create competitively valuable new capabilities via cross-business collaboration, or transfer skills or technology or intellectual capital from one business to another. E) how compatible the competitive strategies of the various sister businesses are and whether these strategies are properly aimed at achieving the same kind of competitive advantage.

D) the extent to which there are competitively valuable relationships between the value chains of sister business units and what opportunities they present to reduce costs, share use of a potent brand name, create competitively valuable new capabilities via cross-business collaboration, or transfer skills or technology or intellectual capital from one business to another.

A broad differentiation strategy improves profitability when A) it is focused on product innovation. B) differentiating enhances product performance. C) the differentiating features appeal to sophisticated and prestigious buyers. D) the extra price the product commands exceeds the added costs of achieving the differentiation. E) the differentiator charges a price that is only fractionally higher than the industry's low-cost provider.

D) the extra price the product commands exceeds the added costs of achieving the differentiation.

A company's strategy is a "work in progress" and evolves over time because of: A) the importance of developing a fresh strategic plan every year (which also has the benefit of keeping employees from becoming bored with executing the same strategy year after year). B) the ongoing need to imitate the new strategic moves of the industry leaders. C) the need to make regular adjustments in the company's strategic vision. D) the ongoing need of company managers to react and respond to changing market and competitive conditions. E) the frequent need to modify key elements of the company's business model.

D) the ongoing need of company managers to react and respond to changing market and competitive conditions.

An industry is said to be fragmented when A) it contains an unusually large number of different market segments and distinct buyer groups. B) demand for the product is scattered over many different country markets. C) the industry value chain is divided into 15 or more distinctly different stages. D) the supply side of the market is populated by hundreds, perhaps thousands of sellers, no one of which has a substantial share of total industry sales. E) the annual number of buyer-seller transactions is in the millions (or higher).

D) the supply side of the market is populated by hundreds, perhaps thousands of sellers, no one of which

Businesses are said to be "related" when A) they have several key suppliers and several key customers in common. B) their value chains have the same number of primary activities. C) their products are both sold through retailers. D) their value chains possess competitively valuable cross-business relationships that present opportunities to transfer resources from one business to another, combine similar activities and reduce costs, share use of a well-known brand name, and/or create mutually useful resource strengths and capabilities. E) many consumers buy the products/services of both businesses.

D) their value chains possess competitively valuable cross-business relationships that present opportunities to transfer resources from one business to another, combine similar activities and reduce costs, share use of a well-known brand name, and/or create mutually useful resource strengths and capabilities.

The value of determining the relative competitive strength of each business a company has diversified into is A) to have a quantitative basis for identifying which businesses have large/small competitive advantages or competitive disadvantages vis-à-vis the rivals in their respective industries. B) to have a quantitative basis for rating them from strongest to weakest in terms of contributing to the corporateparent's revenue growth. C) to compare resource strengths and weaknesses, business by business. D) to have a quantitative basis for rating them from strongest to weakest in contending for market leadership in their respective industries. E) to have a quantitative basis for rating them from strongest to weakest in terms of contributing to the corporateparent's profitability.

D) to have a quantitative basis for rating them from strongest to weakest in contending for market leadership in their respective industries.

A key approach for a company to grow sales and profits in several country markets is to A) employ an export strategy rather than a global strategy. B) locate distribution centers close to buyers. C) minimize transportation costs among these markets. D) transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities. E) take advantage of subsidies offered by a company's host country government.

D) transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.

The 9-cell industry attractiveness-competitive strength matrix A) is a valuable tool for ranking a company's different businesses from best to worst based on strategic fit. B) shows which of a diversified company's businesses have good/poor resource fit. C) indicates which businesses have the highest/lowest economies of scale and which have the highest/lowest economies of scope. D) uses quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix—the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness. E) pinpoints which of a diversified company's businesses are resource-rich cash cows and which are resource-poor cash hogs.

D) uses quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix—the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.

Whether the buyers of an industry's product have strong or weak bargaining leverage over the terms and conditions of sale depends on A) how often that sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently. B) the frequency with which rival firms change strategies and the amount of advertising that sellers utilize. C) whether all buyers have the same degree of negotiating power, whether the item carries a high or low price tag, and whether there are many or few collaborative partnerships between sellers and buyers. D) whether buyers purchase in relatively large or small quantities, and how well informed buyers are about sellers' prices, products, and costs. E) whether buyer demand is seasonal or year-round, whether entry barriers are high or low, and whether competitive pressures from substitutes are strong or weak.

D) whether buyers purchase in relatively large or small quantities, and how well informed buyers are about sellers' prices, products, and costs.

The tests of whether a diversified company's businesses exhibit resource fit do not include A) whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses. B) whether a business adequately contributes to achieving the corporate parent's performance targets. C) whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating. D) whether the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money. E) whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into.

D) whether the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.

One of the biggest strategy issues confronting a company competing in the international arena is A) whether to enter country markets where competitive forces are relatively strong or whether to only enter country markets where competition is relatively weak. B) whether to charge the same price in all country markets. C) whether to license a select few or a large number of foreign firms to produce and distribute the company's products. D) whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the preferences and requirements of local buyers. E) how many strategic alliances to form with foreign-based firms.

D) whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the preferences and requirements of local buyers.

Which of the following statements about a company's realized strategy is true? A. A company's realized strategy is mostly hidden to outside view and is deliberately kept under wraps by top-level managers. 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 generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. D. A company's realized strategy is typically a blend of deliberate/planned initiatives and emergent/unplanned reactive strategy elements. E. A company's realized strategy is developed mostly on the fly because of the constant efforts of managers to keep rival companies at a disadvantage.

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

Which of the following does not accurately characterize the differences between a localized multidomestic strategy and a global strategy? A. A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries. B. A global strategy often entails use of the best suppliers from anywhere in the world whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments). C. A global strategy tends to involve use of similar distribution and marketing approaches worldwide whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country. D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries. E. A global strategy relies upon the same technologies, competencies, and capabilities worldwide whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.

A company's realized strategy is made up of A. deliberate/planned initiatives that have proven themselves in the marketplace and newly launched initiatives aimed at further boosting performance. B. emergent/reactive adjustments to unanticipated strategic moves by rivals, unexpected changes in customer preferences, and new market opportunities. C. tactical plans to imitate the key elements of the strategies employed by rivals. D. Both A and B. E. All of these.

D. Both A and B.

Successful differentiation allows a firm to A. Be the industry's best-cost provider B. Set the industry ceiling on price C. Avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low D. Command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal)

D. Command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal)

The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to A. Tout the company's lower prices B. Tout the lack of frills and extras C. Out-advertise rivals and make frequent use of discount coupons D. Communicate the attractive features of a budget-priced product offering that fits niche members' expectations

D. Communicate the attractive features of a budget-priced product offering that fits niche members' expectations

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made

D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets. B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates. C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to. E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A. Prepare to compete on the basis of low price B. Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding) C. Try to change the local market to better match the way the company does business elsewhere D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly E. Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances

D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A. Prepare to compete on the basis of low price B. Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding) C. Try to change the local market to better match the way the company does business elsewhere D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly E. Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances

D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly

To succeed with a low-cost provider strategy, company managers have to To succeed with a low-cost provider strategy, company managers have to A. Pursue backward or forward integration to detour suppliers or buyers with considerable bargaining power and leverage B. Move the performance of most all value chain activities to low-wage countries C. Sell direct to users of their product or service and eliminate use of wholesale and retail intermediaries D. Do two things: (1) do a better job than rivals of pursuing cost savings throughout the value chain and (2) be proactive in revamping the firm's overall value chain to eliminate low value-added activities and bypass "nonessential" cost-producing activities

D. Do two things: (1) do a better job than rivals of pursuing cost savings throughout the value chain and (2) be proactive in revamping the firm's overall value chain to eliminate low value-added activities and bypass "nonessential" cost-producing activities

Which of the following does not represent a potential core competence? A. Skills in manufacturing a high-quality product at a low cost B. Know-how in creating and operating systems for cost-efficient supply chain management C. The capability to fill customer orders accurately and swiftly D. Having a wider product line than rivals E. The capability to speed new or next-generation products to the marketplace

D. Having a wider product line than rivals

Which of the following is not a factor to consider in identifying an industry's dominant economic features? A. Market size and growth rate B. The extent of backward and forward integration and buyer needs and requirements C. Whether the products or services of rival firms are becoming more or less differentiated D. How strong driving forces and competitive forces are

D. How strong driving forces and competitive forces are

Which one of the following is not something that can be gleaned from identifying a company's resource strengths, resource weaknesses, market opportunities, and external threats? A. How to improve a company's strategy by using company strengths and capabilities as cornerstones for its strategy B. Which market opportunities are best suited to a company's strengths and capabilities C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats D. How to turn a core competence into a distinctive competence E. Whether any of the company's resource strengths can be used to help lessen the impact of external threats

D. How to turn a core competence into a distinctive competence

Which of the following is not accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. It entails drawing upon the results and conclusions from analyzing the company's external environment B. It entails drawing on the results and conclusions from evaluating the company's own resources and competitive position C. It entails developing a "worry list" of "how to," "whether to.," and "what to do about.." D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment

D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment

Which of the following is not accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention? A. It entails drawing upon the results and conclusions from analyzing the company's external environment. B. It entails drawing on the results and conclusions from evaluating the company's own resources and competitive position. C. It entails developing a "worry list" of "how to...," "whether to....," and "what to do about....." D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment. E. Developing a list of what issues and problems that managements need to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company's position and prospects.

D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment.

Which of the following statements regarding global competition is false? A. In global competition, rivals vie for worldwide market leadership. B. In globally competitive industries, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets. C. In global competition, a firm's overall competitive advantage (or disadvantage) grows out of its entire worldwide operations. D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails. E. In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a strong global position in the industry.

D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails.

Which one of the following is NOT a common type of driving force? A. Reductions in uncertainty and business risk B. Changing societal concerns, attitudes, and lifestyles C. Diffusion of technical know-how across companies and countries D. Increasing efforts to collaborate closely with suppliers E. Advances in technology and manufacturing process innovation

D. Increasing efforts to collaborate closely with suppliers

Which of the following are most UNLIKELY to qualify as driving forces? A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency B. Increasing globalization of the industry and product innovation C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry D. Increasing efforts to collaborate with suppliers via strategic alliances and partnerships, escalating risk levels and normalization of cost and efficiency in the industry E. Marketing innovations and changes in who buys the industry's product and how they use it

D. Increasing efforts to collaborate with suppliers via strategic alliances and partnerships, escalating risk levels and normalization of cost and efficiency in the industry

Which of the following is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)? A. Shifting to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets B. Trying to make up the difference by cutting costs earlier in the value chain C. Pressuring distributors-dealers and other forward channel allies to reduce their costs and markups so as to make the final price to buyers more competitive with the prices of rivals D. 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 E. Working closely with forward channel allies to identify win-win opportunities to reduce costs

D. 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

Which of the following questions ought to be used to test the merits of one strategy over another and distinguish a winning strategy from a mediocre or losing strategy? A. Is the company's strategy ethical and socially responsible and does it put enough emphasis on good product quality and good customer service? B. Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? C.Is the strategy resulting in the development of additional competitive capabilities? D. Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting in better company performance? E.Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?

D. Is the strategy helping the company achieve a sustainable competitive advantage and is it resulting inbetter company performance?

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 contain a sufficient number of emergent/reactive elements? B. Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? C. Is the strategy resulting in the development of additional competitive capabilities? D. Is the strategy well-matched to the company's situation, helping the company achieve a sustainable competitive advantage, and resulting in better company performance? E. Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction?

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

Which one of the following does not cause the rivalry among competing sellers to be weak? A. High buyer switching costs B. Rapid growth in buyer demand C. Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales D. Low barriers to entry

D. Low barriers to entry

Which one of the following does NOT cause the rivalry among competing sellers to be weak? A. High buyer switching costs. B. Rapid growth in buyer demand. C. Industry conditions that tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. Low barriers to entry. E. Strongly differentiated products among rival sellers.

D. Low barriers to entry.

Which of the following is not one of the problems and risks of strategic alliances between domestic and foreign firms? A. Overcoming language and cultural barriers B. The amount of time required to build trust, effective communication, and coordination between allies C. Developing mutually agreeable ways of dealing with key issues or differences D. Making it harder to pursue a multidomestic strategy as compared to a global strategy E. Suspicions about whether allies are being forthright in exchanging information and expertise

D. Making it harder to pursue a multidomestic strategy as compared to a global strategy

Which of the following is not one of the problems and risks of strategic alliances between domestic and foreign firms? A. Overcoming language and cultural barriers and the sometimes extensive managerial time required for trust-building, communication, and coordination B. The trouble allies can have reaching mutually agreeable ways to deal with key issues C. Becoming overly dependent on another company for essential expertise and competitive capabilities D. Making it harder to pursue a multidomestic strategy as compared to a global strategy E. Suspicions about whether allies are being forthright in exchanging information and expertise

D. Making it harder to pursue a multidomestic strategy as compared to a global strategy

Which of the following is NOT generally a "driving force" capable of producing fundamental changes in industry and competitive conditions? A. Changes in the long-term industry growth rate B. Increasing globalization of the industry C. Product innovation and technological change D. Movement in the economy and in interest rates E. Regulatory influences and government policy changes

D. Movement in the economy and in interest rates

The obligations of an investor-owned company's board of directors in the strategy-making, strategy-executing process include A. Coming up with compelling strategy proposals of their own to debate against those put forward by top management B. Taking the lead in formulating the company's strategic plan but then delegating the task of implementing and executing the strategic plan to the company's CEO and other senior executives C. Taking the lead in developing the company's business model and strategic vision D. Overseeing the company's financial accounting and financial reporting practices and evaluating the caliber of senior executives' strategy-making/strategy-executing skills

D. Overseeing the company's financial accounting and financial reporting practices and evaluating the caliber of senior executives' strategy-making/strategy-executing skills

Rivalry among competing sellers is generally more intense when A. There are relatively few industry key success factors and rivals have highly differentiated products B. The industry's driving forces are strong and rivals have strongly differentiated products C. Barriers to entry are moderately high and the pool of likely entry candidates is small D. Rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising and otherwise gain sales and market share

D. Rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising and otherwise gain sales and market share

Which of the following is not a potential benefit of strategic alliances or other cooperative arrangements between foreign and domestic companies? A. Gaining wider access to attractive country markets B. Gaining better access to scale economies in production and/or marketing C. Filling competitively important gaps in technical expertise and/or knowledge of local markets D. Safeguarding the company's dependence, allowing for positive engagement once the purpose has been served and ensuring products of important technical standardization requirements are not developed E. Sharing distribution facilities and dealer networks, thus mutually strengthening access to buyers

