BUSA2005 Chapter 6 TB

Which condition must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?

A. differentiation *B. imperfectly imitable resources* C. related diversification D. unrelated diversification ANS: B

What are the positioning strategies identified by Michael Porter?

A. entrepreneurial, growth, and stability B. diversification, acquisition, and divestment C. defender strategy, diversification, and cost leadership *D. focus, cost leadership, and differentiation* ANS: D

What strategy is used to turn around very poor company performance by shrinking the size or scope of the business?

A. growth strategy B. stability strategy *C. retrenchment strategy* D. repositioning strategy ANS: C

Which of the following strategies is analogous to pruning roses?|

A. growth strategy B. stability strategy *C. retrenchment/recovery strategy* D. portfolio strategy ANS: C

Deutsche Bank became the world's largest bank through mergers with Bankers Trust, a transatlantic banking operation. Considering both banking companies had similar core capabilities, what is this an example of?

A. related differentiation *B. related diversification* C. integrated acquisition D. competency acquisition ANS: B

Which of the following is probably the best approach to diversification in portfolio management?

A. related differentiation *B. related diversification* C. unrelated diversification D. unrelated differentiation ANS: B

Some companies' main products will not be seen by consumers, and their skills lie in productivity anonymity. For example, a chemical company could set an objective that 30 percent of its customers would recognize its brand name two years after the introduction of the branding strategy. Which of the following is defined by developing a brand image to create a distinctive competence?

*A. a strategic reference point* B. a tactical benchmark C. a strategic mission D. a core advantage ANS: A

Which statement best describes the status of Tim Hortons and Coffee Time as direct competitors?

A. They have a low degree of resource variability. *B. They have a high degree of market commonality.* C. They have a low degree of competitive inertia. D. They have a low degree of market commonality. ANS: B

Deutsche Bank is the largest bank in the world. Would this position give it a sustainable competitive advantage, and why?

A. Yes, because size would make its operations synergistic. *B. No, because size is not a criterion for sustainable competitive advantage.* C. Yes, because large institutions make more effective use of resources. D. No, because large organizations are always targeted for anti-trust activities. ANS: B

What term could be used to describe Coca-Cola's acquisition of a water-treatment and bottling plant so it could produce and market Dasani brand bottled water?

A. a repositioning strategy *B. growth* C. niche marketing D. a retrenchment strategy ANS: B

Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Specialized bikes have a large share of a fast-growing market. According to the BCG matrix, what would the company Specialized Bicycle Components be classified as?

A. as problem children B. as cash cows C. as exclamation points *D. as stars* ANS: D

Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who is considering developing and marketing a new brand of bleach. Which one of Michael Porter's five industry forces should you be most concerned about?

A. bargaining power of buyers B. threat of substitute products or services C. threat of new entrants *D. character of the rivalry* ANS: D

Which of the following is a problem strongly associated with top managers?

A. competitive dissonance B. differentiation discrepancy C. strategic inertia *D. competitive inertia* ANS: D

What mechanism is used to examine external threats and opportunities facing a firm as well as its internal strengths and weaknesses?

A. organizational scanning B. internal marketing C. corporate strategy *D. a situational analysis* ANS: D

Which of the following will most likely be characteristic of companies when the bargaining power of suppliers and buyers is high?

*A. Companies will find it more difficult to be profitable.* B. Companies will most likely use a growth strategy. C. Companies will divest themselves of all of their cash cows. D. Companies will engage in organizational restructuring. ANS: A

What is the first step in the strategy-making process?

*A. assess the need for strategic change* B. conduct a situational analysis C. choose strategic alternatives D. evaluate the impact of changes on the internal environment ANS: A

Which of the following is intangible?

*A. core capabilities* B. competitive advantages C. strengths and weaknesses D. distinctive competencies ANS: A

When The Home Depot opened stores in Canada, it ran a series of ads featuring an animated hammer that was busily reducing prices to show the U.S.-based home improvement store had the lowest prices. According to Michael Porter's ideas, which positioning strategy did The Home Depot adopt to deal with existing Canadian stores that sold similar products?

