BUSA 6600 Strategic Management
The two pivotal factors that distinguish one competitive strategy from another boil down to
(1) whether the company's market target is broad or narrow, and (2) whether the company is pursuing a competitive advantage linked to lower costs or differentiation.
Which statement points out the main difference between the global and the transnational strategy?
A transnational strategy gives local managers more room to make strategy changes to better satisfy local buyers and to better match local market conditions.
What is the benefit of calculating quantitative attractiveness ratings for the industries a diversified company has invested in?
Calculating attractiveness ratings is a systematic and reasonably reliable method for ranking a diversified company's industries from most to least attractive.
Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT true?
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.
Which of the following best describes economies of scope?
Economies of scope are cost reductions that flow from strategic fit along the value chains of related businesses.
Which of the following is an advantage of an export strategy?
Export strategies minimize risks and capital requirements.
Which of the following is an example of a multidomestic strategy?
Heinz ketchup in India does not have garlic and onion.
Which of the following makes acquisition an attractive approach to diversifying into another industry?
It is quicker than trying to launch a brand-new operation, offers an effective way to hurdle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry.
Which of the following is an example of demand conditions of home-country advantage?
Nokia invested in cellular phones in developing nations based on the increased demand for the product in Finland.
The following are good examples of outsourcing some value chain activities that were formerly performed in-house except
Nordstrom retails certain products for Coach Inc.
Which of the following does NOT reflect an option for tailoring a company's strategy to fit the circumstances presented in developing-country markets?
Observe and follow the lead of local market competitors.
How do economic risks differ from political risks?
Political risks stem from instability in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.
Which of the following is a prime benefit of a strategy keyed to related diversification?
Related diversification offers potential 1 + 1 = 3 benefits because of valuable cross-business relationships among the value chains of the corporation's different businesses.
_________ is 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.
Vertical scope
A boutique hotel chain provides upscale rooms and superior customer service at value prices. What strategy is the hotelier using to gain competitive advantage?
a best-cost provider strategy
A good example of blue-ocean type of offensive strategy is
a company like Australian winemaker Casella Wines that created a Yellow Tail brand designed to appeal to a wider market, one that also includes consumers of other alcoholic beverages.
Which of the following strategic approaches becomes most appealing when a market is not important to industry leaders?
a focused strategy
Which strategic approach tends to work best when price competition among rival sellers is vigorous, the market is large, and there are few ways to achieve product differentiation?
a low-cost provider strategy
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.
A vertical integration strategy can expand the firm's range of activities
backward into sources of supply and/or forward toward end users.
The multidomestic strategy of "think local, act local"
becomes more appealing when country-to-country differences in buyer tastes, cultural traditions, and market conditions vary significantly.
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.
To produce added long-term shareholder value, a move to diversify into a new business must pass three tests the
better-off test, the cost-of-entry test, and the industry attractiveness test.
Using domestic plants as a production base for exporting goods to selected foreign country markets
can be an excellent initial strategy to pursue international sales.
Experience indicates that strategic alliances
can suffer culture clash and integration problems due to different management styles and business practices.
Which of the following generates operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends?
cash cows
Successful differentiation allows a firm to
command a premium price for its product, increase unit sales, and/or gain buyer loyalty to its brand.
The marketing emphasis of a company pursuing a focused differentiation strategy usually is to
communicate how product offerings do the best job of meeting niche buyers' expectations.
Related diversification strategies are strong when built upon sharing
competitively valuable resources.
In order to use location to build competitive advantage when competing on domestic and international level, a company must
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) determine in which countries it should locate particular activities.
A low-cost provider strategy is appropriate for use in the supermarket industry for all of the following reasons EXCEPT
consumer buyers have significant power to bargain down prices.
A greenfield venture strategy involves
creating a subsidiary business by setting up all aspects of the operation from the ground up.
Avenues for performing value chain activities at a lower cost than rivals include all of the following EXCEPT
cutting back on competitively important product attributes to lower costs.
The procedure for evaluating a diversified company's strategy involves all of the following steps EXCEPT
determining the degree of risk involved with each business unit.
Which of the following is the biggest strategic issue when competing in international markets?
determining whether to standardize or customize the company's offerings
Relative market share as a measure of competitive strength is calculated by
dividing the 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.
Which of the following refers to cost reductions stemming from strategic fit along the value chains of related businesses?
economies of scope
What are the two ways a company can translate its low-cost advantage over rivals into attractive profit performance?
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
Which of the following are key indicators of industry attractiveness?
emerging opportunities and threats, industry profitability, and market size and projected growth rate
Checking the competitive advantage potential of cross-business strategic fit involves
evaluating how much benefit a diversified company can gain from cross-business value chain matchups and resource sharing.
Strategic offensive should, as a generic rules, be based on
exploiting a company's strongest competitive assets-its most valuable resources and capabilities
Which of the following is NOT a potential pitfall of a low-cost provider strategy?
facing competitors who are able to quickly copy most or all of the appealing product attributes a company comes up with
A company expands outside its home market in order to
gain access to new customers for the company's products/services.