D. Safeguarding the company's dependence, allowing for positive engagement once the purpose has been served and ensuring products of important technical standardization requirements are not developed

Which of the following is not a factor to consider in identifying an industry's dominant economic features? A. Market size and growth rate B. The extent of backward and forward integration and buyer needs and requirements C. Whether the products or services of rival firms are becoming more or less differentiated D. Strength of driving forces and competitive forces E. The pace of technological change, scale economies and experience curve effects, and product innovation

D. Strength of driving forces and competitive forces

The primary role of a functional strategy is to A. Unify the company's various operating-level strategies B. Specify how to build and strengthen the skills, expertise and competencies needed to execute operating-level strategies successfully C. Support and add power to the corporate-level strategy D. Support the overall business strategy and competitive approach E. Create compatible degrees of strategic intent among a company's different business functions

D. Support the overall business strategy and competitive approach

The competitive force of rival firms' jockeying for better market positions, higher sales and market shares and competitive advantage A. Is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies B. Is typically a weaker competitive force than is the threat of entry of new rivals C. Is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales D. Tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders

D. Tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders

Which of the following is NOT a factor to consider when identifying economic conditions in the macroenvironment? A. The movement and influence of exchange rates, the inflation rate and per capita domestic product on the industry B. The implications of trade deficits or surpluses on the macro-environment C. The strategically relevant general economic climate outside the firm's industry boundaries D. The combined strength of the competitive factors influencing the firm and their implications for strategic momentum and the moves and countermoves of rivals impacted by the economy at large E. Conditions in the markets for stocks and bonds, which can affect consumer confidence and discretionary income

D. The combined strength of the competitive factors influencing the firm and their implications for strategic momentum and the moves and countermoves of rivals impacted by the economy at large

Which one of the following provides the most accurate picture of whether a company is cost competitive with its rivals? A. How the costs of the company's internally performed activities (its own value chain) compare against the costs of the internally-performed activities of rival companies B. Costs in the value chains of the company's suppliers C. Costs in the value chains of a company's distributors and retail dealers and forward channel allies D. The costs of a company's internally performed activities, costs in the value chains of both the company's suppliers and forward channel allies, and how all these costs compare against the costs that make up the value chain systems employed by rival firms E. Whether the company has a longer or shorter value chain than its close rivals

D. The costs of a company's internally performed activities, costs in the value chains of both the company's suppliers and forward channel allies, and how all these costs compare against the costs that make up the value chain systems employed by rival firms

What can happen when international rivals compete against one another in multiple-country markets? A. Businesses create attractive industries which would have badly deteriorated. B. Would create a business line up that consists of too many slow-growth, declining, low-margin, or competitively weak businesses. C. A greater diversity in the types of value chain activities between each business. D. The deterrence effect that restrains them from taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war. E. Increased shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

D. The deterrence effect that restrains them from taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war.

Which of the following best describes the market opportunities that tend to be most relevant to a particular company? A. Those market opportunities that provide avenues for taking market share away from close rivals and enhance a company's image as a leader in product innovation and product quality. B. Those market opportunities that offer the company a chance to raise entry barriers. C. Those market opportunities that help promote greater diversification of revenues and profits. D. Those market opportunities that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage. E. Those market opportunities that help correct a company's biggest weaknesses and competitive deficiencies.

D. Those market opportunities that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage.

Which one of the following is not a reason a company decides to enter foreign markets? A. To spread business risk across a wider geographic market base B. To capitalize on company competencies and capabilities C. To achieve lower costs and enhance the firm's competitiveness D. To build the profit sanctuaries necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market E. To gain access to more buyers for the company's products/services d

D. To build the profit sanctuaries necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market

A broad differentiation strategy improves profitability when A. It is focused on product innovation B. Differentiating enhances product performance C. The differentiating features appeal to sophisticated and prestigious buyers D. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

D. Unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

Which of the following is NOT among the factors that affect whether competitive rivalry among participating firms is strong, moderate, or weak? A. Whether the products of rival sellers are strongly or weakly differentiated B. Whether demand for the industry's product is growing rapidly or slowly C.The degree to which rivals deploy whatever means it believes will attract and retain buyers, strengthen market position, and yield good profits D. Whether the industry's key driving forces yield firms in the industry with adequate profits are strong or weak E. Whether industry conditions tempt competitors to use price discounting or other competitive weapons to boost total sales volume and market share

D. Whether the industry's key driving forces yield firms in the industry with adequate profits are strong or weak

It is normal for a company's strategy to end up being A. a blend of offensive actions and defensive moves to counteract changing market conditions to improve the company's profitability. B. a combination of conservative moves to protect the company's market share and somewhat more risky initiatives to set the company's product offering apart from rivals. C. a close imitation of the strategy employed by the recognized industry leader. D. a blend of deliberate planned actions to improve the company's competitiveness and financial performance and as-needed unplanned reactions to unanticipated developments and fresh market conditions. E. more a product of clever entrepreneurship than of efforts to clearly set a company's product/service offering apart from the offerings of rivals.

D. a blend of deliberate planned actions to improve the company's competitiveness and financial performance and as-needed unplanned reactions to unanticipated developments and fresh market conditions.

The difference between a company competence and a core competence is that A. a company competence refers to a company's best-executed functional strategy and a core competence refers to a company's best-executed business strategy. B. a company competence refers to a company's strongest resource whereas a core competence refers to a company's lowest-cost and most efficiently performed value chain activity. C. a company competence is a competitively relevant activity which a firm performs especially well relative to other internal activities, whereas a core competence is an activity that a company has learned to perform proficiently. D. a company competence represents real proficiency in performing an internal activity whereas a core competence is a competitively relevant activity which a firm performs better than other internal activities. E. a core competence usually resides in a company's technology and physical assets whereas a company competence usually resides in a company's human assets and intellectual capital.

D. a company competence represents real proficiency in performing an internal activity whereas a core competence is a competitively relevant activity which a firm performs better than other internal activities.

Good strategy combined with good strategy execution A. offers a surefire guarantee for avoiding periods of weak financial performance. B. are the two best signs that a company is a true industry leader. C. are more important management functions than forming a strategic vision and setting objectives. D. are the most trustworthy signs of good management. E. signal that a company has a superior business model.

D. are the most trustworthy signs of good management.

The advantages of manufacturing goods in a particular country and exporting them to foreign markets A. are largely unaffected by fluctuating exchange rates. B. are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders. C. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

The advantages of manufacturing goods in a particular country and exporting them to foreign markets A. are largely unaffected by fluctuating exchange rates. B. are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders. C. can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold. D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. E. are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

D. are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

Industry conditions change: A. because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers. B. because of newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups. C. because new industry key success factors emerge. D. because important forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways. E. chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

D. because important forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways.

The advantages of using a licensing strategy to participate in foreign markets include A. being especially well suited to achieve scale economies. B. being able to charge lower prices than rivals. C. enabling a company to achieve first-mover advantages quickly and easily. D. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky. E. being able to achieve higher product quality and better product performance than with an export strategy.

D. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

The advantages of using a licensing strategy to participate in foreign markets include A. being especially well suited to the use of cross-market subsidization. B. being able to charge lower prices than rivals. C. enabling a company to achieve competitive advantage quickly and easily. D. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky. E. being able to achieve higher product quality and better product performance than with an export strategy.

D. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

Industry rivals tend to experience weak competitive pressures from substitute products when: A. the available substitute products are weakly differentiated from one another. B. the buyers of the industry's products are few in number and they have substantial amounts of leverage with sellers. C. rival sellers experience strong bargaining power from both suppliers and influential customers. D. buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the quality, performance, and other attributes they deliver. E. the producers of substitute products are all pursuing strategies to strongly differentiate their products on the basis of quality and product performance.

D. buyers incur high costs in switching to substitutes and substitutes are higher priced relative to the

A company's strategy consists of A. actions to develop a more appealing business model than rivals. B. plans involving alignment of organizational activities and strategic objectives. C. offensive and defensive moves to generate revenues and increase profit margins. D. competitive moves and approaches that managers have developed to grow the business, attract and please customers, conduct operations, and achieve targeted objectives. E. its strategic vision, its strategic objectives, and its strategic intent.

D. competitive moves and approaches that managers have developed to grow the business, attract and please customers, conduct operations, and achieve targeted objectives.

A "think global, act global" approach to strategy-making is preferable to a "think local, act local" approach when A. customer preferences vary significantly from country to country. B. it is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions. C. plants need to be scattered across many countries to avoid high shipping costs. D. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

D. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

Perhaps the foremost strategic issue for a company in competing in the international arena is: A. how to avoid the risks of shifting exchange rates. B. whether to charge the same price in all country markets. C. how many foreign firms to license to produce and distribute the company's products. D. deciding upon the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country. E. whether to pursue a global strategy or an international strategy.

D. deciding upon the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country.

Value-creating activities A. focuses on exploiting a company's best-executed operating strategy. B. is based upon efficient performance of the company's primary value chain activities. C. concentrates on minimizing the costs associated with the design of a product or service. D. deliberately develop valuable competencies and capabilities that add to a company's competitive power in the marketplace. E. focuses on working with forward channel allies to develop capabilities to outmatch the capabilities of rivals.

D. deliberately develop valuable competencies and capabilities that add to a company's competitive power in the marketplace.

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by A. building a state-of-the-art facility to fully capture scale economies via an export strategy. B. using export, licensing, or franchising strategies so as to minimize risk and capital investment. C. locating buyer-related activities in all countries where it sells its product. D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets. E. avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets that it enters.

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.

The two most important parts of SWOT analysis are A. pinpointing the company's competitive assets and pinpointing its competitive liabilities. B. identifying the company's resource strengths and identifying the company's best market opportunities. C. identifying the external threats to a company's future profitability and pinpointing how many market opportunities it has. D. drawing conclusions from the SWOT listings about the company's overall situation and translating these into strategic actions to better match the company's strategy to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats. E. making accurate lists of the company's strengths, weaknesses, opportunities, and threats and then using these lists as a basis for ascertaining how well the company's strategy is working

D. drawing conclusions from the SWOT listings about the company's overall situation and translating these into strategic actions to better match the company's strategy to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats.

The drawbacks of a localized multidomestic strategy include A. hindering the use of cross-border coordination of a company's activities and increasing company vulnerability to adverse shifts in currency exchange rates. B. making it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods. C. making it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. D. hindering transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates. E. being unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company's business model to compete on the basis of low price.

D. hindering transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates.

The drawbacks of a localized multidomestic strategy include A. hindering the use of cross-market subsidization techniques and increasing company vulnerability to adverse shifts in currency exchange rates. B. making it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods. C. making it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. D. hindering transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates. E. being unsuitable for competing in the markets of emerging countries and posing added difficulty in building multiple profit sanctuaries.

D. hindering transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates.

The task of driving forces analysis is to: A. develop a comprehensive list of all the potential causes of changing industry conditions. B. predict which new driving forces will emerge next. C. determine which one of the five competitive forces is the biggest driver of industry change. D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces. E. learn what the industry key success factors are and how they might change in the future.

D. identify the driving forces, assess whether their impact will make the industry more or less attractive, and determine what strategy changes are needed to prepare for the impacts of the driving forces.

A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers: A. lacks powerful driving forces. B. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms. C. makes it challenging for industry members to compete successfully unless they can strongly differentiate their products. D. is conducive to industry members earning attractive profits. E. requires that industry members have low costs in order to be competitively successful.

D. is conducive to industry members earning attractive profits.

A competitive environment where there is weak to moderate rivalry among sellers, high entry barriers, weak competition from substitute products, and little bargaining leverage on the part of both suppliers and customers A. lacks powerful driving forces. B. gives each industry competitor the best potential for building sustainable competitive advantage over rival firms. C. makes it hard for industry members to compete successfully unless they can strongly differentiate their products. D. is conducive to industry members earning attractive profits. E. requires that industry members have low costs in order to be competitively successful.

D. is conducive to industry members earning attractive profits.

The competitive strategy of a firm pursuing a "think global, act local" approach to strategy making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versions for different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.

D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

he competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versions for different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.

D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

The value of doing competitive strength assessment is to A. determine how competitively powerful the company's core competencies are. B. learn if the company's market opportunities are better than those of its rivals. C. learn whether a company has a distinctive competence. D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals. E. determine whether a company's resource strengths are sufficient to allow it to earn bigger profits than rivals.

D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.

SWOT analysis A. is a way to measure whether a company's value chain is longer or shorter than the chains of key rivals. B. is a tool for benchmarking whether a firm's strategy is closely matched to industry key success factors. C. reveals whether a company is competitively stronger than its closest rivals. D. provides a good overview of whether a company's situation is fundamentally healthy or unhealthy. E. identifies the reasons why a company's strategy is or is not working very well.

D. provides a good overview of whether a company's situation is fundamentally healthy or unhealthy.

An industry contains one strategic group when all sellers: A. are subject to the same driving forces. B. are placing about the same emphasis on various distribution channels. C. use the same key success factors to differentiate their products. D. pursue essentially identical strategies and have similar market positions. E. pursue varying distribution channels and product attributes, and where their customer service attributes differentiate them in the marketplace.

D. pursue essentially identical strategies and have similar market positions.

Correctly diagnosing an industry's key success factors: A. points to those things that every firm in the industry needs to attend to in order to develop product propositions. B. hints at the firm's ability to generate above-average profitability. C. reveals the firms capabilities and resources are aligned with operating practices of industry participants. D. raises a company's chances of crafting a sound strategy. E. raises a company's sustainability dimensions and market characteristics in line with industry dynamics.

D. raises a company's chances of crafting a sound strategy.

Rivalry among competing sellers is generally more intense when: A. there are relatively few industry key success factors and rivals have highly differentiated products. B. the industry's driving forces are strong and rivals have strongly differentiated products. C. barriers to entry are moderately high and the pool of likely entry candidates is small. D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising, and otherwise gain sales and market share. E. barriers to entry are high and buyer switching costs are high.

D. rivals are active in making fresh moves to lower prices, introduce new products, increase promotional efforts and advertising, and otherwise gain sales and market share.

A company's business model A. sets forth management's game plan for maximizing profits for shareholders. B. details exactly how management's strategy will result in the achievement of the company's strategic intent. C. explains how it will achieve high profit margins while at the same time charging relatively low prices to customers. D. sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner. E. sets forth management's long term action plan for achieving market leadership.

D. sets forth the key components of the enterprise's business approach, indicates how revenues will be generated, and makes a case for why the strategy can deliver value to customers in a profitable manner.

The difference between a company's strategy and a company's business model is that A. a company's strategy is management's game plan for achieving strategic objectives while its business model is management's game plan for achieving financial objectives. B. the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. C. a company's strategy is management's game plan for realizing the strategic vision whereas a company's business model is the game plan for accomplishing the business purpose or mission. D. strategy relates broadly to a company's competitive moves and business approaches (which may or may not lead to profitability) while its business model relates to whether the revenues and costs flowing from the strategy demonstrate that the business is viable from the standpoint of being able to earn satisfactory profits and returns on investment. E. a company's strategy concerns how to please customers while its business model concerns how to please shareholders.

