BUS485 - study guide
A company's culture is in part defined and identified by A) its internal work climate and personality—as shaped by its shared values, work practices, traditions, and ingrained attitudes and behaviors that define "how we do things around here." B) whether it employs a low-cost provider, best-cost provider, differentiation, or focused strategy. C) whether decision making is centralized or decentralized and whether it is a single-business company or a diversified company. D) how strongly its strategic vision is linked to its core values. E) whether it is a well-known industry leader, an up-and-coming company that is gaining market share, a middle-of-the-pack company unlikely to move up in the industry ranks, or an industry ran that may or may not survive.
A
A differentiation strategy works best when A) technological change is fast-paced and competition revolves around rapidly evolving product features. B) buyers' needs are homogeneous. C) many rival firms are also pursuing a differentiation approach. D) there are few other ways to make a product unique to buyers. E) firms have ample excess cash to invest in R&D activities.
A
A sustainable competitive advantage is gained when a company A) has durable competitive assets that are central to its strategy and superior to those of rival firms. B) has sufficient resources to expedite its strategy. C) realizes its inherent weaknesses are transformable to advantages. D) can stand out relative to rivals because of resource utilization. E) has resources in well-populated geographical locations.
A
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 are 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.
A
If you were asked to use a powerful analytical tool to size up Amazon's competitive assets and determine whether they can provide the foundation necessary for its competitive success in the marketplace, you would choose A) VRIN tests. B) SWOT analysis. C) competitive strength matrix analysis. D) financial and asset management analysis. E) value chain analysis.
A
Low-cost leaders who have the lowest industry costs are likely to A) have outmanaged rivals in finding ways to perform value chain activities more cost effectively. B) be considering exiting the current product market and use their competitive low-cost strength to gain a competitive advantage in other product arenas. C) be favorites to win the game of strategy in the long run. D) understand that driving costs to the lowest possible level is the only way to sell cheap products to consumers. E) understand that they have lower bargaining power with suppliers than rivals who employ a different strategy.
A
Lululemon's strategy to acquire Mirror, the home exercise startup, for $500 million in June 2020 was primarily intended to A) lead the convergence of industries whose boundaries were being blurred by changing technologies and new market opportunities. B) create a more cost-efficient operation out of the combined companies. C) expand Lululemon's geographic coverage. D) facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy. E) take advantage of Mirror's blue-ocean strategy.
A
Once established, company cultures can be perpetuated by A) relying on word-of-mouth indoctrination and the power of tradition to instill the culture's fundamentals, as well as frequent reiteration of core values by senior managers and group members, and regular ceremonies honoring members who display desired cultural behaviors. B) avoiding frequent or dramatic reorganizations that could disturb existing relationships and networking among departments and company personnel. C) making adherence to cultural beliefs and cultural norms the defining features of the company's strategic vision. D) rewarding departments that observe cultural norms with above-average budget increases and penalizing those who don't with budget cuts. E) making cultural values and beliefs the centerpiece of the company's competitive strategy.
A
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
Rivalry among competing sellers decreases A) when buyer demand is growing rapidly. B) as it becomes less costly for buyers to switch brands. C) as the products of rival sellers become commoditized. D) when there is excess production relative to demand. E) as the number of competitors increases.
A
The competitive pressures from substitute products tend to be stronger when A) good substitutes are readily available. B) there are fewer number of substitute products. C) substitutes have lower performance features. D) buyers incur high costs in switching to substitutes. E) substitutes are priced above the market.
A
The difference between a resource and a capability is a resource A) is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently. B) is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function. C) is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource. D) represents the firm's fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets. E) represents the firm's human assets, whereas a capability defines the skills and knowledge of these human resources.
A
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) determine 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) determine which rival has the biggest competitive advantage and (2) assess 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) assess 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
A company needs financial objectives A) to overtake key competitors on such important measures as net profit margins and return on investment. B) because without adequate profitability and financial strength, the company's ultimate survival is jeopardized. C) to convince shareholders that top management is acting in their interests. D) to translate the company's business model into action items. E) to indicate to employees that financial objectives always take precedence over strategic objectives.
B
A company should not couch its mission statement in terms of making a profit because a profit is more correctly an A) obligation and a reason for what a company does. B) objective and a result of what a company does. C) outlay and a rationale for what a company does. D) obligation and a responsibility for what a company does. E) outflow and a right of what a company does.
B
A company's resources and capabilities represent A) the firm's net working capital and related determinants for measuring operating performance and capabilities. B) the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace. C) whether the firm has the industry's most efficient value chain. D) management's sources and uses of funding for new strategic initiatives. E) positive trends with relevant cultural factors related to buyers' choices and product modifications.
