Quiz - Chapter 1

Identify the company with a low-cost provider strategy.

A baby products retailer sells unassembled baby furniture produced in China. The baby products retailer selling unassembled parts made in China is most likely to have the lowest costs, and to pursue a low-cost provider strategy. The other companies listed are more likely to pursue focused differentiation or best-cost strategies.

Managerial considerations in determining how to compete successfully do not normally include

How can a company modify its entire product line to emphasize its internal service attributes? Managerial considerations for successful strategies serve consumers better while increasing performance. Internal attributes are modified to meet product line changes based on changes in the market rather than vice versa.

To distinguish a winning strategy from a mediocre or losing strategy, a strategic manager should ask which question?

How well does the strategy fit the company's situation? To qualify as a winner, a strategy has to be well matched to industry and competitive conditions, a company's best market opportunities, and other pertinent aspects of the business environment in which the company operates.

To test the merits of a firm's strategy and distinguish it as a winning strategy, which major question needs to be addressed?

Is the strategy helping the company achieve a sustainable competitive advantage, and is it resulting in better company performance? A strategy is distinguished as a winning strategy based on whether it fits a company's situation, allows a company to produce superior performance for more than a brief period of time, and helps achieve a durable competitive advantage over rivals.

A pharmaceutical giant acquires a manufacturer of rare specialty drugs to improve its falling share prices and invests all its wealth into the deal. Due to a deficit, it agrees to do a joint venture for the acquisition and involves a major automobile giant to fund the deal. After a rocky start, the companies now have a strong market position and generate good profits. How would you characterize this company's strategy?

It is a winning strategy. The pharmaceutical giant assessed the market, identified a suitable solution to accentuate its market position, gained a competitive edge by adding a specialty drug to its product line, and realized financial profits and a strong market position. The strategy is a winner as it clears all three tests.

BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds of consumers, this resort caters mainly to gays with a guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage?

a focused differentiation strategy BloomsJay caters to gay customers, focusing on a narrow customer base and providing a unique holidaying experience. It has adopted a focused differentiation strategy concentrating on a narrow customer segment and outcompeting rivals by offering customers attributes that meet their specialized needs and is more appealing than rivals' offerings.

Every strategy needs

a distinctive element that attracts customers and produces a competitive edge. Every company's strategy needs to have some distinctive and unconventional element that draws in customers and produces a competitive edge. Mimicking the strategies of successful industry rivals and employing diverse practices, not necessarily aligned to a strategy, rarely work.

The heart and soul of a company's strategy-making effort is determining how to

come up with moves and actions that produce a durable competitive edge over rivals. A company achieves a competitive advantage whenever it has some type of edge over rivals in attracting buyers and coping with competitive forces. Strategy, at its essence, is about competing differently—doing what rival firms don't do or what rival firms can't do.

Crafting a deliberate strategy involves developing strategy elements that

consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. The biggest portion of a company's current strategy flows from previously initiated actions that have proven themselves in the marketplace and newly launched initiatives aimed at edging out rivals and boosting financial performance. This part of management's action plan for running the company is its deliberate strategy, consisting of proactive strategy elements that are both planned and realized as planned.

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because

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. A company might tailor a strategy to compete profitably in a new market that has few rivals for its business. But when rivals are already entrenched in a market, sustainable competitive advantage provides buyers with lasting reasons to prefer a company's products or services over its rivals' offerings—reasons that competitors are unable to nullify or overcome despite their best efforts.

Under Armour, a multinational sports apparel company plans entry into a new geographical location, Vietnam, considered an emerging market, with its established and best-selling product line: women's running shorts. How should Under Armour not craft a strategy to enhance future profits in Vietnam?

create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs A sales plan that is based on a low price, high cost model usually does not work as it creates a wide gap between investment and realized profits, whereas an attractive mass market plan, diversification of products, positive acquisition, and more visibility in a market are moves to enhance profits.

Strategy, at its essence, is about

developing lasting success that can support growth and secure the company's future over the long term. Strategy at its essence is about setting a company apart from its rivals and staking out a market position that is not crowded with strong competitors. It aims at doing what rivals cannot or do not do.

A winning strategy is one that

fits the company's internal and external situation, builds sustainable competitive advantage, and improves company performance. A winning strategy must fit the company's external and internal situation, build sustainable competitive advantage, and improve company performance.

The pattern of actions and business approaches that would not define a company's strategy include actions to

gain sales and market share with lower prices despite increased costs. A company's strategy would include actions to gain sales and market share with lower prices based on lower costs, not higher costs.

For John Sidanta, CEO and founder of Primaplast, a manufacturer of biodegradable plastic drinking straws made from recycled material, crafting and executing a strategy is a top-priority managerial task because it

is Primaplast management's prescription for doing business, its roadmap to competitive advantage, a game plan for pleasing customers, and its formula for improving performance, especially in light of impending community and some food service outlets' bans on conventional plastic drinking straws. High-achieving enterprises like Primaplast are nearly always the product of astute, creative, and proactive strategy making. A company's business model, its operational model, and realized results are factors associated with its strategy.

A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage

is a company's most reliable ticket to above-average profitability. If a company's competitive edge holds promise for being sustainable (as opposed to just temporary), then so much the better for both the strategy and the company's future profitability.

Managers of every company should be willing and ready to modify their strategies because

market conditions and circumstances are changing over time or the current strategy is clearly failing. A company's strategy evolves incrementally as management fine-tunes various pieces of the strategy and adjusts it in response to unfolding events. Inevitably there will be occasions when changing market and competitive conditions call for some kind of strategic reaction or abandonment of a current strategy, but a company's strategy also consists of deliberate and proactive (or planned) elements.

A company's strategy consists of the action plan management takes to

stake out a unique market position and achieve superior profitability. A company's strategy is the set of actions that its managers take to outperform the company's competitors with a unique market position and sustained competitive advantage.

To improve performance, there are many different avenues for outcompeting rivals such as

strengthening competitiveness by pursuing strategic alliances and collaborative partnerships. Strategy is about competing differently from rivals—doing what competitors don't do or doing what they can't do. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen their market position and competitiveness.

Excellent execution of an excellent strategy is

the best test of managerial excellence and the best recipe for making a company a standout performer. The formulation of a truly successful strategy requires managers to consider not only these primary factors involved in crafting a strategy but also an organization's ability to execute whatever strategy it chooses.