MGT 4150 Exam 2 (Chapters 6)

Which of the following signals would NOT warn challengers that strong retaliation is likely?

Announcing strong quarterly earnings potential to financial analysts

Which of the following ways are employed by defending companies to fend off a competitive attack?

Gain product line exclusivity to force competitors to use other distributors.

Which of the following is NOT one of the key benefits of employing an outsourcing strategy?

It can hollow out a firm's own capabilities and cause it to lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.

Why do mergers and acquisitions sometimes fail to produce anticipated results?

Key employees at the acquired company can quickly become disenchanted and leave.

Which of the following is NOT a typical reason that many outsourcing alliances prove unstable or break apart?

The partners may disagree over how to divide the profits gained from joint collaboration.

Which of the following is NOT a strategic disadvantage of vertical integration?

Vertical integration reduces the opportunity for achieving greater product differentiation.

Which of the following is NOT an example of a company that uses blue-ocean market strategy?

Walmart's logistics and distribution in the retail industry

The formation of a new corporation, jointly owned by two or more companies agreeing to share in the revenues, expenses, and control, is known as

a joint venture.

For every emerging opportunity there exists

a market penetration curve, and this typically has an inflection point where the business model falls into place.

The difference between a merger and an acquisition is that

a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).

The best reason for investing company resources in vertical integration (either forward or backward) is to

add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability.

The best strategic alliances

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

A vertical integration strategy can expand the firm's range of activities

backward into sources of supply and/or forward toward end users.

The Achilles' heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is

becoming dependent on other companies for essential expertise and capabilities.

. Which of the following is NOT among the principal offensive strategy options that a company can employ?

blocking the avenues open to challengers

Which of the following is NOT a principal offensive strategy option?

blocking the avenues open to challengers

Experience indicates that strategic alliances

can suffer culture clash and integration problems due to different management styles and business practices.

Which of the following is NOT an example of a defensive move to protect a company's market position and restrict a challenger's options for initiating a competitive attack?

challenging struggling runner-up firms that are on the verge of going under

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

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

Backward vertical integration can produce a

differentiation-based competitive advantage when activities enhance the performance of the final product.

Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house?

enables a company to gain better access to end users and better market visibility

Mergers and acquisitions are often driven by such strategic objectives as

expanding a company's geographic coverage or extending its business into new product categories.

Strategic offensives should, as a general rule, be based on

exploiting a company's strongest competitive assets—its most valuable resources and capabilities.

Vertical integration strategies

extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain.

Which of the following rivals make the best targets for an offensive attack?

firms with weaknesses in areas where the challenger is strong

A good example of forward vertical integration is a

footwear manufacturer developing own-branded retail stores.

Mergers and acquisitions

frequently do not produce the hoped-for outcomes.

The strategic impetus for forward vertical integration is to

gain better access to end users and better market visibility.

Which of the following is typically the strategic impetus for forward vertical integration?

gaining better access to end users and better market visibility

Market conditions and factors that tend NOT to favor first movers include

growth in demand that depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed before buyer demand can surge.

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to

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.

The big risk of employing an outsourcing strategy is

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.

The range of product and service segments that the firm serves within its market is known as the firm's

horizontal scope.

The principal offensive strategy options include all of the following EXCEPT

initiating a market threat and counterattack simultaneously to effect a distraction.

Outsourcing strategies

involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.

A blue-ocean strategy

involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.

An outsourcing strategy

involves farming out certain value chain activities presently performed in-house to outside vendors.

A hit-and-run or guerrilla warfare type offensive strategy

involves unexpected attacks (usually by a small-to-medium size competitor) to grab sales and market share from complacent or distracted rivals.

Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense EXCEPT when

it restricts a company's ability to assemble diverse kinds of expertise speedily and efficiently.

Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when

market uncertainties make it difficult to ascertain what will eventually succeed.

Merger and acquisition strategies

may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry.

Which of the following is NOT one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits?

minimizing the amount of resources that the partners commit to the alliance

A primary reason for why mergers and acquisitions sometimes fail is due to the

misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.

Launching a preemptive strike type of offensive strategy entails

moving first to secure advantageous competitive assets that rivals can't readily match or duplicate.

Outsourcing strategies can offer such advantages as

obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.

A blue-ocean type of offensive strategy

offers growth in revenues and profits by discovering or inventing a new industry or distinct market segment that renders rivals largely irrelevant and allows a company to create and capture altogether new demand.

Which one of the following is NOT a good type of rival for an offensive-minded company to target?

other offensive-minded companies with a sizable war chest of cash and marketable securities

Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, EXCEPT whether to

pay special attention to buyer segments that a rival is already serving.

A company that fails to manage its strategic alliance probably has

refrained from making commitments to its partners and ensured they do the same.

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users.

The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are

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

The two big drivers of outsourcing are

that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).

For a backward vertical integration strategy into the business of suppliers to be viable and profitable, a company must possess

the capability to achieve the same scale economies as outside suppliers and also match or beat suppliers' production efficiency with no drop in quality.

The difference between a merger and an acquisition relates to

the details of ownership, management control, and the financial arrangements.

A strategy of vertical integration can have substantial drawbacks, including

the environmental costs of coordinating operations across vertical chain activities.

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when

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.

First-mover disadvantages (or late-mover advantages) rarely ever arise when

the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

What does the scope of the firm refer to?

the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?

to dissuade challengers from attacking or diverting them into using less threatening options

Which 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?

to enable greater opportunities for employee advancement

Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions?

to facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy

In which of the following instances is being a first-mover NOT particularly advantageous?

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

In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise?

when opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand

Which of the following is NOT a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement?

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

An offensive to yield good results can be short if

buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign).

Strategic alliances are

collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective.

An alliance becomes "strategic" as opposed to just a convenient business arrangement when it serves all of the following strategic purposes EXCEPT

contracts out certain value chain activities that are normally performed in-house to outside vendors.

Vertical integration strategies do not aim at

control integration (creating control factors across the value chain).

Entering into strategic alliances and collaborative partnerships can be competitively valuable because

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.

A company that has greater success in managing its strategic alliance can credit all of the following, EXCEPT

creating organizational learning barriers across boundaries.

A good example of vertical integration is a

crude oil refiner purchasing a firm engaged in drilling and exploring for oil.

Alliance management is considered an organizational capability and

develops over time, out of effort and learning.

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to

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.

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company

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.

Which of the following is NOT a potential advantage of backward vertical integration?

reduced business risk because of controlling a bigger portion of the overall industry value chain

Relying on outsiders to perform certain value chain activities offers such strategic advantages as

reducing the company's risk exposure to changing technology and/or changing buyer preferences.

Which of the following is defined as a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective?

strategic alliance

The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to

strengthen the company's competitive position and/or boost its profitability.

Which of the following is NOT among the intended outcomes of horizontal merger and acquisition strategies?

suppressing a rival's breakthroughs in management or technology

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

to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

Which of the following is NOT a purpose of a defensive strategy?

to increase the risk of having to defend an attack

Sometimes it makes sense for a company to go on the offensive to improve its market position and business performance. The best offensives tend to incorporate the following EXCEPT

using a strategic offensive to allow the company to leverage its weaknesses to strengthen operating vulnerabilities.

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 is known as

vertical scope.

First-mover advantages are unlikely to be present in which one of the following instances?

when rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products

Which 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?

whether to employ a market share leadership strategy