D. strategy relates broadly to a company's competitive moves and business approaches (which may or may not lead to profitability) while its business model relates to whether the revenues and costs flowing from the strategy demonstrate that the business is viable from the standpoint of being able to earn satisfactory profits and returns on investment.

A company's strategic options for remedying cost disadvantages in internally performed value chain activities do not include A. revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities). B. implementing the use of best practices, particularly for high-cost activities. C. investing in productivity-enhancing, cost-saving technological improvements. D. switching to activity-based costing. E. outsourcing the performance of high-cost activities to vendors that can perform them more cheaply.

D. switching to activity-based costing.

The competitive force of rival firms' jockeying for better market positions, higher sales and market shares, and competitive advantage A. is stronger when firms strive to be low-cost producers than when they use differentiation and focus strategies. B. is typically a weaker competitive force than is the threat of entry of new rivals. C. is largely unaffected by whether industry conditions tempt rivals to use price cuts or other competitive weapons to boost unit sales. D. tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders. E. is weaker when more firms have weakly differentiated products, buyer demand is growing slowly, and buyers have moderate switching costs.

D. tends to intensify when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform the acquired companies into strong market contenders.

One of the things that can be gleaned from a strategic group map of industry rivals is: A. which rivals have been in business longer and thus have greater access to experience curve effects. B. which rivals have newer manufacturing facilities and thus have achieved greater product quality. C. which strategic groups have the highest profit margins and the highest customer switching costs and thus represent key operating characteristics. D. that some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces. E. which strategic groups are currently being shunned by customers because of high prices and relatively low product quality.

D. that some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces.

In expanding outside its domestic market, one way a company can strive to gain competitive advantage (or offset domestic disadvantages) is by A. using a differentiation-based competitive strategy in those country markets with superior resources. B. deliberately choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D. using location in a manner that lowers costs or else helps achieve greater product differentiation and allowing for the transfer of competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets. E. employing a multidomestic strategy instead of a global strategy.

D. using location in a manner that lowers costs or else helps achieve greater product differentiation and allowing for the transfer of competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.

In expanding outside its domestic market, a company can gain competitive advantage by A. not pursuing costly efforts to build multiple profit sanctuaries. B. deliberately choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D. using location to lower costs or help achieve greater product differentiation and it can use cross-border coordination in ways a domestic-only competitor cannot. E. employing a multidomestic strategy instead of a global strategy.

D. using location to lower costs or help achieve greater product differentiation and it can use cross-border coordination in ways a domestic-only competitor cannot.

Diversified companies need to divest low-performing businesses or businesses that do not fit in order to concentrate on expanding existing businesses and entering new ones where opportunities are more promising.

Diversified companies need to divest low-performing businesses or businesses that do not fit in order to concentrate on expanding existing businesses and entering new ones where opportunities are more promising.

Diversified firms should divest low-performing businesses or businesses that do not fit in order to concentrate on expanding existing businesses and entering new ones where opportunities are more promising.

Diversified firms should divest low-performing businesses or businesses that do not fit in order to concentrate on expanding existing businesses and entering new ones where opportunities are more promising.

List the 7 dos and 7 don'ts of wording in a vision statement.

Dos 1. Be graphic. 2. Be forward-looking and directional. 3. Keep it focused. 4. Have some wiggle room. 5. Be sure the journey is feasible. 6. Indicate why the directional path makes good business sense. 7. Make it memorable. Don'ts 1. Don't be vague or incomplete. 2. Don't dwell on the present. 3. Don't use overly broad language. 4. Don't state the vision in bland or uninspiring terms. 5. Don't be generic. 6. Don't rely on superlatives. 7. Don't run on and on.

SWOT Analysis Involves

Drawing conclusions from the SWOT listings about the firm's overall situation Translating these conclusions into strategic actions by the firm that: - Match its strategy to its internal strengths & market opportunities - Correct important weaknesses and defend it against external threats

A company with strategic intent A. Is one that is going all-out to overcome the challenges of having encountered a strategic inflection point B. Is one that is putting much more emphasis on achieving its strategic objectives than its financial objectives C. Is one that has good alignment between its strategic objectives and its strategy D. Usually has an aggressive strategy and plan for growing its business E. Usually has an exceptionally bold and grandiose long-term objective—like becoming the dominant global market leader—and an unshakable commitment to concentrating its full resources and strategy on achieving that objective even if it takes 10 years or longer

E

A company's strategy can be considered "unethical" or shady A. If any of its actions constitute "unfair competition." B. If the company engages in actions or behaviors that are contrary to the general public interest C. If the company's actions/behaviors are harmful to its stakeholders—customers, employees, shareholders, suppliers and the communities in which the company operates D. If it entails actions or behaviors that cross the moral line from "can do" to "should not do" (because such actions are "unsavory" or unconscionable or unnecessarily harmful to the environment) E. All of the above call the company's actions/behaviors into question from an ethical standpoint

E

A company's strategy evolves over time as a consequence of A. The need to keep strategy in step with changing market conditions and changing customer needs and expectations B. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy C. The need to abandon some strategy features that are no longer working well D. The need to respond to the newly-initiated actions and competitive moves of rival firms E. All of these

E

Buyers are in position to exert strong bargaining power in dealing with sellers when A. Their costs to switch to competing brands or to substitute products are relatively high B. A particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands C. They buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products, prices and costs D. Buyer demand is growing rapidly E. The number of buyers is small or when a customer is particularly important to a seller

E

Evaluating whether an industry presents a sufficiently attractive business opportunity usually does not involve a consideration of which of the following factors? A. The industry's growth potential, whether competitive pressures will likely grow stronger or weaker and whether the industry's future profit prospects are above average, average or below average B. An assessment of the degrees of business risk and uncertainty in the industry's future C. Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces D. The severity of the problems confronting the industry as a whole E. Whether the industry's product is strongly or weakly differentiated

E

Good competitive intelligence about the strategies and competitive strengths and weaknesses of rival companies helps management determine A. Which competitor has the best strategy and which competitors have flawed or weak strategies B. Which rivals are poised to gain market share and which seem destined to lose market share C. Which rivals are likely to rank among the industry leaders on the road ahead D. Which rivals are likely to initiate what kinds of fresh strategic moves and why E. All of these

E

In seeking to predict the next moves of close or key rivals, it is useful to consider such questions as: A. Which rivals badly need to increase their unit sales and market share and what new offensive initiatives are they likely to employ? B. Which rivals are poised to gain market share and which seem destined to lose market share? C. Which rivals are good candidates to be acquired? D. Which rivals are likely to enter new geographic markets or expand their product offerings (so as to enter new market segments where they currently do not have a presence)? E. All of these

E

In the course of crafting a strategy, it is common for management to A. Decide to abandon certain strategy elements that have grown stale or become obsolete B. Modify the current strategy when market and competitive conditions take an unexpected turn or some aspects of the company's strategy hit a stone wall C. Modify the current strategy in response to the fresh strategic maneuvers of rival firms D. Take proactive actions to improve this or that piece of the strategy E. All of these

E

In which one of the following instances are the competitive pressures that industry members experience in their dealings with suppliers not weakened? A. When industry members pose a credible threat of backward integration into the business of suppliers B. When the cost of switching from one supplier to another is low C. When the buying firms purchase in large quantities and thus are important customers of the suppliers D. When the item being supplied is a commodity E. When the items purchased from suppliers are in short supply

E

Managerial jobs with strategy-making responsibility A. Are found only at the vice-president level and above in most companies B. Are primarily located in the strategic planning departments of large corporations C. Are relatively rare because most strategy-making is done by the members of a company's board of directors D. Seldom exist within a functional department (e.g., marketing and sales) or in an operating unit (a plant or a district office) because these levels of the organization structure are well below the level where strategic decisions are typically made E. Extend throughout the managerial ranks and exist in every part of a companybusiness units, operating divisions, functional departments, manufacturing plants and sales districts

E

Masterful strategies come from A. Successful managerial efforts to develop a sound strategic vision B. Doing a very thorough job of strategic planning C. Involving as many company personnel as possible in the strategy-making process D. Crafting a strategy that mimics the best parts of the strategies of the industry leaders E. Doing things differently from competitors where it counts—out-innovating them, being more efficient, adapting faster—rather than running with the herd

E

The best test of whether potential entry is a strong or weak competitive force is A. The strength of buyer loyalty to existing brands B. Whether the industry's driving forces make it harder or easier for new entrants to be successful C. Whether the strategies of industry members are well-matched to the industry's key success factors D. Whether there are any vacant spaces on the industry's strategic group map E. To ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates

E

The managerial purpose of setting objectives includes A. Converting the strategic vision into specific performance targets—results and outcomes the organization wants to achieve B. Using the objectives as yardsticks for tracking the company's progress and performance C. Challenging and helping stretch the organization to perform at its full potential and deliver the best possible results D. Pushing company personnel to be more inventive, to exhibit more urgency in improving the company's financial performance and business position and to be more intentional and focused in their actions E. All of these

E

The task of effectively communicating the strategic vision is made easier by A. Having a simple strategy that is easy for company personnel to understand B. Combining the strategic vision and the company's values statement into a single document C. Combining the strategic vision and the mission statement into a single statement of overall business purpose D. Waiting until the company achieves its mission to tell company personnel about the strategic vision E. Capturing the essence of the vision in a catchy slogan or brief phrase and then using it repeatedly as a reminder of "where we are going and why."

E

Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on A. Whether most buyers possess roughly equal or varying degrees of bargaining power and leverage B. How many buyers are engaged in collaborative partnerships with sellers C. Whether entry barriers are high or low and the size of the pool of likely entry candidates D. Whether the overall quality of the items being furnished by industry members is rising or falling E. Whether demand-supply conditions represent a buyer's market or a seller's market

E

Which of the following factors does not affect whether buyer bargaining power and seller-buyer collaboration are an important source of competitive pressure in an industry? A. Whether winning the business of certain customers offers a seller important market exposure or prestige B. The extent and importance of collaborative partnerships and alliances between particular sellers and buyers C. Whether buyers pose a major threat to integrate backward into the product market of sellers D. Whether sellers' products are weakly differentiated, making it easy and inexpensive for buyers to switch to competing brands E. Whether buyers have a strong preference for products of superior quality or just average quality

E

Which of the following is a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage B. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority or unusually good value for the money C. Developing expertise and resource strengths that give the company competitive capabilities that rivals can't easily imitate or trump with capabilities of their own D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche E. All of these

E

Which of the following is not a primary focus of a company's strategy? A. How to attract and please customers B. How each functional piece of the business will be operated C. How to grow the business D. How to compete successfully E. How to achieve above-average gains in the company's stock price and thereby meet or beat shareholder expectations

E

Which of the following is not something to look for in identifying a company's strategy? A. Actions to respond to changing market conditions or other external factors B. Actions to strengthen competitiveness via strategic alliances and collaborative partnerships C. Actions to strengthen competitive capabilities and correct competitive weaknesses D. Actions to capture emerging market opportunities and defend against external threats to the company's business prospects E. Management actions to revise the company's financial and strategic performance targets

E

Which of the following is something to look for in identifying a company's strategy? A. Actions to gain sales and market share B. Actions to strengthen marketing standing and competitiveness by merging with or acquiring rival companies C. Actions to enter new geographic or product markets or exit existing ones D. Actions and approaches used in managing R&D, production, sales and marketing, finance and other key activities E. All of above are pertinent in identifying a company's strategy

E

Which one of the following is not an accurate attribute of an organization's strategic vision? A. Providing a panoramic view of "where we are going" B. Describing the company's future product-market-customer-technology focus C. Pointing an organization in a particular direction and charting a strategic path for it to follow D. Helping mold an organization's character and identity E. Outlining how the company intends to implement and execute its business model

E

Which one of the following questions is not something that company managers should consider in choosing to pursue one strategic course or directional path versus another? A. Are changing market and competitive conditions acting to enhance or weaken the company's business outlook? B. Is the company stretching its resources too thinly by trying to compete in too many markets or segments, some of which are unprofitable? C. Will our present business generate sufficient growth and profitability in the years ahead to please shareholders? D. What emerging market opportunities should the company pursue and which ones should not be pursued? E. Do we have a better business model than key rivals?

E

Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries? A) Variations in market growth rates from country to country and important country-to-country differences in consumer buying habits and buyer tastes and preferences B) Country-to-country variations in host government policies and trade requirements C) The fact that product designs suitable for one country are sometimes inappropriate in another D) Vulnerability to adverse shifts in currency exchange rates E) A need to convince shippers to keep cross-country transportation costs low

E) A need to convince shippers to keep cross-country transportation costs low

When identifying a diversified company's present corporate strategy, which of the following would not be something to look for? A) Recent moves to build positions in new industries B) The company's approach to allocating investment capital and resources across its present businesses C) Recent management actions to strengthen the company's positions in existing businesses D) Recent moves to divest weak or unattractive business units E) Actions over the past few years to substitute global strategies for multi-country strategies in one or more business units

E) Actions over the past few years to substitute global strategies for multi-country strategies in one or more business units

In judging the attractiveness of the businesses a multi-business company has diversified into, it is important to A) consider whether each industry the company has diversified into represents a good business for the company to be in. B) calculate industry attractiveness scores for each industry into which the company has diversified. C) consider the appeal of the whole group of industries in which the company has invested. D) consider to what extent the industries a company has invested in hold promise for attractive growth and profitability. E) All of the above

E) All of the above

The industry or market opportunities that are most relevant to a company and those which its strategy should aim at capturing include A) opportunities that are well-suited to the company's competitive capabilities and resource strengths. B) opportunities which the company has the financial resources to pursue. C) opportunities that offer important avenues for growth. D) opportunities where the company has the greatest potential for competitive advantage. E) All of the above

E) All of the above

Which of the following is usually a promising strategic option for competing in a fragmented industry? A) Specializing by product type or by customer type B) Becoming a low-cost operator C) Constructing and operating "formula" facilities at many different locations D) Focusing on a limited geographic area E) All of the above can be promising options.

E) All of the above can be promising options.

A company that succeeds in differentiating its product offering from those of its rivals can usually A) avoid having to compete on the basis of simply a low price. B) charge a price premium for its product. C) increase unit sales. D) gain buyer loyalty to its brand. E) All of the above.

E) All of the above.

A company's strategy: A) is shaped partly by management analysis and choice and partly by the necessity of adapting and learning by doing. B) is fluid, representing the temporary outcome of an ongoing process that, on the one hand, involves reasoned and creative management efforts to craft an effective strategy and, on the other hand, involves ongoing responses to market change and constant experimentation and tinkering. C) stands a better chance of succeeding when it is predicated on actions, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from rivals and carving out its own market position. D) is revealed in part by its actions to gain sales and market share via lower prices, more performance features, more appealing design, better quality or customer service, wider product selection, and other competitive tactics. E) All of the above.

