Strategic Management
D
9) A blue-ocean strategy: A) works best when a company is the industry's low-cost leader. B) involves an unexpected (out-of- the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C) is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. D) 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. E) involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.
E
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) it forces managers to put equal emphasis on financial and strategic objectives. B) it assists managers in putting roughly equal emphasis on short-term and long-term performance targets C) a balanced-scorecard approach pushes managers to avoid setting objectives that reflect the results of past decisions and organizational activities. D) it entails putting equal emphasis on good strategy execution and good business model execution. E) 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 and business prospects.
E
A company exhibits strategic intent when: A) it capitalizes on its primary competitive advantage and ensures resources are allocated to maintain its strategy. B) management establishes a comprehensive set of financial objectives that meet stockholder expectations. C) management crafts and adopts a strategic plan. D) it aggressively pursues financial objectives, establishing a priority on meeting the performance metrics and instilling a sense of urgency throughout the company. E) it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.
D
A company should not couch its mission in terms of making a profit because a profit is more correctly an: A) obligation and a reason for what a company does. B) obligation and a responsibility for what a company does. C) outlay and a rationale for what a company does. D) objective and a result of what a company does. E) outflow and a right of what a company does.
B
A company's "macro-environment" refers to: A) the dominant economic features of a company's industry. B) the strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions. C) the competitive market environment that exists between a company and its competitors. D) general economic conditions plus the factors driving change in the markets where a company operates. E) the industry and the competitive arena in which the company operates.
B
A company's mission statement typically addresses which of the following questions? A) What business model should we employ to achieve our objectives and our vision. B) Who are we and what do we do? C) What objectives and level of performance do we want to achieve? D) Where are we going and what should our strategy be? E) What approach should we take to achieve sustainable competitive advantage?
C
A competitively valuable resource or capability is a company's: A) assessment of the availability of superior substitutes. B) unsurpassed worker productivity and product quality. C) enabling foundation of its business model. D) unique piecework incentive system, providing a competitive advantage. E) equally valuable substitute resource providing a competitive advantage.
A
A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage: A) is a company's most reliable ticket to above-average profitability. B) is achievable in emerging but not mature industries. C) signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. D) is a reliable indicator that the company has a socially responsible business model. E) is the best indicator that the company's strategy and business model are well-matched and properly synchronized.
D
A useful way to identify a company's resources is to view them as: A) physical resources, such as the company's brand, image, and reputation assets. B) productive inputs or competitive assets, except human assets and intellectual capital, which are considered capabilities or competencies. C) an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats. D) divided into two main categories, tangible and intangible. E) intangible resources such as patents, copyrights, and technological processes.
D
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 is termed: A) competitive analysis. B) financial and asset management analysis. C) value chain analysis. D) resource and capability analysis. E) SWOT.
D
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) buyers use the product in a variety of different ways and have high switching costs in changing from one seller's product to another. B) the market is composed of many distinct segments with varying buyer needs and expectations. C) there are many ways to achieve product differentiation that buyers find appealing. D) the offerings of rival firms are essentially identical, standardized, commodity-like products. E) entry barriers are high and competition from substitutes is relatively weak.
B
A sustainable competitive advantage is gained: A) when a company can stand out relative to rivals because of resource utilization. B) when a company has durable competitive assets that are central to its strategy and superior to those of rival firms. C) when a company realizes its inherent weaknesses are transformable to advantages. D) when a company has sufficient resources to expedite its strategy. E) when a company has resources in well-populated geographical locations
B
A winning strategy must pass which three tests? A) The Sustainable Performance Test, the Fit Test, and the Profit Test B) The Fit Test, the Competitive Advantage Test, and the Performance Test C) The Fit Test, the Sustainable Advantage Test, and the Dominant Market Test D) The Performance Test, the Dominant Market Test, and the Fit Test E) The Dominant Market Test, the Sustainable Advantage Test, and the Profit Test
D
An example of how companies can revamp their value chain to reduce costs is to: A) not make any changes in product manufacturing but change end distribution methods. B) continue to utilize traditional methods of distribution and sales. C) facilitate the learning curve by providing superior training to new employees. D) have suppliers locate their plants close to companies' own facilities. E) increase extra services to increase staffing requirements.