B
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
Company folktales and stories frequently A) articulate a company's strategic vision and strategic intent. B) capture a significant part of a company's culture. C) are indicative of a company's openness in sharing its financial performance and strategic plan with all staff members. D) mirror formal documentation about what are a company's best practices and performance benchmarks. E) document troublesome customers who return products or who encounter problems with deliveries.
B
First-mover advantages are unlikely to be present when A) pioneering helps build a firm's image and reputation with buyers. B) 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. C) early commitments to new technologies, new-style components, new or emerging distribution channels, and so on, can produce an absolute cost advantage over rivals. D) moving first can constitute a preemptive strike, making imitation extra hard or unlikely. E) first-time customers remain strongly loyal to pioneering firms in making repeat purchases.
B
Strategic objectives A) are more essential in achieving a company's strategic vision than are financial objectives. B) relate to strengthening a company's overall market standing and competitive position. C) are more difficult to achieve and harder to measure than financial objectives. D) are generally less important than financial objectives. E) help managers track an organization's true progress better than financial objectives.
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 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. D) first and foremost the function and responsibility of a company's board of directors. E) first and foremost the function of a company's chief executive officer, who formulates strategic initiatives and submits them to the board of directors for approval.
B
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 acquisition involves a company acquiring another company by buying all of the shares of its common stock. B) 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). 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
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 the bargaining power from both suppliers and influential customers. E) lesser the bargaining power from both suppliers and influential customers.
B
What defines an insular, inwardly focused culture? A) The firm never underestimates rivals because of their proven track record in defending challenges. B) The firm believes they have all the answers because of their past great market success and is thus overconfident. C) The firm's unflinching belief in the company's superiority breeds a champion's attitude and thus they thrive on doing better by adapting to fresh thinking from outside the company. D) The firm values their customers' opinions and fully understands their needs and expectations. E) The firm has a commitment to hiring young people who can offer fresh thinking and new perspectives.
B
When strategic managers assess the competitive power of company resources, what matters is A) whether it helps differentiate a company's product offering from the product offerings of rival firms. B) whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals. C) whether customers are aware of the resource and view it positively enough to boost the company's brand name reputation. D) whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company's brand image, and if it is the foundation of a cost-based advantage. E) whether the resource is technology based or based on superior marketing know-how.
B
When trying to change a problem culture, management should undertake such steps as A) selecting a team of key employees to lead the culture change effort and design a plan for cultural change. B) identifying facets of the present culture that are supportive of good strategy execution and which ones are not and then specifying what new actions, behaviors, and work practices are needed in the new culture to improve performance. C) drawing up an action plan to change the present culture and then persuading company personnel why this plan of action is good and will be successful. D) conducting an employee survey to determine the organization's cultural norms and what company personnel like and dislike about the current culture. E) employing a consultant with expertise in culture change and following his or her advice on how to proceed.
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 can offer the lowest possible prices and whether the company can get the best suppliers in the market. E) whether a company's overall costs are lower than competitors' and whether the company can achieve strong product differentiation.
B
A company's values relate to such things as A) how it will balance its pursuit of financial objectives against the pursuit of its strategic objectives. B) how it will balance the pursuit of its business purpose/mission against the pursuit of its strategic vision. C) fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch quality, superior customer service, social responsibility, and community citizenship. D) whether it will emphasize stock price appreciation or higher dividend payments to shareholders. E) whether it will put more emphasis on the achievement of short-term performance targets or long-range performance targets.
C
A good example of vertical integration is a A) global public accounting firm acquiring a small local or regional public accounting firm. B) large supermarket chain getting into convenience food stores. C) crude oil refiner purchasing a firm engaged in drilling and exploring for oil. D) hospital opening up a nursing home for the aged. E) railroad company acquiring a trucking company specializing in long-haul freight.
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 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
Tangible resources do not include A) physical resources. B) financial resources. C) human assets. D) technological assets. E) organizational resources.
C
The culture of a company can be a cost-efficient value chain activity because it can A) allow for safeguarding internalized operating benefits. B) distinguish a company's capacity integration efforts. C) spur worker pride in productivity and continuous improvement. D) foster quality technological enhancements. E) increase a company's bargaining power with suppliers.
C
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 provider, broad differentiation, best-cost provider, focused low-cost, and focused differentiation strategies. D) low-cost/low-price strategies, high-quality/high-price strategies, and medium quality/medium price strategies. E) price leader strategies, price follower strategies, technology leader strategies, and first-mover strategies.