E) All of the above.

A comprehensive evaluation of the group of businesses a company has diversified into involves A) evaluating the attractiveness of industries the company has diversified into and the competitive strength of each of its business units. B) evaluating the strategic fits and resource fits among the various sister businesses. C) ranking the performance prospects of the businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its various businesses. D) using the results of the prior analytical steps as a basis for crafting new strategic moves to improve the company's overall performance. E) All of the above.

E) All of the above.

Checking a diversified company's business line-up for the competitive advantage potential of cross-business strategic fits involves searching for and evaluating how much benefit a diversified company can gain from value chain match-ups that present A) opportunities to combine the performance of certain activities, thereby reducing costs and capturing economies of scope. B) opportunities to transfer skills, technology, or intellectual capital from one business to another, thereby leveraging use of existing resources. C) opportunities to share use of a well-respected brand name. D) opportunities for sister businesses to collaborate in creating valuable new competitive capabilities (such as enhanced supply chain management capabilities, quicker first-to-market capabilities, or greater product innovation capabilities). E) All of the above.

E) All of the above.

Commonly encountered market conditions that must be considered when choosing among strategic options include: A) Rapidly growing markets. B) Mature, slow-growth markets. C) Stagnant or declining industries. D) Fragmented markets comprised of a large number of relatively small sellers. E) All of the above.

E) All of the above.

Doing a weighted competitive strength assessment of how a company compares against key rivals involves A) developing a list of 6 to 10 telling measures of competitive strength and then assigning weights to each of these strength measures that reflects their relative importance. B) rating each company on each strength measure (using a scale of 1 to 10) and then multiplying the strength rating by the assigned weight to get a weighted strength score. C) summing each company's weighted strength scores on the various strength measures to get an overall measure of competitive strength for each competitor. D) drawing conclusions about the size of a company's net competitive advantage or disadvantage vis-à-vis its rivals (with the size of the advantage/disadvantage being indicated by the sizes of the differences among the companies' competitive strength scores). E) All of the above.

E) All of the above.

Identifying the strategic issues that company managers need to address A) involves using the results of both industry and competitive analysis and what has been learned from evaluating the company's present strategy, SWOT analysis, and the evaluations of the company's own competitiveness. B) entails developing a "worry list" of "how to...", "whether to....", and "what to do about....." C) is important because it sets the agenda for deciding what actions to take next to improve the company's performance and business outlook—a good strategy must include actions to deal with all the strategic issues and problems that stand in the way of the company's future success. D) entails locking in on what challenges the company has to overcome in order to be financially and competitively successful in the years ahead. E) All of the above.

E) All of the above.

Once a company decides to expand beyond its borders it has which of the following strategic options? A) To maintain a domestic production base and export goods to foreign markets. B) To rely on strategic alliances or joint ventures to partner with foreign companies. C) To license foreign firms to produce and distribute its products or use the company's technology. D) Employ a franchising strategy E) All of the above.

E) All of the above.

Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices as A) whether to enter into strategic alliances or collaborative partnerships. B) which value chain activities, if any, should be outsourced. C) whether to bolster the company's market position via merger or acquisitions. D) whether to integrate forward or backward into more stages of the industry value chain. E) All of the above.

E) All of the above.

Relying on outsiders to perform certain value chain activities offers such strategic advantages as A) obtaining higher quality and/or cheaper components or services. B) improving the company's ability to innovate by allying with "best-in-world" suppliers. C) reducing the company's risk exposure to changing technology and/or changing buyer preferences. D) increasing the firm's ability to assemble diverse kinds of expertise speedily and efficiently. E) All of the above.

E) All of the above.

The procedure for evaluating the pluses and minuses of a diversified company's strategy includes A) assessing the attractiveness of the industries the company has diversified into. B) assessing the competitive strength of each business the company has diversified into to see which ones are the strongest/weakest contenders in their respective industries. C) ranking the performance prospects of the various businesses from best to worst and determining the priorities for resource allocation. D) checking the competitive advantage potential of cross-business strategic fits and also checking whether the firm's resources fit the needs of its present business lineup. E) All of the above.

E) All of the above.

Cross-business strategic fits can exist A) in the R&D and technology portion of the value chains of related businesses. B) in the supply-chain portion of the value chains of related businesses. C) in the manufacturing or production portions of the value chains of related businesses. D) in the sales and marketing portion of the value chains of related businesses. E) All of the above—since cross-business strategic fits can exist anywhere along the values chains of related businesses.

E) All of the above—since cross-business strategic fits can exist anywhere along the values chains of related businesses.

As a rule, all the industries represented in a diversified company's business portfolio should be judged on such attractiveness factors as A) market size and projected growth rate. B) emerging opportunities and threats, the intensity of competition, and the degree of industry uncertainty and business risk. C) resource requirements and the presence of cross-industry strategic fits. D) seasonal and cyclical factors, industry profitability, and whether an industry has significant social, political, regulatory, and environmental problems. E) All of these

E) All of these

A company becomes a prime candidate for diversifying under which of the following circumstances: A) When it spots opportunities for expanding into industries whose technologies and products complement its present business. B) When it has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such business. C) When diversifying into additional businesses opens new avenues for reducing costs via cross-business sharing or transfer of competitively valuable resources and capabilities. D) When can leverage its collection of resources and capabilities by expanding into businesses where these resources and capabilities are valuable assets. E) All of these.

E) All of these.

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because A) it has resources or capabilities that are eminently transferable to other related or complementary businesses. B) the company's growth is sluggish and it needs the sales and profit boost that a new business can provide. C) management wants to lessen the company's vulnerability to seasonal or recessionary influences or to threats from emerging new technologies. D) it wants to make new acquisitions to strengthen or complement some of its present businesses. E) All of these.

E) All of these.

A competitive strategy to be the low-cost provider in an industry works well when A) price competition among rival sellers is especially vigorous. B) there are few ways to achieve product differentiation that have value to buyers. C) buyers incur low costs in switching their purchases from one seller/brand to another. D) industry newcomers use low introductory prices to attract buyers and build a customer base. E) All of these.

E) All of these.

A diversified company may pursue expansion of several of its businesses into the markets of additional foreign countries in order to A) fully capture economies of scale and learning/experience curve effects in these businesses. B) exploit opportunities for both cross-business and cross-country coordination of value chain activities and strategic initiatives. C) leverage use of a well-known and competitively powerful brand name across two or more of its businesses. D) transfer competitively valuable resources in these businesses from one country to another. E) All of these.

E) All of these.

A multinational diversification strategy allows a firm to pursue maximum competitive advantage potential by A) fully capturing economies of scale and learning/experience curve effects and also pursuing cross-business economy of scope opportunities. B) exploiting opportunities for both cross-business and cross-country collaboration and strategic coordination. C) leveraging use of a well-known and competitively powerful brand name. D) transferring competitively valuable resources both from one business to another and one country to another. E) All of these.

E) All of these.

A multinational diversification strategy can be particularly attractive to a diversified company because it allows the company to pursue maximum competitive advantage potential via actions to A) fully capture economies of scale and cross-business economy of scope opportunities. B) capitalize on opportunities for both cross-business and cross-country collaboration and coordination. C) leverage use of a well-known and competitively powerful brand name. D) transfer competitively valuable resources both from one business to another and from one country to another. E) All of these.

E) All of these.

Being first to initiate a particular strategic move can have a high payoff when A) pioneering helps build up a firm's image and reputation with buyers. B) first-time buyers remain strongly loyal to pioneering firms in making repeat purchases. C) moving first can result in a cost advantage over rivals. D) moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E) All of these.

E) All of these.

Checking the competitive advantage potential of cross-business strategic fits in a diversified company involves evaluating the extent to which sister businesses present A) opportunities to combine the performance of certain cross-business activities and thereby reduce costs. B) opportunities to transfer skills, technology, or intellectual capital from one business to another. C) opportunities for the company's different businesses to share use of a well-respected brand name. D) opportunities for sister businesses to collaborate in creating valuable new competitive capabilities. E) All of these.

E) All of these.

Companies are motivated to enter into strategic alliances or cooperative arrangements A) to expedite the development of promising new technologies or products. B) to bring together the personnel and expertise needed to create desirable new skill sets and capabilities to improve supply chain efficiency, and/or gain economies of scale in production and/or marketing. C) to acquire or improve market access through joint marketing agreements. D) to help win the race against rivals for global market leadership. E) All of these.

E) All of these.

Competing in the markets of foreign countries entails dealing with such factors as A) fluctuating exchange rates, country-to-country variations in host government restrictions and requirements, and country-to-country variations in cultural, demographic, and market conditions. B) important country-to-country differences in consumer buying habits and buyer tastes and preferences. C) whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide. D) the fact that product designs suitable for one country are sometimes inappropriate in another. E) All of these.

E) All of these.

Conditions that may make corporate restructuring strategies appealing include A) ongoing declines in the market shares of one or more major business units that are falling prey to more market-savvy competitors. B) a business lineup that consists of too many slow-growth, declining, low-margin, or competitively weak businesses. C) an excessive debt burden with interest costs that eat deeply into profitability. D) ill-chosen acquisitions that haven't lived up to expectations. E) All of these.

E) All of these.

Corporate strategy options for diversified companies include A) broadening the company's business scope by making new acquisitions in new industries. B) divesting weak-performing businesses and retrenching to a narrower base of business operations. C) restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup. D) pursuing growth opportunities within the existing business lineup. E) All of these.

E) All of these.

Diversification becomes a relevant strategic option when a company A) spots opportunities to expand into industries whose technologies and products complement its present business. B) can leverage existing competencies and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets. C) has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D) can open up new avenues for reducing costs by diversifying into closely related businesses. E) All of these.

E) All of these.

First-mover disadvantages (or late-mover advantage) arise when A) the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B) rapid market evolution gives fast-followers an opening to leapfrog the pioneer with next-generation products of their own. C) the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D) the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E) All of these.

E) All of these.

Important reasons for a company to consider diversification include A) a desire to avoid putting all of its "eggs" in one industry basket. B) diminishing market opportunities and stagnating sales in its principal business. C) opportunities to leverage existing competencies and capabilities by expanding into businesses where these same resource strengths are key success factors and valuable competitive assets attractive. D) an opportunity to lower costs by entering closely-related businesses and/or opportunity to transfer a powerful and well-respected brand name to the products of other businesses and thereby increase the sales and profits of these newly-entered businesses. E) All of these.

E) All of these.

Managers must be prepared to modify their strategy in response to: A) changing circumstances that affect performance and their desire to improve the current strategy. B) competitor moves in the market and shifting needs of buyers. C) stagnating market and restrictive industrial opportunities. D) mounting evidence that the strategy is less effective. E) All of these.

E) All of these.

Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense when A) an activity can be performed better or more cheaply by outside specialists. B) it allows a company to focus its entire energies on those activities that are at the center of its expertise (its core competencies) and that are most critical to its competitive and financial success. C) outsourcing won't adversely hollow out the company's technical know-how, competencies, or capabilities. D) it reduces the company's risk exposure to changing technology and/or changing buyer preferences. E) All of these.

E) All of these.

Retrenching to a narrower diversification base can be attractive or advisable when A) certain businesses have questionable long-term potential. B) a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on. C) certain business units are weakly positioned and show poor prospects for providing a good return on investment. D) market conditions in a once-attractive business have badly deteriorated. E) All of these.

E) All of these.

Strategic fit between two or more businesses exists when one or more activities comprising their respective value chains present opportunities A) to transfer expertise or technology or capabilities from one business to another. B) for cross-business use of a common brand name. C) to lower costs by combining the performance of the related value chain activities of different businesses. D) for cross-business collaboration to build valuable new resource strengths and competitive capabilities. E) All of these.

E) All of these.

The options for allocating a diversified company's financial resources include A) making acquisitions to establish positions in new businesses or to complement existing businesses. B) investing in ways to strengthen or grow existing businesses. C) funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. D) paying off existing debt, increasing dividends, building cash reserves, or repurchasing shares of the company's stock. E) All of these.

E) All of these.

The reasons why a company opts to expand outside its home market include A)gaining access to new customers for the company's products/services. B)spreading its business risk across a wider market base. C)achieving lower costs and enhancing the company's competitiveness. D)a desire to capitalize on its core competencies and capabilities. E)All of these.

E) All of these.

The strategic moves and initiatives that seem to offer the best payoff in turbulent, fast-changing markets include A) developing quick response capability. B) keeping the company's products fresh and exciting enough to stand out in the midst of all the change that is taking place. C) investing aggressively in R&D to stay on the leading edge of technological know-how. D) initiating fresh actions every few months, not just when a competitive response is needed. E) All of these.

E) All of these.

The task of crafting corporate strategy for a diversified company encompasses A) picking the new industries to enter and deciding on the means of entry. B) initiating actions to boost the combined performance of the businesses the firm has entered. C) pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage. D) establishing investment priorities and steering corporate resources into the most attractive business units. E) All of these.

E) All of these.

Winning a sustainable competitive edge over competitors generally hinges on which of the following? A) Having a distinctive competitive product offering. B) Building competitively valuable expertise and capabilities not readily matched, and offering a distinctive product offering. C) Building experience, know-how, and specialized capabilities that have been perfected over a long period of time. D) Having "hard to beat" capabilities and impressive product innovation. E) All of these.

E) All of these.

Which one of the following is not one of the strategy elements that companies in emerging industries are likely to consider incorporating into their strategy? A) Pursuing new customer groups, new user applications, and entry into new geographical areas (perhaps using strategic partnerships or joint ventures if financial resources are constrained) B) Forming strategic alliances and partnerships with key suppliers and/or other companies having complementary technology or expertise C) Pushing hard to perfect the technology, improve product quality, and develop additional attractive performance features D) As technological uncertainty clears and a dominant technology emerges, trying to capture any first- mover advantages by adopting it quickly E) Being aggressive in cutting prices below key rivals and establishing a reputation of being the low-price leader

E) Being aggressive in cutting prices below key rivals and establishing a reputation of being the low-price leader

Striving to be the industry's low-cost provider and achieving lower costs than rivals entails A) doing a better job than rivals of performing value chain activities more cost-effectively. B) having a smaller labor force than rivals, paying lower wages than rivals, locating all facilities in countries where labor costs are low, and outsourcing many value chain activities to suppliers with world-class technological capabilities. C) revamping the firm's overall value chain to eliminate or bypass cost-producing activities that produce little value added insofar as customers are concerned. D) aggressive use of activity-based costing, utilizing more best practices than rivals, and having a narrower product line than rivals. E) Both A and C.

E) Both A and C.