C
An outsourcing strategy: A) carries the substantial risk of making a company overly dependent on its suppliers. B) is nearly always a more attractive strategic option than merger and acquisition strategies. C) involves farming out certain value chain activities presently performed in-house to outside vendors. D) carries the substantial risk of raising a company's costs. E) increases a company's risk exposure to changing technology and/or changing buyer preferences.
A
As a rule, the collective impact of competitive pressures associated with the five competitive forces: A) determines the extent of the competitive pressure on industry profitability. B) means there will be a greater number of industry key success factors. 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) determines the strength of the industry's driving forces.
C
Challenging a struggling rival can do all of the following EXCEPT: A) accelerate the rival's exit from the market. B) threaten the rival's overall survival in the market. C) strengthen the rival's loyal following. D) weaken the rival's resolve. E) sap the rival's financial strength and competitive position.
D
Changing circumstances and ongoing managerial efforts to improve the strategy: A) make it very hard to know what a company's strategy really is. B) result in abandoned strategic visions. C) explain why a company's strategic vision undergoes almost constant change. D) account for Why a Company's Strategy Evolves over Time. E) make it very difficult for a company to have concrete strategic objectives.
C
Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less, or it's free!" With it what has the pizza maker achieved? A) Given a sense of exclusivity to its customers B) Coordinated with suppliers to better address customer needs C) Built a unique customer value proposition D) Emphasized human resource management activities E) Created a new delivery system
E
Driving-forces analysis helps managers identify whether: A) it will become more or less important to aim the company's strategy at being the industry's low-cost produce. B) the industry is likely to become more or less vertically integrated and why. C) the driving forces will have a bigger impact on company profitability than competitive forces. D) competitive advantages are likely to grow or diminish in importance. E) 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.
E
Focusing carries several risks, one of which is the: A) potential for the segment to be highly vulnerable to economic cycles. B) chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace. C) inability of a company to compete industry-wide. D) potential for the segment to become too specialized for other multi-segmented rivals to enter. E) chance that competitors will find effective ways to match the focused firm's capabilities in serving the target market.
E
For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should: A) bean industry key success factor and occupy a prime position in the company's value chain. B) have the potential for lowering the firm's unit costs. C) be something that a company does internally rather than in collaborative arrangements with outsiders. D) be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals. E) be patentable.
E
Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because: A) it helps identify which rival is in which strategic group. B) it identifies who the industry's current market share leaders are. C) it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. D) it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing. E) it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence.
A
In crafting a company's strategy, managers: A) need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals. B) face the biggest challenge of how closely to replicate strategies of successful companies in the industry. C) are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility. D) have comparatively little freedom in choosing the "hows" of strategy. E) are well-advised to be risk-averse and develop a "conservative" strategy —"dare-to-be-different" strategies are rarely successful.
A
Low-cost leaders who have the lowest industry costs are likely to: A) have out managed rivals in finding ways to perform value chain activities more cost-effectively. B) understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers. C) understand that they have lower bargaining power with suppliers than rivals who employ a different strategy. D) be considering exiting the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. E) be favorites to win the game of strategy in the long run.
D
Managers must chart a company's strategic course by: A) building a bigger dealer network. B) ensuring excess production capacity and/or inventory. C) focusing on the local environment in which they are operating. D) developing a thorough understanding of the company's external and internal environment. E) competing fiercely for a share in the market.
E
Mergers and acquisitions: A) 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. B) are generally less effective than forming alliances or partnerships with these same companies. C) are usually more successful in achieving cost reductions than in expanding a company's market opportunities. D) are nearly always successful in achieving their desired purpose. E) frequently do not produce the hoped-for outcomes.
E
One important indicator of how well a company's present strategy is working is whether: A) it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign). B) it has more core competencies than close rivals. C) its strategy is built around at least two of the industry's key success factors. D) it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign). E) the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
C
Organizational capabilities are virtually always: A) reflective of the industry's driving forces. B) require constant evaluation to ensure cooperative support from management. C) knowledge-based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. D) more complex than resources and are exercised only through key personnel. E) are easier and less challenging to categorize than resources because there are fewer to be concerned about.
C
Strategic alliances are: A) a proven means of reducing the costs of performing value chain activities. B) the cheapest means of developing new technologies and getting new products to the market quickly. C) collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective. D) the best way to help insulate a firm from the adverse impacts of industry driving forces. E) best used to insulate a company from the impact of the five competitive forces.