C
What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack? A) to alleviate their fears by committing to reduce the costs of value chain activities B) to cause the challenger to begin the attack instead of waiting C) to dissuade challengers from attacking or diverting them into using less-threatening options D) to create collaborative relationships with challengers E) to insulate other firms from adverse impacts resulting from the challenge
C
1) A company's strategic vision concerns: A) management's storyline of how it intends to make a profit with the chosen strategy "who we are and what we do." B) what future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage. C) "who we are and what we do." D) a company's directional path and future product-customer-market-technology focus. E) why the company does certain things in trying to please its customers.
D
A blue-ocean strategy A) is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B) involves an unexpected (out-of-the-blue) 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
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
A corporate culture founded on ethical business principles and socially approved values A) virtually guarantees that a company will be (or soon become) the acknowledged industry leader because of the ethical and socially approved manner in which its business is being conducted. B) doesn't necessarily impact a company's long-term strategic success favorably or unfavorably. C) does more to detract from a company's chances for strategic success and market leadership than to help it. D) is a positive force underlying a company's long-term financial success and reduces the likelihood of lapses in ethical and socially approved behavior that can damage the company's reputation. E) is seldom more than window-dressing and is generally regarded by customers, suppliers, employees, shareholders, and society at large as nothing more than good public relations.
D
Being a first mover is not particularly advantageous under which circumstance? 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 and reputation with buyers
D
In adaptive corporate cultures A) the prevailing view is that the best way to look out for the interests of employees is to change core values and cultural norms in whatever ways are needed to fit the changing requirements of an evolving strategy. B) company personnel are amenable to changing policies and operating practices as long as the core elements of the company's strategic vision and strategy remain intact. C) members are willing to embrace a proactive approach to trying new ideas, altering operating practices, and changing pieces of the strategy provided it doesn't imperil their job security, entail cuts in compensation, or require different work practices. D) there's a spirit of doing what's necessary to ensure long-term organizational success provided that core values and business principles are not compromised and provided top management undertakes the changes in a manner that exhibits genuine concern for the legitimate interests of stakeholders. E) there is little need for policies and procedures because group members willingly accept experimentation and innovation.
D
In evaluating how well a company's strategy is working, the two best indicators are A) SWOT and value chain analyses. B) Porter's five forces and Value Net analyses. C) value chain and PESTEL analyses. D) competitive strength and financial ratio analyses E) SWOT and PESTEL analyses.
D
Strategic offensives make sense when a company is A) focusing relentlessly on destroying a competitive advantage. B) applying resources where rivals are least able to defend themselves. C) leveraging its weaknesses to strengthen operating vulnerabilities. D) trying to whittle away at a rival's competitive advantage. E) displaying a"wait-and-see"approach to its rivals'moves.
D
The five generic competitive strategies include A) low-cost differentiation. B) no-cost provider. C) best-margin. D) narrow differentiation. E) high-cost.
D
The two culture-building roles of a company's stated values and ethical standards are to A) communicate the company's good intentions and establish a corporate conscience. B) confirm the integrity of company personnel and signal the above-board nature of the company's business principles and operating methods. C) steer company personnel toward doing the right thing and convince outsiders that the company is socially responsible. D) foster a work climate where company personnel share common and strongly held convictions about how the company's business is to be conducted and to provide them with guidance about how to do their jobs, steering them toward both doing things right and doing the right things. E) provide a basis for designing culture-supportive incentive compensation plans and reinforcing the appropriateness of particular ethical and moral actions.
D
Whatever strategic approach is adopted by a company to deliver value, it nearly always requires A) that management undertake formal planning sessions with functional departments to ensure productivity improvement. B) the identification of strengths and weaknesses within the company. C) matching corporate identity with the corporate culture in order to integrate effort and build sales momentum. D) performing value chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match. E) constant efforts to thwart entry of new rivals and their attempts to create differentiated products with unit costs above price premium.
D
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 because the product represents a significant portion of their purchasing budget.
E
Outsourcing 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
Ride-hailing giant Uber purchased food delivery business Postmates in July 2020 in a $2.65 billion all-stock takeover. Postmates will continue to operate under its own name, but will be combined with UberEats to create the country's second-largest delivery goliath. This is known as a(n) A) merger involving one company purchasing the assets of another company. B) merger involving two or more companies deciding to adopt the same strategy. C) acquisition involving one company purchasing the assets of another company with cash. D) acquisition in which the name of the company being acquired is changed to be the name of the acquiring company. E) acquisition involving one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).
E
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) offer unique product attributes in ways that are valuable and appealing and that buyers consider the cost worth it.
E
The real purpose of the company's strategic vision: A) lays out how management plans to implement and execute a profitable business model. B) describes what business the company is presently in and why it has chosen certain operating practices to meet the needs of customers. C) serves as management's tool for giving the organization a sense of direction. 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