The procedure for constructing a strategic group map involves A) identifying the competitive characteristics that differentiate firms' market positions and competitive approaches. B) selecting variables for the map's axes that are highly correlated. C) using only variables for the map's axes that are quantitative in nature (qualitative measures of market positions and competitive approaches are too subjective and unreliable). D) plotting the firms on a two-variable or two-dimensional map, drawing circles around those firms occupying about the same strategy space, and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues. E) Both A and D

E) Both A and D

Successful differentiation allows a firm to A) gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). B) earn the highest profit margins of any company in the industry. C) attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. D) command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). E) Both A and D.

E) Both A and D.

A localized multicountry strategy A) is generally preferable to a global strategy in situations where buyers are price sensitive because a "think local, act local" type of multicountry strategy is better suited to achieving low unit costs than a global strategy. B) is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. C) has two big drawbacks: (1) the bigger the country-to-country variations in strategy, the harder it is difficult to transfer a company's competencies and resources across country boundaries and (2) it does not promote building a single, unified competitive advantage. D) is generally inferior to a global strategy when it comes to pursuing product differentiation. E) Both B and C.

E) Both B and C.

Which one of the following questions can be used to distinguish a winning strategy from a mediocre or losing strategy? A) How good is the company's business model? B) Is the company a technology leader? C) Does the company have low prices in comparison to rivals? D) Is the company putting too little emphasis on behaving in an ethical and socially responsible manner? E) How well does the strategy fit the company's situation?

E) How well does the strategy fit the company's situation?

Which one of the following is not likely to be a suitable strategy option for companies competing in rapid-growth industries? A) Driving down costs per unit so as to enable price reductions that attract droves of new customers B) Pursuing rapid product innovation, both to set a company's product offering apart from rivals and to incorporate attributes that appeal to growing numbers of customers C) Gaining access to additional distributional channels and sales outlets D) Expanding the product line to add models/styles that appeal to a wider range of buyers E) Putting top priority on heavy advertising and other marketing-related actions calculated to strongly differentiate its product offering from rivals

E) Putting top priority on heavy advertising and other marketing-related actions calculated to strongly differentiate its product offering from rivals

Which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak? A) Whether buyer demand for the product is growing rapidly or slowly B) Whether customers' costs to switch brands is low or high C) How active industry rivals are in initiating fresh competitive moves and in using the various weapons of competition to improve their market standing and business performance D) Whether there are few or many rival sellers and whether there are big differences in their sizes and competitive capabilities E) Whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change

E) Whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change

A company's strategy and its quest for competitive advantage are tightly related because A) a company's strategy determines whether it will have lower or higher costs than rivals and thus be at a competitive advantage or disadvantage. B) competitive advantage is essential to having a profitable business model. C) choosing a competitive advantage to pursue also helps a company choose which business model is most appropriate. D) competitive advantage enables a company to achieve its strategic objectives. E) a company is almost certain to have better profits and financial performance when its strategy produces a competitive advantage over rivals.

E) a company is almost certain to have better profits and financial performance when its strategy produces a competitive advantage over rivals.

A broad differentiation strategy A) is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller. B) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals. C) works best when the basis for differentiation is superior performance features and buyer switching costs are low. D) offers a better chance for gaining market share than low-cost or best-cost provider strategies, and typically allows a firm to charge the highest price in the industry. E) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.

E) can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.

Trying to determine what strategic moves rivals are likely to make next A) is interesting but usually has little bearing on a company's own best strategic moves. B) usually requires evaluating the industry's key success factors as well as determining how many driving forces are present. C) is best done by monitoring each rival's market share, earnings per share, and stock price—adverse changes in these measures signal the coming of a fresh move but as long as a company's performance on these measures is satisfactory the chance of fresh moves is slim. D) cannot be done effectively without first drawing a strategic group map. E) entails understanding rivals' strategies, watching their actions on a regular basis, sizing up their strengths and weaknesses, gauging how well they are faring in the marketplace, assessing how much pressure they are under to improve their performance, and evaluating the relative merits of their strategic options and alternatives so as to better predict their likely next moves.

E) entails understanding rivals' strategies, watching their actions on a regular basis, sizing up their strengths and weaknesses, gauging how well they are faring in the marketplace, assessing how much pressure they are under to improve their performance, and evaluating the relative merits of their strategic options and alternatives so as to better predict their likely next moves.

Mergers and acquisitions are a much used strategy because they are an effective means of A) revamping a company's value chain. B) facilitating the employment of both offensive and defensive strategies. C) creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories. D) gaining quick access to new technologies or other resources and competitive capabilities and trying to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities. E) gaining quick access to new technologies or other resources and competitive capabilities and; plus creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories.

E) gaining quick access to new technologies or other resources and competitive capabilities and; plus creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories.

In a maturing industry, slackening growth rates tend to alter the competitive environment in such ways as A) weakening competitive rivalry and dampening the forces of multinational or global competition. B) boosting industry profitability and spurring buyer excitement about the product. C) increasing the number of competitors and reducing the number of mergers and acquisitions among competing firms. D) lowering the emphasis on cost control and reducing price competition among rivals. E) increased buyer sophistication, more head-to-head competition for market share, increased difficulty in coming up with new product features, and sustaining buyer excitement.

E) increased buyer sophistication, more head-to-head competition for market share, increased difficulty

Out sourcing strategies A) are nearly always a more attractive strategic option than merger and acquisition strategies. B) carry the substantial risk of raising a company's costs. C) carry the substantial risk of making a company overly dependent on its suppliers. D) increase a company's risk exposure to changing technology and/or changing buyer preferences. E) involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.

E) involve farming out value chain activities presently performed in-house to outside specialists and

A big advantage of related diversification is that A) it offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships. B) it is less capital intensive and usually more profitable than unrelated diversification. C) it involves diversifying into industries having the same kinds of key success factors. D) it is less risky than either vertical integration or unrelated diversification due to lower capital requirements. E) it passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits

E) it passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits

A company that decides to stick with a stagnant or declining industry A) is doomed to have declining revenues and profits. B) may still be successful if it aggressively expands into the markets of more and more foreign countries using a global differentiation strategy. C) may have a promising future if it is the industry's low-cost leader and has deep financial pockets to withstand bitter price wars and lots of industry-wide overcapacity. D) is well-advised to revamp its value chain to achieve strong product differentiation. E) may be able to grow and prosper if market demand decays very slowly and it has the competitive capabilities to take market share away from weaker competitors.

E) may be able to grow and prosper if market demand decays very slowly and it has the competitive

A viable business model A) is derived from the company's strategic vision. B) lays out a compelling case for how the strategy will yield competitive advantage. C) should explain how the company will achieve high profit margins while at the same time charging relatively low prices to customers. D) must be closely linked to the company's business strategy. E) must generate revenues sufficient to cover costs and deliver good profitability.

E) must generate revenues sufficient to cover costs and deliver good profitability.

The actual strategy a company employs is A) is known only to top-level managers and is kept hidden from outside view for reasons of competitive sensitivity. B) usually deviates little from management's planned set of actions and business approaches since making on-the-spot changes is too risky. C) pretty much like the strategies of other industry members since all companies are confronting much the same market conditions and competitive pressures. D) seldom consistent with its business model because of ongoing changes in market conditions and competitive pressures. E) partly proactive (in the sense of reflecting management's plans and intentions)and partly reactive to changing circumstances.

E) partly proactive (in the sense of reflecting management's plans and intentions)and partly reactive to changing circumstances.

Management's storyline for how and why the company's product offerings and competitive approaches will generate a revenue stream and have an associated cost structure that produces attractive earnings and returns on investment is A) called a company's strategy. B) referred to as a company's strategic intent. C) referred to as a company's primary financial objective. D) what a company's mission statement is all about. E) referred to as a company's business model.

E) referred to as a company's business model.

A focused low-cost strategy seeks to achieve competitive advantage by A) outmatching competitors in offering niche members an absolute rock-bottom price. B) delivering more value for the money than other competitors. C) performing the primary value chain activities at a lower cost per unit than can the industry's low-cost leaders. D) dominating more market niches in the industry via a lower cost and a lower price than any other rival. E) serving buyers in the target market niche at a lower cost and lower price than rivals.

E) serving buyers in the target market niche at a lower cost and lower price than rivals.

A broad differentiation strategy works best in situations where A) technological change is slow-paced and new or improved products are infrequent. B) buyer needs and uses of the product are very similar. C) buyers incur low costs in switching their purchases to rival brands. D) buyers have a low degree of bargaining power and purchase the product frequently. E) technological change is fast-paced and competition revolves around rapidly evolving product features.

E) technological change is fast-paced and competition revolves around rapidly evolving product features.

The standout competitive characteristic or feature of a fragmented industry is A) an unusually large number of different market segments and buyer groups. B) a market situation where demand for the product is scattered over many different country markets. C) an exceptionally large number of models, styles, and product varieties being produced and marketed by industry members. D) the demand side of the market is populated by millions of buyers, no one of which buys in large volume quantities. E) the absence of market leaders with king-sized market shares and widespread buyer recognition.

E) the absence of market leaders with king-sized market shares and widespread buyer recognition.

To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use A) the profit test, the competitive strength test, the industry attractiveness test, and the capital gains test. B) the better-off test, the competitive advantage test, the profit expectations test, and the shareholder value test. C) the barrier to entry test, the competitive advantage test, the growth test, and the stock price effect test. D) the strategic fit test, the industry attractiveness test, the growth test, the dividend effect test, and the capital gains test. E) the attractiveness test, the cost of entry test, and the better-off test.

E) the attractiveness test, the cost of entry test, and the better-off test.

A weighted industry attractiveness assessment is generally analytically superior to an unweighted assessment because A) a weighted ranking identifies which industries offer the best/worst long-term profit prospects. B) an unweighted ranking doesn't discriminate between strong and weak industry driving forces and industry competitive forces. C) it does a more accurate job of singling out which industry key success factors are the most important. D) an unweighted ranking doesn't help identify which industries have the easiest and hardest value chains to execute. E) the various measures of attractiveness are not likely to be equally important in determining overall attractiveness

E) the various measures of attractiveness are not likely to be equally important in determining overall attractiveness

Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is A) to be the first mover. B) to be a fast follower. C) to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer- first-mover disadvantages usually overwhelm first-mover advantages). D) to be the last-mover—playing catch-up is usually fairly easily and nearly always much cheaper than any other option. E) to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

E) to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

The sources of a competitive advantage for a diversified multinational corporation do not include A) transferring competitively valuable resources from one business to another and one country to another. B) the ability to exploit opportunities for both cross-business and cross-country collaboration and strategic coordination. C) leveraging use of a well-known and competitively powerful brand name. D) pursuing cross-business economy of scope opportunities and striving to fully capture scale economies. E) trying to maximize the number of cash cow businesses and minimize the number of cash hog businesses.

E) trying to maximize the number of cash cow businesses and minimize the number of cash hog businesses.

A company achieves sustainable competitive advantage when A) it has a low-cost business model. B) it is able to increase shareholder value. C) sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability. D) it is consistently able to achieve both its strategic and financial objectives. E) when it provide buyers with lasting reasons to prefer its products or services over those of competitors.

E) when it provide buyers with lasting reasons to prefer its products or services over those of competitors.

Which of the following is something to look for in identifying a company's strategy? A. Actions to gain sales and market share. B. Actions to strengthen marketing standing and competitiveness by merging with or acquiring rival companies. C. Actions to enter new geographic or product markets or exit existing ones. D .Actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities. E. All of above are pertinent in identifying a company's strategy

E. All of above are pertinent in identifying a company's strategy

A company that succeeds in differentiating its product offering from those of its rivals can usually A. Avoid having to compete on the basis of simply a low price B. Charge a price premium for its product (because buyers see its differentiating features as worth something extra) C. Increase unit sales (because of the attraction of its differentiating product attributes) D. Gain buyer loyalty to its brand (because some, maybe many, of its customers will have a strong preference for the company's differentiating features) E. All of the above

E. All of the above

Thinking strategically about industry and competitive conditions in a given industry involves evaluating such considerations as A. The forces driving change in the industry B. The dominant economic features of the industry in which the company operates C. The kinds of competitive forces industry members are facing and the strength of each competitive force D. The key factors influencing future competitive success in the industry E. All of the above

E. All of the above

A "think global, act global" approach to crafting a global strategy involves A. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. B. selling much the same products under the same brand names everywhere and expanding into most, if not all, nations where there is significant buyer demand. C. integrating and coordinating the company's strategic moves worldwide. D. utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. E. All of the above.

E. All of the above.

A "think local, act local" multidomestic strategy works particularly well when A. host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards. B. there are significant country-to-country differences in customer preferences and buying habits. C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country to country. D. there are significant country-to-country differences in distribution channels and marketing methods. E. All of the above.

E. All of the above.

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A. when high transportation costs make it expensive to operate from central locations. B. whenever buyer-related activities are best performed in locations close to buyers. C. if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates (such risks are greater when activities are concentrated in a single location) or (2) supply interruptions (due to strikes, mechanical failures, or transportation delays) or (3) adverse political developments. E. All of the above.

E. All of the above.

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when A. there are significant scale economies in performing an activity. B. the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C. there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D. certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. All of the above.

E. All of the above.

The strategic options for expansion into foreign markets include A. employing a franchising strategy. B. maintaining a national (one-country) production base and exporting goods to foreign markets. C. licensing foreign firms to produce and distribute one's products. D. establishing a subsidiary in a foreign market. E. All of the above.

E. All of the above.

A "think local, act local" multidomestic strategy works particularly well when A. host governments enact regulations requiring that products sold locally meet strictly-defined manufacturing specifications or performance standards. B. there is significant country-to-country differences in customer preferences and buying habits. C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country. D. there is significant country-to-country differences in distribution channels and marketing methods. E. All of these.