*A. cost leadership* B. diversification C. focus D. differentiation ANS: A

The ad for ASKO washers reads, "Since our humble Swedish beginnings back in 1950, ASKO has been dedicated to building machines with superior cleaning power, reliability, and style. Which type of positioning strategy is ASKO more than likely using?

*A. differentiation* B. retrenchment C. diversification D. focus ANS: A

Infinity Inc. makes a paperweight with real flowers preserved within a solid clear crystal polymer. Independent gift stores sell Infinity's paperweights to collectors of nature related keepsakes. The larger gift companies find this market too niche for them. What kind of strategy has Infinity adopted?

*A. focus* B. differentiation C. cost leadership D. diversification ANS: A

Which type of strategy, manifested in three ways, is a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use?

*A. grand strategy* B. growth strategy C. stability strategy D. retrenchment/recovery strategy ANS: A

What type of grand strategy is McDonald's using when it increases its profits in France by offering uniquely French products, such as Croque McDo, the McDonald's version of a popular French grilled sandwich?

*A. growth* B. decline C. retrenchment/recovery D. repositioning ANS: A

Resource similarity determines the extent to which firms will be in direct competition with one another. What other factor does the same?

*A. market commonality* B. resource quality C. related diversification D. product differentiation ANS: A

According to the text, valuable, rare, imperfectly imitable resources can produce a sustainable competitive advantage. What kind of resources must they also be to do so?

*A. nonsubstitutable resources* B. substitutable resources C. reliable resources D. expensive resources ANS: A

Which strategy, if successful, is often followed by a growth strategy?

*A. retrenchment* B. portfolio C. focus D. differentiation ANS: A

Which of the following organizations are most directly in competition with each other?

A. Kmart and Gap B. a local flower shop and Kroger's *C. FedEx and UPS* D. an independent bookstore and a library ANS: C

Which type of resource is NOT controlled or possessed by many competing firms?

*A. rare resources* B. imperfectly imitable resources C. nonsubstitutable resources D. strategically dissonant resources ANS: A

Glassmaker AFG Industries positions itself as the primary supplier of glass used in microwave doors, shower doors, and patio tables. Which type of positioning strategy does AFG use?

A. adaptive B. growth C. diversification *D. focus* ANS: D

Hector wanted to grow his business beyond the food industry and started investing in clothing, toys, and travel companies. Hector's vice president did not agree with these investments and predicted a decline in profit. Predicting this decline in profit is contrary to which strategy?

A. BCG strategy *B. portfolio strategy* C. related diversification strategy D. acquisition strategy ANS: B

How can the portfolio strategy be used to help managers acquire companies that fit well with the rest of their corporate portfolio?

A. The fewer businesses in which a corporation competes, the smaller its overall chances of failing. *B. Risk can be reduced through related diversification—creating or acquiring companies with related core capabilities.* C. Invest the profits and cash from mature, slow-growth businesses into newer, faster growing businesses. D. The most significant advantage of the portfolio strategy is the ability to categorize businesses as stars, exclamation points, question marks, and dogs. ANS: B

Which of the following might an internal situational analysis for a pet food manufacturer reveal?

A. a growing dog and cat population in the United States B. an indication that dogs need less calcium in their diet C. a less expensive, more nutritious imported brand of pet food *D. a need for management that understands the trends in pet care* ANS: D

Among the adaptive strategies, analyzing is a blend of which strategies?

A. analyzing and reacting B. defending and reacting C. prospecting and analyzing *D. defending and prospecting* ANS: D

Imagine Dow Chemical is conducting a situational analysis. According to its sales, Dow is the second-largest chemical company in the world. BASF is the largest. Both companies use a similar strategy. Within Dow's situational analysis, what would BASF be classified as?