B
Strategic objectives: A) are more difficult to achieve and harder to measure than financial objectives. B) relate to strengthening a company's overall market standing and competitive position. C) are generally less important than financial objectives. D) are more essential in achieving a company's strategic vision than are financial objectives. E) help managers track an organization's true progress better than financial objectives.
A
Tangible resources do not include: A) human assets. B) technological assets. C) organizational resources. D) financial resources. E) physical resources.
A
The "driving forces" in an industry: A) are major underlying causes of changing industry and competitive conditions and have the biggest influences in reshaping the industry landscape and altering competitive conditions. B) are usually triggered by changing technology or stronger learning/experience curve effects. C) usually are spawned by growing demand for the product, the outbreak of price-cutting, and big reductions in entry barriers. 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.
E
The customer value proposition lays out the company's approach to: A) embracing rival company approaches to gaining customers. B) operating efficiently given the current level of customers. C) assuring that the company makes enough profits based on its per-unit cost. D) meeting profitability guidelines without the risk of losing customers. E) satisfying customer wants and needs at a price customers will consider a good value.
C
Well-conceived visions are ________ and ________ to a particular organization and they avoid generic, feel-good statements that could apply to hundreds of organizations. A) universal; established B) customary; familiar C) distinctive; specific D) recurring; customary E) widespread; unique
A
The difference between a company's strategy and a company's business model is that: A) strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues flowing from the strategy are sufficient to cover costs and realize a profit. B) 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. C) the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. D) a company's strategy is solely concerned with how to please customers while its business model is solely concerned with how to please shareholders. E) 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 its corporate responsibility goals.
D
The difference between a merger and an acquisition is that: A) 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. B) a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies C) 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 D) 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). E) a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock.
C
The difference between the concept of a company mission statement and the concept of a strategic vision is that: A) a mission statement deals with what to accomplish on behalf of shareholders, while a strategic vision concerns what to accomplish on behalf of customers. B) a mission statement focuses on the methods needed to make a profit, whereas a strategic vision concerns what business model to employ in striving to make a profit. C) a mission statement typically concerns a company's purpose and its present business scope, whereas the principal concern of a strategic vision is a company's aspirations for its future. D) accelerate the rival's exit from the market. E) strengthen the rival's loyal following.
C
The essence of a broad differentiation strategy is to: A) lower buyer switching costs. B) appeal to the high-end part of the market and concentrate on providing a top-of-the-line product to consumers. C) offer unique product attributes in ways that are valuable and appealing and that buyers consider worth paying for. D) incorporate a greater number of differentiating features into its product/service than rivals. E) outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes.
B
The extent to which firms are meeting objectives suggests they: A) are likely to prosper in the future. B) are likely to continue their present strategy with only minor fine-tuning. C) realize refocusing will ensure competitive gains. D) recognize "status quo" as the best course of action to adopt. E) are virtually certain to make fresh strategic moves.
B
The generic types of competitive strategies include: A) offensive strategies, defensive strategies, and counter maneuvers strategies. B) low-cost provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies. C) price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies. D) market share growth provider, sales revenue leader strategy, and market share retention strategy. E) low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies.
D
The key success factors in an industry: A) 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. B) hinge on how many different strategic groups the industry has operating within the industry and their level of profitability and sustainable advantages. C) are determined by the industry's driving forces, which are essential to surviving and thriving in the industry. D) 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. E) depend on how many rivals are trying to move from one strategic group to another without losing momentum.
E
The most powerful and widely used tool for diagnosing the principle competitive pressures in a market is: A) Pestel. B) competitor analysis. C) the driving forces model. D) strategic group mapping. E) the five forces framework.
E
The objectives of a well-crafted strategy require management to strive to: A) re-create their business models regularly. B) realign the market to provoke change in rival companies. C) match rival businesses' products and quality dimensions in the marketplace. D) build profits for short-term success. E) develop lasting success that can support growth and secure the company's future over the long term.
D
The real purpose of the company's strategic vision: A) sets forth what business what business the company is presently in and why it uses particular operating practices in trying to please customers. B) is management's story line for how it plans to implement and execute a profitable business model. C) 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. D) serves as management's tool for giving the organization a sense of direction. E) defines "who we are and what we do."