E. All of these

A well-conceived strategy is value creating producing excellence in company performance and is best when the gains are achieved A. in profitability and financial strength B. in competitive strength and market standing C. in developing distinctive competencies and sustainability D. in developing a desirable competitive edge E. All of these

E. All of these

One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets include A. Try to change the local market to better match the way the company does business elsewhere B. Be prepared to modify aspects of the company's business model to accommodate local circumstances C. Prepare to compete on the basis of low price D. Stay away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances E. All of these

E. All of these

The nature and strength of the competitive forces that prevail in an industry are generally a joint product of A. The pressures induced by the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry B. The threat that firms outside the industry will decide to enter the market C. The attempts of companies in other industries to win buyers over to their own substitute products D. Competitive pressures stemming from the bargaining power of both suppliers and buyers E. All of these

E. All of these

The pitfalls of a differentiation strategy include A. Trying to differentiate on the basis of attributes or features that are easily copied B. Choosing to differentiate on the basis of attributes that buyers do not perceive as valuable or worth paying for C. Trying to charge too high a price premium for the differentiating features D. Being timid and not striving to open up meaningful gaps in quality or performance or service or other attractive differentiating attributes E. All of these

E. All of these

The risks of a focused strategy based on either low-cost or differentiation include A. The chance that competitors outside the niche will find effective ways to match the focuser's capabilities in serving the target niche B. The potential for the preferences and needs of niche members to shift over time towards many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market C. The potential for the segment to become so attractive that it is soon inundated with competitors, intensifying rivalry and splintering sales, profits and growth prospects D. The potential for segment growth to slow to such a small rate that a focuser's prospects for future sales and profit gains become unacceptably dim E. All of these

E. All of these

The state of competition in an industry is a function of A. The competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry B. Competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products C. Competitive pressures associated with the threat of new entrants into the marketplace D. Competitive pressures associated with the bargaining power of suppliers and customers E. All of these

E. All of these

Competitive pressures associated with the threat of entry are greater when A. Incumbent firms are unable or unwilling to strongly contest the entry of newcomers B. Newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist C. Entry barriers are relatively low and buyer demand for the product is growing fairly rapidly D. Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry

E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry

Competitive pressures associated with the threat of entry are greater when: A. incumbent firms are unable or unwilling to strongly contest the entry of newcomers. B. a large pool of potential entrants exists, some of which have the capabilities to overcome high entry barriers. C. entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents. D. existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence. E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry.

E. All of these conditions heighten the competitive pressures associated with fresh entry into the industry.

A "think global, act global" approach to crafting a global strategy involves A. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. B. selling much the same products under the same brand names everywhere and expanding into most, if not all, nations where there is significant buyer demand. C. integrating and coordinating the company's strategic moves worldwide. D. utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. E. All of these.

E. All of these.

A company may develop an emergent strategy due to A. strategic moves by rival firms. B. unexpected shifts in customer preferences. C. fast-changing technological developments. D. new market opportunities. E. All of these.

E. All of these.

A company's resource weaknesses can relate to A. inferior or unproven skills, expertise, or intellectual capital in competitively important parts of the business. B. something that it lacks or does poorly (in comparison to rivals). C. deficiencies in competitively important physical, organizational, or intangible assets. D. missing or competitively inferior capabilities in key areas. E. All of these.

E. All of these.

A company's strategy evolves over time as a consequence of A. the need to keep strategy in step with changing market conditions and changing customer needs and expectations. B. the proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy. C. the need to abandon some strategy features that are no longer working well. D. the need to respond to the newly-initiated actions and competitive moves of rival firms. E. All of these.

E. All of these.

A company's strength can concern A. a skill, specialized expertise, or competitively important capability. B. valuable human assets and intellectual capital. C. an achievement or attribute that puts the company in a position of market advantage. D. competitively valuable alliances or cooperative ventures. E. All of these.

E. All of these.

A distinctive competence A. is a competitively important activity that a company performs better than its competitors. B. gives a company competitively valuable capability that is unmatched by rivals. C. is a basis for sustainable competitive advantage. D. can underpin and add real punch to a company's strategy. E. All of these.

E. All of these.

Companies operating in a cross-country marketplace have to respond to A. whether to customize their offerings in each different country market to match the tastes and preferences of local buyers. B. whether to pursue a strategy of offering a mostly standardized product worldwide. C. how much to customize their offerings in each different country market to match the tastes and preferences of local buyers. D. None of these. E. All of these.

E. All of these.

Competing in the markets of foreign countries entails dealing with such factors as A. fluctuating exchange rates, country-to-country variations in host-government restrictions and requirements, and variations in cultural, demographic, and market conditions. B. important country-to-country differences in consumer buying habits and buyer tastes and preferences. C. whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide. D. the fact that product designs suitable for one country are sometimes inappropriate in another. E. All of these.

E. All of these.

Cross-border coordination contributes to a competitive advantage for a global competitor by A. allowing production to be shifted from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs and quotas. B. allowing knowledge gained in one location to be transferred to operations in other countries. C. shifting workloads from where they are unusually heavy to locations were personnel are underutilized. D. accelerating product development and enhancing innovation by globally linking and coordinating the scattered R&D departments of a multinational company. E. All of these.

E. All of these.

Determining whether a company's prices and costs are competitive A. requires looking at the costs of a company's competitively relevant suppliers and forward channel allies (distributors/dealers). B. requires considering the costs of a company's internally performed activities. C. involves the use of benchmarking the costs in a company's value chain system (the costs of its suppliers, its internally performed activities, the costs of its distributors/dealers) against the costs of the value chain systems employed by rival firms. D. typically involves the use of activity-based cost accounting. E. All of these.

E. All of these.

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when A. buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers. B. buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations. C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D. there is diseconomies of scale in trying to operate from a single location. E. All of these.

E. All of these.

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when A. buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers. B. high transportation costs make it uneconomical to operate from one or just a few locations. C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D. there are diseconomies of scale in trying to operate from a single location. E. All of these.

E. All of these.

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A. when high transportation costs make it expensive to operate from central locations. B. whenever buyer-related activities are best performed in locations close to buyers. C. if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions or (3) adverse political developments. E. All of these.

E. All of these.

Good competitive intelligence about the strategic direction and likely moves of key competitors allows a company to determine: A. which competitor has the best strategy and which competitors have flawed or weak strategies. B. which rivals are poised to gain market share and which seem destined to lose market share. C. which rivals are likely to rank among the industry leaders on the road ahead. D. which rivals are likely to initiate fresh strategic moves and why. E. All of these.

E. All of these.

Identifying the strategic issues and problems that merit front-burner managerial attention A. is accomplished in part by using the results of analyzing the company's external environment to help come up with a "worry list" of "how to...," "whether to....," and "what to do about....." B. helps set management's agenda for taking actions to improve the company's performance and business outlook. C. is done in part by evaluating the company's own internal situation—its resources and competitive position—to help come up with a "worry list" of "how to...," "whether to....," and "what to do about....." D. is done in part as a basis for drawing conclusions about whether to stick with company's present strategy or to modify it. E. All of these.

E. All of these.

Identifying the strategy-related issues and problems that company managers need to address and resolve entails A. drawing on what was learned from having analyzed the company's industry and competitive environment. B. drawing on the evaluations of the company's own resources, internal circumstances, and competitiveness. C. looking in on what challenges/obstacles/roadblocks the company has to overcome in order to be financially and competitively successful in the years ahead. D. developing a "worry list" of "how to...," "whether to....," and "what to do about....." E. All of these.

E. All of these.

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when A. there are significant scale economies in performing an activity. B. the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C. when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D. certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. All of these.

E. All of these.

In the course of crafting a strategy, it is common for management to A. decide to abandon certain strategy elements that have grown stale or become obsolete. B. modify the current strategy when market and competitive conditions take an unexpected turn or some aspects of the company's strategy hit a stone wall. C. modify the current strategy in response to the fresh strategic maneuvers of rival firms. D. take proactive actions to improve this or that piece of the strategy. E. All of these.

E. All of these.

One of the lessons of SWOT analysis is that a company's strategy should A. be grounded in its resource strengths and capabilities. B. be aimed at those market opportunities that offer the best potential for both profitable growth and competitive advantage. C. seek to defend against threats to the company's future profitability. D. generally not place heavy demands on areas where company resources are weak or unproven. E. All of these.

E. All of these.

One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets includes A. try to change the local market to better match the way the company does business elsewhere. B. be prepared to modify aspects of the company's business model to accommodate local circumstances. C. prepare to compete on the basis of low price. D. stay away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances. E. All of these.

E. All of these.

Proven approaches to winning a sustainable competitive advantage include which of the following? A. Strategies keyed to developing a low-cost-based advantage. B. Strategies keyed to creating a broad differentiation-based advantage. C. Focusing on a narrow market niche within an industry. D. Developing a best-cost provider strategy. E. All of these.

E. All of these.

Strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to A. enter additional country markets. B. gain better access to scale economies in production and/or marketing. C. fill competitively important gaps in their technical expertise and/or knowledge of local markets. D. share distribution facilities and dealer networks, thus mutually strengthening their access to buyers. E. All of these.

E. All of these.

The advantages of manufacturing goods in a particular country A. are significantly impacted by where its production, distribution, and customer service activities are located. B. can be affected by differences in operating costs and profitability due to wage rate and worker productivity. C. can be affected by differences in energy costs, environmental regulations, tax rates, and inflation rates. D. can be influenced by cheaper access to essential natural resources. E. All of these.

E. All of these.

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include A. being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions. B. being in better position to choose where and how to challenge rivals. C. shortening delivery times to customers by having geographically scattered distribution facilities. D. locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers. E. All of these.

E. All of these.

The competitive power of a company resource strength or competitive capability hinges on A. how hard it is for competitors to copy. B. whether it is rare and something rivals lack. C. whether it is really competitively valuable and having the potential to contribute to a competitive advantage. D. how easily it can be trumped by the substitute resources/capabilities of rivals. E. All of these.

E. All of these.

The competitive pressures on companies within an industry comes from those: A. associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B. companies in other industries attempting to win buyers over to their substitute products. C. associated with the threat of new entrants into the marketplace. D. associated with the bargaining power of suppliers and customers. E. All of these.

E. All of these.

The diamond framework is an aid in deciding/revealing: A. the appropriate level of competition one can expect. B. the basis of the new rival's strengths. C. the countries where rivals will be weakest. D. the advantages of conducting particular business activities in that country. E. All of these.

E. All of these.

The nature and strength of the competitive forces that prevail in an industry is generally a joint product of: A. competition from rival sellers. B. competition from potential new entrants. C. competition from producers of substitute products. D. competitive pressures stemming from the bargaining power of both suppliers and buyers. E. All of these.

E. All of these.

The options for remedying an internal cost disadvantage include A. investing in productivity-enhancing, cost-saving technological improvements. B. redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly. C. implementing the use of best practices, particularly for high-cost activities. D. eliminating some cost-producing activities from the value chain, especially low value-added activities. E. All of these.

E. All of these.

The reasons a company opts to expand outside its home market include A. gaining access to new customers for the company's products/services. B. spreading its business risk across a wider market base. C. achieving lower costs and enhancing the company's competitiveness. D. a desire to capitalize on its core competencies and capabilities. E. All of these.

E. All of these.

The reasons behind the accelerating pace of globalization include A. countries with previously planned economies are embracing market or mixed economies. B. information technology shrinks the importance of geographic distances. C. ambitious growth-minded countries race to build global share. D. lower barriers to international trade. E. All of these.

E. All of these.

The state of competition in an industry is a function of A. the competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival firms in the industry. B. competitive pressures coming from the attempts of companies in other industries attempting to win buyers over to their substitute products. C. competitive pressures associated with the threat of new entrants into the marketplace. D. competitive pressures associated with the bargaining power of suppliers and customers. E. All of these.

E. All of these.

Which of the following are strategy options for entering foreign markets? A. Maintaining a national (one-country) production base and exporting goods to foreign markets. B. Establishing a subsidiary in a foreign market. C. Franchising and licensing strategies. D. Forming strategic alliances or joint ventures with foreign partners. E. All of these.

E. All of these.

Which of the following areas within a company's total value chain system, can managers improve efficiency and effectiveness? A. A company's own activity segments. B. Suppliers' part of the overall value chain. C. The distribution channel portion of the value chain. D. None of these. E. All of these.

E. All of these.

Which of the following is a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? A. Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage. B. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, or technological superiority. C. Developing competitively valuable resources and capabilities that rivals can't easily match, copy, or trump with capabilities of their own. D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers comprising the niche. E. All of these.

E. All of these.

Which of the following is an option for tailoring a company's strategy to fit unusual circumstances presented in developing-country markets? A. Prepare to compete on the basis of low price. B. Modify aspects of company's business model and/or strategy to accommodate local customs. C. Attempt to modify the local market to do business in the manner that the company works elsewhere. D. Avoid markets where it is impractical or uneconomic to do business in such a way as to accommodate local circumstances. E. All of these.

E. All of these.

Which of the following is not an example of a company's dynamic capability? A. capacity to improve existing resources and capabilities. B. upgrades to R&D resources to drive product innovation. C. capacity to add new resources and capabilities to the competitive asset portfolio. D. ability to replace degraded resources with acquired capabilities. E. All of these.

E. All of these.

Which of the following is the role of local managers to experienced multinational companies? A. To contribute needed understanding of local market conditions, local buying habits, local ways of doing business. B. To run the local operations for the company. C. To understand how "the system" works to detour the hazards of collaborative alliances with local companies. D. To serve as conduits for the flow of information between the corporate office and local operations. E. All of these.

E. All of these.

Winning a competitive edge over competitors generally hinges on which of the following? A. Having a competitive product offering. B. Building valuable expertise and capabilities not readily matched and offering a distinctive product. C. Building experience, know-how, and specialized capabilities that have been perfected over a long period of time. D. Having "hard to beat" capabilities and impressive product innovation. E. All of these.

E. All of these.

trategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to A. enter additional country markets and compete on a more global scale while still preserving their independence. B. gain better access to scale economies in production and/or marketing. C. fill competitively important gaps in their technical expertise and/or knowledge of local markets. D. share distribution facilities and dealer networks, thus mutually strengthening their access to buyers. E. All of these.

E. All of these.

The essence of a broad differentiation strategy is to A. Appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers B. Incorporate a greater number of differentiating features into its product/service than rivals C. Lower buyer switching costs D. Outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes E. Be unique in ways that are valuable and appealing to a wide range of buyers

E. Be unique in ways that are valuable and appealing to a wide range of buyers

Rivalry among competing sellers grows in intensity when A. Rivals' products/services are sold at widely varying prices and there are only 2-4 rivals B. Rivals have highly differentiated products and buyer demand is growing rapidly C. There are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members D. The products/services of rivals are strongly differentiated and buyers have high switching costs E. Buyer demand is growing slowly and the industry is composed of 6 to 10 competitors that are fairly equal in size and competitive capability

E. Buyer demand is growing slowly and the industry is composed of 6 to 10 competitors that are fairly equal in size and competitive capability

Buyers are in position to exert strong bargaining power in dealing with sellers when: A. their costs to switch to competing brands or to substitute products are relatively high. B. a particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands. C. they buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products, prices, and costs. D. buyer demand is growing rapidly. E. Buyers are price-sensitive due to the product representing a significant fraction of their purchases.