A. as a cash cow B. as a primary firm C. as an unrelated firm *D. as a cor firm* ANS: D

Hohner is a company that manufactures and markets harmonicas, a product with a steady demand rate. It is so successful at what it does that the company controls 85 percent of the world's harmonica industry. In terms of adaptive strategies, what is Hohner most likely categorized as?

A. as a reactor B. as a diversifier C. as an analyzer *D. as a defender* ANS: D

By which of the following actions can companies achieve growth?

A. by shrinking the scope of their business *B. through direct expansion of its operations* C. by deleting all cash cows from their portfolios D. by maintaining only stars in their portfolios ANS: B

Apple and Samsung lead the cellphone industry and usually one or the other company leads the industry in phone sales. Which of Porter's five industry forces is this an example of?

A. character of culture B. competitive barrier *C. character of the rivalry* D. benchmarked rivalries ANS: C

Which of the following is one of the five industry forces that determine an industry's overall attractiveness and potential for long-term profitability?

A. character of management B. existing complementary products C. level of government subsidies *D. threat of substitute products* ANS: D

The highly fragmented chemical industry in Europe has experienced decreasing profits partly due to industry reluctance to change the way it conducts business—especially in how it competes against lower-priced U.S. imports. What is this an example of?

A. competitive apathy B. strategic apathy *C. competitive inertia* D. strategic inertia ANS: C

What strategic group do top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities in a situational analysis?

A. non-industry-specific companies B. expert managers C. trade journals and other relevant periodicals *D. other firms within an industry* ANS: D

What strategy is characterized by significant cost reductions, the layoffs of employees, the closing of poorly performing stores, offices, or manufacturing plants, or the closing or selling of entire lines of products or services?

A. portfolio *B. retrenchment* C. stability D. firm-level ANS: B

What are the two major approaches to corporate-level strategy?

A. portfolio strategy and secondary strategy B. grand strategy and temporal strategy *C. grand strategy and portfolio strategy* D. temporal strategy and secondary strategy ANS: C

Which type of strategy has the purpose of choosing an industry-level strategy that is best suited to changes in the organization's external environment?

A. positioning B. differentiation C. growth *D. adaptive* ANS: D

Which of the following is an example of a common approach to corporate-level strategy?

A. positioning strategies B. adaptive strategies C. ROI strategies *D. grand strategies* ANS: D

Which of the following is determined by Michael Porter's five industry forces?

A. potential for long-term change B. potential for short-term profitability C. potential for short-term change *D. potential for long-term profitability* ANS: D

Civet coffee beans are the world's most coveted and expensive coffee bean that comes from Sumatra. Civets eat the coffee berries and excrete the beans. The digestive process creates a rich flavourful coffee bean. What kind of resource is this coffee bean?

A. rare resource *B. imperfectly imitable resource* C. nonsubstitutable resource D. strategically dissonant resource ANS: B

Besides selling coffee, Starbucks markets a line of compilation CDs under the brand name Hear Music. Which term best describes this making and marketing of CDs?

A. related differentiation B. related diversification C. integrated acquisition *D. unrelated diversification* ANS: D

Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce. What is this action an example of?

A. related differentiation B. related diversification C. integrated acquisition D. unrelated diversification ANS: D

What does an organization experience when it is reluctant to change strategies or competitive practices that have been successful in the past?

A. strategic dissonance B. strategic inertia C. competitive dissonance *D. competitive inertia* ANS: D

What types of firms use strategies that are related to, but somewhat different from, those of core firms when doing an analysis of strategic groups to assess external environmental threats and opportunities?

A. strategic firms *B. secondary firms* C. transient firms D. pioneering firms ANS: B

When making travel plans, many tourists select Thomas Cook because they perceive the tour company as being superior to all others. No other tour service can duplicate the customer service and satisfaction that Thomas Cook has provided over its years of operation. What type of resources has Thomas Cook apparently used to create a sustainable competitive advantage?