The primary reasons that companies opt to expand into foreign markets are to
gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base
The strategic impetus for forward vertical integration is to
gain better access to end users and better market visibility.
A "cash hog" type of business
generates cash flows that are too small to fully fund its operations and growth.
Which of the following reflects an advantage of acquisition strategies?
having a high level of control, as well as speed, when entering a market on a large scale
Combination related-unrelated diversification strategies have particular appeal for companies
having a mix of valuable competitive assets, covering the spectrum from generalized to special resources and capabilities.
The purposes of a defensive strategy do not include
increasing the risk of having to defend an attack.
The principal offensive strategy options include all of the following except
initiating a market threat and counterattack simultaneously to effect a distraction.
An outsourcing strategy
involves farming out certain value chain activities presently performed in-house to outside vendors.
A company's competitive strategy is unlikely to succeed unless it
is predicated on leveraging a competitively valuable collection of resources and capabilities that match the strategy.
The main disadvantage of using a franchising strategy to pursue opportunities in foreign markets is
maintaining quality control.
Which of the following is NOT among the hazards and difficulties associated with strategic alliances with foreign partners?
making it harder to pursue a multidomestic strategy as compared to a global strategy
Carlos, the CEO of a local HR recruiting and staffing company, is considering a strategic alliance with a local payroll company. What would not likely be a consideration for Carlos with respect to whether the proposed alliance could become successful and realize its intended benefits?
minimizing the amount of resources that the partners commit to the alliance
Launching a preemptive strike type of offensive strategy entails
moving first to secure advantageous competitive assets that rivals can't readily match or duplicate.
Walmart's low-cost advantage results primarily from its ability to
outdo its rivals in performing value chain activities cost efficiently.
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
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.
Whatever strategic approach is adopted by a company to deliver value, it nearly always requires
performing chain activities differently than rivals and building competitively valuable resources and capabilities that rivals cannot readily match
Best-cost provider strategies work best when
product differentiation is the norm and there is an attractively large number of value-conscious buyers.
Including product attributes and user features that lower the buyer's costs is one way of delivering superior value via a differentiation strategy. This option does NOT primarily include which of the following?
providing financing options
Regulations, government policies, and requirements in host countries have a major effect on the operations of foreign companies. Which of the following does NOT reflect a typical regulation?
providing low-interest loans to foreign companies
The financial options for allocating a diversified company's financial resources do NOT include
purchasing competitively weak businesses or businesses in unattractive industries.
Cost-cutting methods that demonstrate an effective use of cost drivers include all of the following EXCEPT
pursuing production R&D activities.
Corporate restructuring strategies
radically alter the business lineup by divesting poor performers and acquiring new promising businesses.
Which of the following is NOT a strategic option for a company that is already diversified?
repurchasing shares of the company's common stock and building cash reserves by investing in short-term securities
Which of the following is NOT an example of a competitively valuable strategic fit?
restricting cross-business linkages among value chain activities
A focused low-cost strategy based on low cost aims at
securing a competitive advantage by serving buyers in the target market niche at a lower cost than those of rival competitors.
Which of the following is NOT a route to achieving a differentiation-based competitive advantage?
separating marketing from brand-building activities
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).
Which of the following is NOT an advantage of utilizing a licensing strategy to participate in foreign markets?
the ability to safeguard the company's technical know-how or patents
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.
Which of the following is NOT a factor that makes competing across national borders more difficult than competing domestically?
the difficulty in achieving strategic fit in sales and marketing activities
A best-cost provider's resources and capabilities must allow
the incorporation of upscale attributes into its product offering at a lower cost than rivals.
The global strategy that emphasizes a "think-global, act-global" strategic theme focuses on
the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all countries where the firm does business.
Which of the following is NOT a possible reason why Uber opted to expand its on-demand transportation services into foreign markets?
to build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market
What might not be considered as 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
Exxon Mobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Moscow. Which of the following is most likely the reason for Exxon Mobil to opt for this strategic alliance?
to gain access to low-cost inputs of production
To fend off a competitive attack, defensive-minded companies
use innovation and intellectual property protection to obtain product line exclusivity to force competitors to use other distributors.
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 strategic target of a best-cost provider is
value-conscious buyers in a middle-market range.
The drawbacks of an unrelated diversification strategy include
very demanding managerial requirements and limited competitive advantage potential.
Being a first mover is not particularly advantageous under which circumstance?
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
A differentiation strategy works best in which of the following market circumstances?
when there are many ways to differentiate the product or service that have value to buyers
The biggest and most important differences among the competitive strategies of different companies boil down to
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
Unrelated diversification requires that company managers spend much time and effort screening acquisition candidates using all of the following criteria EXCEPT
whether the business has a cross-business strategic fit.
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