E. Buyers are price-sensitive due to the product representing a significant fraction of their purchases.

Competing in the markets of foreign countries generally does not involve which of the following? A. Country-to-country differences in consumer buying habits and buyer tastes and preferences B. Country-to-country variations in host-government restrictions and requirements and fluctuating exchange rates C. Whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide D. In which countries to locate company operations for maximum locational advantage (given country-to-country variations in wages rates, worker productivity, energy costs, tax rates, and the like) E. Crafting a multicountry strategy that works just as well in one country as in another and that also has the appeal of turning the world market into one big profit sanctuary

E. Crafting a multicountry strategy that works just as well in one country as in another and that also has the appeal of turning the world market into one big profit sanctuary

Which of the following is NOT one of the principal components of strategic significance in the PESTEL analysis? A. Political factors including the extent to which government intervenes in the economy B. Economic conditions that include the general economic climate and specific factors such as interest rates, inflation rate, and unemployment rate, as well as conditions in the stock and bond markets that can affect consumer confidence C. Socio-cultural forces including societal values, attitudes, cultural factors, and lifestyles that impact business D. Technological factors includes the pace of change and technical developments that have the potential for impacting society E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business

E. Environmental forces that include the competitive structure, the degree of industry fragmentation, and the mobility barriers that inhibit business

Which of the following statements regarding multidomestic and global competition is false? A. In global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries. B. In globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries. C. One of the features of multidomestic competition is there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets. D. With multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries. E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

Competitive jockeying and market maneuvering among industry rivals A. Determines whether the industry's strategic group map will be static or dynamic B. Centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers C. Is usually an industry's strongest driving force D. Is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves and the ability to make advance preparations for countering such moves E. Is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another

E. Is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another

Which of the following is not an element of a company's business strategy? A. Actions to respond to changing market conditions or other external factors B. Actions to strengthen competitiveness via strategic alliances and collaborative partnerships C. Actions to strengthen internal capabilities and competitively valuable resources D. Actions to manage the functional areas of the business E. Management actions to revise the company's financial and strategic performance targets

E. Management actions to revise the company's financial and strategic performance targets

Typically, the weakest of the five competitive forces in an industry is/are: A. The threat posed by potential new entrants B. The bargaining power and leverage that suppliers are able to exercise C. The competitive pressures that stem from the ready availability of attractively-priced substitute products D. The bargaining power and leverage that buyers are able to exercise E. None of the above is typically weakest

E. None of the above is typically weakest

Typically, the weakest of the five competitive forces in an industry is/are: A. the threat posed by potential new entrants. B. the bargaining power and leverage that suppliers are able to exercise. C.the competitive pressures that stem from the ready availability of attractively priced substitute products. D. the bargaining power and leverage that buyers are able to exercise. E. None of these is typically the weakest.

E. None of these is typically the weakest.

A differentiation-based competitive advantage A. Nearly always is attached to the quality and service aspects of a company's product offering B. Most usually is the result of highly effective marketing and advertising C. Requires developing at least one distinctive competence that buyers consider valuable D. Hinges on a company's success in developing top-of-the-line product features that will command the biggest price premium in the industry E. Often hinges on incorporating features that (1) raise the performance of the product or (2) lower the buyer's overall costs of using the company's product or (3) enhance buyer satisfaction in intangible or non-economic ways

E. Often hinges on incorporating features that (1) raise the performance of the product or (2) lower the buyer's overall costs of using the company's product or (3) enhance buyer satisfaction in intangible or non-economic ways

Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively? A. Striving to capture all available economies of scale and learning/experience curve effects B. Trying to operate facilities at full capacity C. Adopting labor-saving operating methods D. Improving supply chain efficiency E. Outsourcing all production-related activities

E. Outsourcing all production-related activities

Which of the following is not an option for remedying a supplier-related cost disadvantage? A. Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchased. B. Negotiate more favorable prices with suppliers. C. Collaborate closely with suppliers to identify mutual cost-saving opportunities. D. Switch to lower priced substitute inputs. E. Persuade forward channel allies to implement best practices.

E. Persuade forward channel allies to implement best practices.

) Which of the following is the most unlikely element of a localized multidomestic strategy? A. Granting country managers fairly wide strategy-making lattitude B. Plants scattered across many host countries, each producing product versions for local area markets C. Marketing and distribution adapted to the buying habits, customs, and culture of each host country D. Preference for local suppliers (use of some local suppliers may be mandated by host governments) E. Selling direct to buyers (perhaps via the company's Web site) to avoid having to establish networks of wholesale/retail dealers in each country market

E. Selling direct to buyers (perhaps via the company's Web site) to avoid having to establish networks of wholesale/retail dealers in each country market

Which one of the following is not part of a company's macroenvironment? A. Conditions in the economy at large B. Population demographics and societal values and lifestyles C. Technological factors and governmental regulations and legislation D. The industry and competitive environment arena in which the company operates E. The company's resource strengths, resource weaknesses and competitive capabilities

E. The company's resource strengths, resource weaknesses and competitive capabilities

Which one of the following is NOT part of a company's macro-environment? A. Economic conditions in the economy at large B. Political factors and socio-cultural forces C. Technological factors and legal/regulatory conditions D. The immediate industry and competitive environment in which the company operates E. The company's resource strengths, resource weaknesses, and competitive capabilities

E. The company's resource strengths, resource weaknesses, and competitive capabilities

Which one of the following generic types of competitive strategy is typically the best strategy for a company to employ? A. A low-cost leadership strategy B. A broad differentiation strategy C. A best-cost provider strategy D. A focused low-cost provider strategy E. There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities

E. There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities

The most appealing approaches to differentiation are A. Those that are also being pursued by other rivals with differentiation strategies B. Those that are the most costly to incorporate (because expensive attributes are perceived by buyers as more valuable and worth paying more for) C. Those that can be made even more attractive to buyers via clever advertising D. Generally related to flavor and taste or sophisticated use of Internet technology applications E. Those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal

E. Those that are hard or expensive for rivals to duplicate and that also have considerable buyer appeal

Using a broad differentiation strategy to produce an attractive competitive advantage is least likely to be based on A. Developing a superior performing product B. Offering buyers a product which is superior in quality and reliability as compared to rivals' brands C. Giving consumers comprehensive support services D. Providing buyers with a continuing stream of better-designed, better-performing and more stylish products E. Undercutting the prices being charged by rivals

E. Undercutting the prices being charged by rivals

Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive? A. When it is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers B. When the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities C. When industry leaders do not see that having a presence in the niche is crucial to their own success D. When the target market niche is not overcrowded with a number of other rivals attempting to focus on the same niche E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy

E. When buyers are not strongly brand loyal and most industry competitors are pursuing some sort of a focused strategy

Which one of the following increases the competitive pressures associated with the threat of entry? A. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers B. When strong brand preference and a high degree of customer loyalty exists for the product offerings of incumbents C. When buyer demand for the product is growing fairly slowly D. When few outsiders have the expertise and financial resources and capabilities to hurdle whatever entry barriers exist E. When new entrants can expect to earn attractive profits

E. When new entrants can expect to earn attractive profits

Which one of the following increases the competitive pressures associated with the threat of entry? A. When incumbent firms are likely to launch competitive initiatives to strongly contest the entry of newcomers B. When buyers have a high degree of loyalty to the brands and product offerings of existing industry members C. When buyer demand for the product is growing fairly slowly D. When few outsiders have the expertise and resources to hurdle whatever entry barriers exist E. When newcomers can expect to earn attractive profits

E. When newcomers can expect to earn attractive profits

In which one of the following instances are the competitive pressures stemming from supplier bargaining power NOT weakened? A. When industry members pose a credible threat of backward integration into the business of suppliers B. When the cost of switching from one supplier to another is low C. When the buying firms purchase in large quantities and thus are important customers of the suppliers D. When the item being supplied is a commodity E. When the items purchased from suppliers are in short supply

E. When the items purchased from suppliers are in short supply

In which one of the following instances are the competitive pressures that industry members experience in their dealings with suppliers not weakened? A. When industry members pose a credible threat of backward integration into the business of suppliers B. When the cost of switching from one supplier to another is low C. When the buying firms purchase in large quantities and thus are important customers of the suppliers D. When the item being supplied is a commodity E. When the items purchased from suppliers are in short supply

E. When the items purchased from suppliers are in short supply

In which one of the following instances is rivalry among competing sellers not more intense? A. When certain competitors are dissatisfied with their market position and make moves to bolster their standing B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly-acquired competitors into stronger market contenders C. When competitors are fairly equal in size and capability D. When the products of rivals are weakly differentiated, buyer switching costs are low and market demand is growing slowly E. When there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members

E. When there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members

In which one of the following instances is rivalry among competing sellers NOT more intense? A. When certain competitors are dissatisfied with their market position and make moves to bolster their standing B. When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders C. When competitors are fairly equal in size and capability D. When the products of rivals are weakly differentiated, buyer switching costs are low, and market demand is growing slowly E. When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

E. When there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

Which of the following factors does not affect whether buyer bargaining power and seller-buyer collaboration are an important source of competitive pressure in an industry? A. Whether winning the business of certain customers offers a seller important market exposure or prestige B. The extent and importance of collaborative partnerships and alliances between particular sellers and buyers C. Whether buyers pose a major threat to integrate backward into the product market of sellers D. Whether sellers' products are weakly differentiated, making it easy and inexpensive for buyers to switch to competing brands E. Whether buyers have a strong preference for products of superior quality or just average quality

E. Whether buyers have a strong preference for products of superior quality or just average quality

In evaluating whether the industry and competitive environment presents sufficiently attractive prospects for both competitive success and attractive profits usually does NOT involve a consideration of which of the following factors? A. The industry's growth potential and whether competitive pressures will likely grow stronger or weaker, and whether strong competitive forces are squeezing industry profitability to subpar levels B. Whether the company occupies a stronger market position than rivals C. Whether the industry's future profitability will be favorably or unfavorably affected by the prevailing driving forces D. The severity of the macro-environment problems confronting the industry E. Whether the industry's product is strongly or weakly differentiated

E. Whether the industry's product is strongly or weakly differentiated

Which two tests of a resource's competitive power determine whether a company's competitive advantage can be sustained in the face of active competition? A. Whether the resource or capability is competitively valuable and/or is something that rivals lack. B. Whether the resource or capability is rare and/or is hard to copy. C. Whether the resource or capability is easy to copy. D. Whether the resource or capability is competitively valuable and/or are there good substitutes available for the resource. E. Whether the resource or capability is hard to copy and/or can be trumped by different types of resources and capabilities.

E. Whether the resource or capability is hard to copy and/or can be trumped by different types of resources and capabilities.

When a company is good at performing a particular internal activity, it is said to have A. a competitive advantage over rivals. B. a competitive capability. C. a distinctive competence. D. a core competence. E. a company competence.

E. a company competence.

Assigning a weight to each measure of competitive strength assessment is generally analytically superior because A. a weighted ranking identifies which competitive advantages are most powerful. B. an unweighted ranking doesn't discriminate between companies with high and low market shares. C. it singles out which competitor has the most competitively potent core competencies. D. weighting each company's overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength. E. all of the various measures of competitive strength are not equally important.

E. all of the various measures of competitive strength are not equally important.

The payoff of doing a thorough SWOT analysis is A. identifying whether the company's value chain is cost effective vis-à-vis the value chains of rivals. B. helping strategy-makers benchmark the company's resource strengths against industry key success factors. C. enabling a company to assess its overall competitive position relative to its key rivals. D. revealing whether a company's market share, measures of profitability, and sales compare favorably or unfavorably vis-à-vis key competitors. E. assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

E. assisting strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

The advantages of using a licensing strategy to participate in foreign markets include A. being especially well suited to the exploit a profit sanctuary. B. being able to charge lower prices than rivals. C. enabling a company to achieve competitive advantage quickly and easily. D. being able to achieve lower costs than with a localized multicountry strategy. E. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

E. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is A. competitive strength analysis. B. activity-based costing. C. resource cost mapping. D. SWOT analysis. E. benchmarking.

E. benchmarking.

Rivalry among competing sellers grows in intensity when: A. rivals' products/services are sold at widely varying prices and there are only a few rivals. B. rivals have highly differentiated products and buyer demand is growing rapidly. C. there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members. D. the products/services of rivals are strongly differentiated and buyers have high switching costs. E. buyer demand is growing slowly or declining and the number of competitors is increasing and they become more equal in size and competitive capability.

E. buyer demand is growing slowly or declining and the number of competitors is increasing and they become more equal in size and competitive capability.

The heart and soul of a company's strategy-making effort A. is figuring out how to become the industry's low-cost provider. B. is figuring out how to maximize the profits and shareholder value. C. concerns how to improve the efficiency of its business model. D. deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner that keeps the company's prices as low as possible. E. involves coming up with moves and actions that produce a durable competitive edge over rivals.

E. involves coming up with moves and actions that produce a durable competitive edge over rivals.

Competitive jockeying and market maneuvering among industry rivals A. determines whether the industry's strategic group map will be static or dynamic. B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. C. is usually an industry's strongest driving force. D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. E. is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.

E. is ever-changing as fresh offensive and defensive moves are initiated and as rivals emphasize first one mix of competitive weapons and tactics and then another.

Market maneuvering among industry rivals: A. determines whether the industry's strategic group map will be static or dynamic. B. centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. C. is usually an industry's strongest driving force. D. is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.

E. is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers

A company resource weakness or competitive deficiency A. represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace. B. causes the company to fall into a lower strategic group than it otherwise could compete in. C. prevents a company from having a distinctive competence. D. usually stems from having a missing link or links in the industry value chain. E. is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace.

E. is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace.

Competing companies deploy whatever means necessary to strengthen market position, including all of the following EXCEPT: A. marketing tactics including special sales promotions such as introducing new or improved features or increasing the number of styles to provide greater product selection. B. differentiating their products by offering better performance features than rivals. C. improving innovation to increase product performance and quality. D. making efforts to expand dealer networks. E. reduce distribution capabilities and market presence.

E. reduce distribution capabilities and market presence.

With the aid of a strategic group map, one can: A. identify easily the entry and exit barriers for each strategic group. B. pinpoint precisely which firms are in profitable strategic groups and which are not. C. identify which competitive forces are strong and which are weak. D. measure accurately whether across-group rivalry is stronger than within-group rivalry, and vice versa. E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.

E. reveal which companies are close competitors and which are distant rivals, and that not all positions on the map are equally attractive.

One of the big risks of competing in foreign markets is A. the extent to which the advantages of exporting goods from a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing much weaker relative to the currencies of the countries to which the goods are being exported. B. whether the economies of foreign countries will continue to grow at double digit rates. C. the fact that some countries have lower wage rates than others. D. the potential for local government officials to reduce tariffs on the imports of its goods into their country. E. the extent to which the advantages of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing stronger relative to the currencies of the countries where the output is being sold.

E. the extent to which the advantages of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing stronger relative to the currencies of the countries where the output is being sold.

Multidomestic competition is best characterized as a situation where A. the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole. B. competition is mainly among the domestic companies of a few neighboring countries (five countries at most). C. there are extensive trade restrictions, sharply fluctuating exchange rates, and high tariff barriers in many country markets that work against the formation of a true world market. D. competition among domestic companies predominates and foreign competitors are a minor factor. E. there is no international or global market, just a collection of mostly self-contained country markets.