D
Vertical Integration: A) are one of the best strategic options for helping companies win the race for global market leadership. B) are a good strategy option for helping a company revamp its value chain and bypass low value-added activities. C) are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. D) extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. E) offer a good potential to expand a company's lineup of products and services.
D
What does the scope of the firm refer to? A) The firm's capability to employ vertical integration strategies. B) The range of activities the firm performs externally and its social responsibility activities. C) to prevent foreign competition from affecting the market. D) 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. E) To gain competitive advantage based on where it locates its various value chain activities
A
Whatever strategic approach is adopted by a company to deliver value, it nearly always requires: A) performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match. B) that management undertake formal planning sessions with functional departments to ensure productivity improvement. C) constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium. D) the identification of strengths and weaknesses within the company. E) matching corporate identity with the corporate culture in order to integrate effort and build sales momentum.
B
Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether: A) buyer switching costs are low and customer loyalty to any one brand is low. B) most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation. C) buyers are prone to shop the market for sellers offering the best price. D) most buyers have similar needs and use the product in the same ways. E) many buyers view the product's differentiating features as having value.
C
Which of the following are integral parts of the managerial process of crafting and executing strategy? A) Developing a proven business model, deciding on the company's strategic intent, and crafting a strategy. B) Developing a strategic vision, setting objectives, 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) Deciding on the company's strategic intent, setting financial objectives, crafting a strategy, and choosing what business approaches and operating practices to employ. E) Coming up with a statement of the company's mission and purpose, setting objectives, choosing what business approaches to employ, selecting a business model, and monitoring developments.
A
Which of the following is NOT a good example of a company's resources? A) Having higher earnings per share and a higher stock price than key rivals B) Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance C) A well-known brand name and enjoying the confidence of customers D) More intellectual capital and better e-commerce capabilities than rivals E) A lower-cost value chain than rivals
E
Which of the following is NOT a purpose of a defensive strategy? A) To help protect a competitive advantage B) To weaken the impact of any attack that occurs C) To decrease the risk of being attacked D) To pressure challengers to aim their efforts at other rivals E) To increase the risk of having to defend an attack
C
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 strategies? A) Whether to focus on building competitive advantages. B) Whether to display a strong bias for swift, decisive, and overwhelming actions to overpower. C) Whether to employ a market share leadership strategy. D) Whether to create and deploy company resources to cause rivals to defend themselves. E) Whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for.
A
Which of the following is NOT an analytical tool for revealing a company's competitiveness and for helping to match the strategy to the company's own particular circumstances? A) Best practice concept B) SWOT C) Value chain analysis D) Competitive strength analysis E) Resource and capability analysis
B
Which of the following is NOT one of the five typical sources of competitive pressures? A) The market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. B) The power and influence of industry driving forces. 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 bargaining power of suppliers and seller-supplier collaboration
D
Which of the following is NOT one of the managerial considerations in determining how to compete successfully? A) How should a company be competitive against rivals? B) How should a company respond to changing economic and market conditions? C) How should a company position itself in the marketplace? D) How can a company modify its entire product line to emphasize its internal service attributes? E) How can a company attract, keep, and please customers?
D
Which of the following is NOT typically a trigger to an evolving strategy? A) The need to abandon some strategy features that are no longer working well B) The need to respond to the newly initiated actions and competitive moves of rival firms C) The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations D) The need to respond to short-term swings in the stock market E) The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy
C
Which of the following is an integral part of the managerial process of crafting and executing strategy? A) Communicating the company's values and code of conduct to all employees B) Deciding on the company's strategic intent C) Setting objectives and using them as yardsticks for measuring the company's performance and progress D) Developing a proven business model E) Deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage
C
Which of the following is true of a company's business model? A) It explains how it intends to achieve the same market position as a rival. B) It details the ethical and socially responsible nature of the company's strategy. C) It zeroes in on the customer value proposition and its related profit formula. D) It explains why the customer value proposition takes precedence over the related profit formula to generate optimum revenues. E) It is termed a winning model if it passes any one of the three strategy tests.
B
While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are: A) whether a company can build a brand name and an image that buyers trust. B) whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy. C) whether a company can achieve lower costs than rivals and whether the company is pursuing the industry's sales and market share leader's role. D) whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation. E) whether a company can offer the lowest possible prices and whether the company can get the best suppliers in the market.