E. there is no international or global market, just a collection of mostly self-contained country markets.

The best test of whether potential entry is a strong or weak competitive force is: A. the strength of buyer loyalty to existing brands. B. whether the industry's driving forces make it harder or easier for new entrants to be successful. C. whether the strategies of industry members are well-matched to the industry's key success factors. D. whether there are any vacant spaces on the industry's strategic group map. E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

E. to ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

Strategic Group mapping analysis does not entail drawing conclusions about: A. where on the map is the best place to be and why. B. which companies/strategic groups are destined to prosper because of their positions. C. which companies/strategic groups seem destined to struggle. D. what accounts for why some parts of the map are better than others. E. where on the map is the easiest position to shift from to a more favorably situated position.

E. where on the map is the easiest position to shift from to a more favorably situated position.

Key factors distinguishing strategies from another

Firm's market target broad or narrow? Is competitive advantage pursued linked to low costs or product differentiation?

Explain the Best-Cost Provider competitive strategy

Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals

The Five Generic Competitive Strategies

Low-cost provider Broad differentiation Focused low-cost Focused differentiation Best-cost provider => don't get suck in middle on low cost/differentiation spectrum

A low-cost provider's basis for competitive advantage is:

Lower overall costs than competitors.

Are the company's cost structure and value proposition competitive?

One telling sign of whether a company's situation is strong or precarious is whether its costs are competitive with those of industry rivals. Another sign is how the company compares with rivals in terms of differentiation—how effectively it delivers on its customer value proposition. Value chain analysis and benchmarking are essential tools in determining whether the company is performing particular functions and activities well, whether its costs are in line with those of competitors, whether it is differentiating in ways that really enhance customer value, and whether particular internal activities and business processes need improvement. They complement resource and capability analysis by providing data at the level of individual activities that provide more objective evidence of whether individual resources and capabilities, or bundles of resources and linked activity sets, are competitively superior.

What are 3 steps in the competitive strength assessment process?

Step 1: Make a list of the industry's key success factors and measures of competitive strength or weakness (6 to 10 measures usually suffice). Step 2: Assign a weight to each competitive strength measure based on its perceived importance. Step 3: Rate the firm and its rivals on each competitive strength measure and multiply by each measure by its corresponding weight.

The Chief Strategic and Financial Options for Allocating a Diversified Company's Financial Resources

Strategic options - Invest in ways to strengthen or grow existing business - Make acquisitions to establish positions in new industries or to complement existing businesses - Fund long-range R&D ventures aimed at opening market opportunities in new or existing businesses Financial options - Pay off existing long-term or short-term debt - Increase dividend payments to shareholders - Repurchase shares of the company's common stock - Build cash reserves; invest in short-term securities

Distinguishing Features: Low-Cost Provider

Strategic target: A broad cross-section of the market Basis of competitive strategy: Lower overall costs than competitors Product line: A good basic product with few frills (acceptable quality and limited selection Production emphasis: A continuous search for cost reduction without sacrificing acceptable quality and essential features Marketing emphasis: Low prices, good value, try to make a virtue out of product features that lead to low cost keys to maintaining the strategy: economical prices, good value, strive to manage costs down year after year in every are of the business Resources and capabilities required: Driving costs out of the value chain system (automated plants, efficiency oriented culture, bargaining power etc.)

Distinguished Features: Best-Cost Provider

Strategic target: Value-conscious buyers, or middle-market range Basis of competitive strategy: Ability to offer better goods at attractive prices Product line: Items with appealing attributes and assorted features, better quality, not best Production emphasis: Build in appealing features and better quality at lower cost than rivals Marketing emphasis: emphasize delivery of best value for the money Keys to maintaining the strategy: Unique expertise in simultaneously managing costs down while incorporating upscale features and attributes Resources and capabilities required: Capabilities to simultaneously deliver lower cost and higher-quality or differentiated feature (TQM practices, mass customization)

A company should NOT perform any value chain activity internally that can be performed more efficiently or effectively by outsiders. However, the chief exception is when a particular activity is:

Strategically crucial and internal control over the activity is deemed essential

The Value Chain System

Suppliers value chains are relevant because they perform activities and incur costs in creating and delivering the purchased features, and quality of these inputs influence a company's own costs and product differentiation capabilities. -value chains of a company's distribution channel partners are relevant because 1. the costs and margins of a company's distributors and retail dealers are part of the price the ultimate consumer pays and 2. the activities that distribution allies perform affect sales volumes and customer satisfaction. -Accurately assessing a company's competitiveness entails scrutinizing the nature and costs of value chain activities throughout the entire value chain system for delivering its products or services to end use customers

Is the company able to seize market opportunities and overcome external threats to its future well-being?

The answer to this question comes from performing a SWOT analysis. The two most important parts of SWOT analysis are (1) drawing conclusions about what strengths, weaknesses, opportunities, and threats tell about the company's overall situation; and (2) acting on the conclusions to better match the company's strategy to its internal strengths and market opportunities, to correct the important internal weaknesses, and to defend against external threats. A company's strengths and competitive assets are strategically relevant because they are the most logical and appealing building blocks for strategy; internal weaknesses are important because they may represent vulnerabilities that need correction. External opportunities and threats come into play because a good strategy necessarily aims at capturing a company's most attractive opportunities and at defending against threats to its well-being.

In doing SWOT analysis, why is it not sufficient just to compile 4 lists (one each for resource strengths, resource weaknesses, market opportunities, and external threats) and then move on?

The most important part of SWOT analysis is using the 4 lists to draw conclusions about a company's overall situation and then acting on the conclusions in these lists to better match a company's strategy to its resource strengths and market opportunities, correct the important weaknesses, and defend against external threats.

STEP 6: CRAFTING NEW STRATEGIC MOVES TO IMPROVE OVERALL CORPORATE PERFORMANCE - Strategy Options for a Firm That Is Already Diversified

Undiversified firm: - Stick with the existing business lineup (Makes sense when the current business lineup offers attractive growth opportunities and can generate added economic value for shareholders) - Broaden the diversification base with new acquisitions 1. Acquire more businesses and build positions in new related or unrelated industries 2. Add businesses that will complement and strengthen the market position and competitive capabilities of businesses in industries where the firm already has a stake Diversified frim: - Divest and retrench to a narrower diversification base (Get out of businesses that are competitively weak or in unattractive industries, or lack adequate strategic and resource fit) - Restructure through divestitures and acquisitions (Use debt capacity and cash from divesting businesses that are in unattractive industries, or that lack strategic or resource fit and are noncore businesses to make acquisitions in more promising industries)

Benchmarking involves A. Comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities B. Checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with

a

Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate A. Which weaknesses and vulnerabilities of competitors that the company might be able to attack successfully B. Which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups

a

Calculating competitive strength ratings for a company and its rivals using the industry's most telling measures of competitive strength or weakness A. Is a way of determining which competitor has the biggest overall competitive advantage in the marketplace and which competitor is faced with the biggest overall competitive disadvantage B. Is the most reliable indicator of which industry member has the highest overall product quality

a

Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of A. Not only explaining where management is trying to take the company and what changes lie on the road ahead but, more importantly, also inspiring company personnel to unite behind managerial efforts to get the company moving in the intended direction B. Helping company personnel understand why "making a profit" is so important C. Making it easier for top executives to set stretch objectives D. Helping lower-level managers and employees better understand the company's business model

a

For a company to translate its performance of value chain activities into competitive advantage, it must A. Develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage B. Have more core competencies than rivals

a

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should A. Be hard for competitors to copy, be durable and long-lasting and not be easily trumped by the different resources/capabilities of rivals B. Be something that a company does internally rather than in collaborative arrangements with outsiders C. Be patentable

a

Out-managing rivals in performing value chain activities A. Is one of the most dependable ways a company can build a competitive advantage over rivals B. Allows a company to avoid the impact of the five competitive forces

a

Sizing up a company's overall resource strengths and weaknesses A. Essentially involves constructing a "strategic balance sheet" where the company's resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities B. Is called benchmarking C. Is called competitive strength assessment

a

The options for remedying a supplier-related cost disadvantage include A. Trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs B. Forward vertical integration C. Shifting into the production of substitute products

a

The three steps of SWOT analysis are A. Identifying the company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation and translating the conclusions into strategic action to improve the company's strategy B. Pinpointing the company's competitive assets, pinpointing its competitive deficiencies and determining whether it enjoys a competitive advantage

a

Which of the following is not one of the five questions that comprise the task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working?

a

Which of the following most accurately reflect a company's resource strengths? A. Its human, physical and/or organization assets; its skills and competitive capabilities; achievements or attributes that enhance the company's ability to compete effectively; and whether it is engaged in competitively valuable alliances or cooperative ventures B. The sizes of its unit sales, revenues and market share vis-à-vis those of key rivals

a

Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment? A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores B. High scores indicate that a company is a power-user of best practices while low scores signal minimal or ineffective adoption of best practices

a

Evaluating a company's cost-competitiveness involves using what accountants call

activity-based costing to determine the costs of performing each value chain activity.

Internal cash flow

after tax profits + depreciation -A rough estimate of the cash a company's business is generating after payment of operating expenses, interest, and taxes. Such amounts can be used for dividend payments or funding capital expenditures.

Free cash flow

after tax profits + depreciation - capital expenditures - dividends -A rough estimate of the cash a company's business is generating after payment of operating expenses, interest, taxes, dividends, and desirable reinvestments in the business. The larger a company's free cash flow, the greater its ability to internally fund new strategic initiatives, repay debt, make new acquisitions, repurchase shares of stock, or increase dividend payments.

Capability

aka competence -the capacity of a firm to perform some internal activity competently. -Apple's product innovation capabilities, Nordstrom's superior incentive management capabilities, PepsiCo's marketing and brand management capabilities -Organizational capabilities are developed and enabled through the deployment of a company's resources

In doing SWOT analysis and trying to identify a company's market opportunities, which of the following is not an example of a potential market opportunity that a company may have? A. Serving additional customer groups or market segments B. Growing buyer preferences for substitutes for the industry's product C. Acquiring rival firms or companies with attractive technological expertise or capabilities

b

In doing SWOT analysis, which one of the following is not an example of a potential resource weakness or competitive deficiency that a company may have? A. Less productive R & D efforts than rivals B. Having a single, unified functional strategy instead of several distinct functional strategies C. Lack of a strong brand image and reputation (as compared to rivals)

b

One of the most telling signs of whether a company's market position is strong or precarious is A. Whether its product is strongly or weakly differentiated from rivals B. Whether its prices and costs are competitive with those of key rivals

b

Quantitative measures of a company's competitive strength A. Signal which competitor has the most distinctive competencies and which competitor has the fewest B. Provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival

b

SWOT analysis is a powerful tool for A. Gauging whether a company has a cost competitive value chain B. Sizing up a company's resource capabilities and deficiencies, its market opportunities and the external threats to its future well-being

b

The competitive power of a company resource strength is not measured by which one of the following tests? A. Is the resource strength durable—does it have staying power? B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders? C. Is the resource strength easily trumped by the different resources/capabilities of rivals?

b

The competitive power of a company's core competence or distinctive competence depends on A. Whether it helps differentiate a company's product offering from the product offerings of rival firms B. How hard it is to copy and how easily it can be trumped by the different resource strengths and competitive capabilities of rivals C. Whether customers are aware of the competence and view the competence positively enough to boost the company's brand name reputation

b

The value chains of rival companies A. Tend to be essentially the same—any differences are typically minor B. Can differ substantially, reflecting differences in the evolution of each company's own particular business, differences in internal operations, differences in strategy and differences in the approaches being used to execute strategy

b

When a company has real proficiency in performing a competitively important value chain activity, it is said to have A. A distinctive competence B. A core competence C. A key value chain proficiency

b

Which of the following is not a component of evaluating a company's resources and competitive position? A. Evaluating how well the present strategy is working B. Scanning the environment to determine a company's best and most profitable customers

b

Which of the following is not an example of an external threat to a company's future profitability? A. Likely entry of potent new competitors B. The lack of a well-known brand name with which to attract new customers and help retain existing customers C. Shifts in buyer needs and tastes away from the industry's product

b

Which one of the following is inaccurate as concerns a distinctive competence? A. A distinctive competence is a competitively important activity that a company performs better than its competitors B. A distinctive competence is typically less difficult for rivals to copy than a core competence C. A distinctive competence can be a basis for sustainable competitive advantage

b

Which one of the following is not a reliable measure of how well a company's current strategy is working? A. Whether the company's sales are growing faster, slower or about the same pace as the industry as a whole, thus resulting in a rising, falling or stable market share B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product

b

The best quantitative evidence of whether a company's present strategy is working well is A. Whether the company has more competitive assets than it does competitive liabilities B. Whether the company is in the industry's best strategic group C. The caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer

c

The difference between a core competence and a distinctive competence is that A. A distinctive competence refers to a company's strongest resource or competitive capability and a core competence refers to a company's lowest-cost and most efficiently executed value-chain activity B. A core competence usually resides in a company's base of intellectual capital whereas a distinctive competence stems from the superiority of a company's physical and tangible assets C. A core competence is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs, whereas a distinctive competence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes

c

The external market opportunities which are most relevant to a company are the ones that A. Increase market share B. Reinforce its overall business strategy C. Match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage

c

The market opportunities most relevant to a particular company are those that A. Offer the best growth and profitability B. Provide a strong defense against threats to the company's profitability C. Hold the most potential for product innovation

c

The three main areas in the value chain where significant differences in the costs of competing firms can occur include A. Age of plants and equipment, number of employees and advertising costs B. Operating-level activities, functional area activities and line of business activities C. The nature and make-up of their own internal operations, the activities performed by suppliers and the activities performed by wholesale distribution and retailing allies

c

To build a competitive advantage by out-managing rivals in performing value chain activities, a company must A. Position itself in the industry's more favorably situated strategic group B. Develop resources strengths that will enable it to pursue the industry's most attractive opportunities C. Develop core competencies and maybe a distinctive competence that rivals don't have or can't quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage

c

Two analytical tools useful in determining whether a company's prices and costs are competitive are A. SWOT analysis and key success factor analysis B. SWOT analysis and benchmarking C. Value chain analysis and benchmarking

c

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have A. A company competence B. A strategic resource C. A distinctive competence

c

Which of the following is not one of the objectives of benchmarking? A. To identify the best practices in performing various value chain activities B. To learn how best practice companies achieve lower costs or better results in performing benchmarked activities C. To help construct a company value chain and identify which activities are primary and which are support activities

c

Which of the following is not pertinent in identifying a company's present strategy? A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR and finance) a company is employing B. Management's planned, proactive moves to outcompete rivals (via better product design, added features, improved quality or service, wider product lines and so on) C. The company's mission, strategic objectives and financial objectives

c