A. synergistic B. valuable C. tangible *D. nonsubstitutable* ANS: D

To differentiate its products from other similar brands, Aveda beauty products focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. What has Aveda achieved with customer education and employee training?

A. synergy through relationship marketing B. prevention of product duplication C. efficient use of imitative resources *D. a competitive advantage* ANS: D

A sustainable competitive advantage exists for an organization when other companies have tried unsuccessfully to duplicate the advantage and when which of the following happens?

A. the other companies have been prohibited from duplicating the advantage by federal law *B. the other companies have, for the moment, stopped trying to duplicate the advantage* C. the organization is able to implement exclusive distribution D. the organization operates in the international marketplace ANS: B

In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital intensive, less cyclical business. Which type of grand strategy was ICI using?

*A. retrenchment* B. stability C. growth D. maturity ANS: A

Which type of strategy do companies often choose when their external environment doesn't change much or when they have struggled with periods of explosive growth?

*A. stability* B. growth C. pioneering D. portfolio ANS: A

Francis has to decide between two financiers. The first financier wants quick growth while the second prefers slow and steady growth. Francis likes the idea of growing quickly but is unsure if she is willing to take on the additional risks. Which theory describes what Francis is contemplating?

*A. strategic reference point theory* B. situational analysis theory C. core competency theory D. risk-seeking theory ANS: A

Which targets do managers use to measure whether their firm has developed the core competencies it needs to achieve a sustainable competitive advantage?

*A. strategic reference points* B. strategic focus points C. differentiation targets D. imperfectly imitable resources ANS: A

Top-Flite manufactures Strata golf balls and prices these balls at about three times what ordinary golf balls cost. The Strata ball is selling exceptionally well because customers recognize the ball's patented three-layer construction improves handling and increases distance. What does the company have from the patent on these golf balls?

*A. sustainable competitive advantage* B. aggregate marketing strategy C. reliable differentiation D. strategic stance ANS: A

Which corporate strategy addresses the question "How should we compete in this industry?

" A. corporate-level *B. industry-level* C. firm-level D. niche-specific ANS: B

Which term refers to the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?

"|A. firm-level strategy *B. corporate-level strategy* C. industry-level strategy D. portfolio strategy ANS: B

Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Since then, the company has maintained a technological leadership in the production of bikes and bike accessories and an organizational culture that encourages innovation. Which one of the following refers to the company's technological leadership and its organizational culture?

A. customer sustainabilities B. organizational advantages C. relative competencies *D. core capabilities* ANS: D

Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. It is recognized worldwide for its ability to design and produce superior mountain bikes. Which of the following terms best defines this ability?

A. customer sustainability B. organizational advantage C. relative competence *D. distinctive competence* ANS: D

Sales of Arm & Hammer baking soda had flattened when its manufacturer started promoting new, innovative uses for its product. Which adaptive strategy stance did the manufacturer of Arm & Hammer use by searching for new market opportunities?

A. defender B. cost leader C. analyzer *D. prospector* ANS: D

Peter owns an independent residential realtor agency. Rather than creating his own promotions, he waits to see what the larger realtors offer potential home owners and then offers the same with some added perks. What type of adaptive strategist is Peter?

A. defender B. pioneer C. analyzer *D. reactor* ANS: D

Which of the following employ adaptive strategies that tend to result in the poorest performance?

A. defenders B. analyzers C. prospectors *D. reactors* ANS: D

Which of the following is one of the five forces Michael Porter identified as being the ones to determine an industry's overall attractiveness and potential for long-term profitability?

A. existence of complementary products B. organizational structure C. existing benchmarks *D. bargaining power of suppliers* ANS: D

NTL, the largest cable company in the United Kingdom, recently declared bankruptcy. It needs to engage in restructuring to gain more flexibility and to allow it to raise capital. It has identified the need for strategic change. What is the next step NTL should take in this strategy-making process?

A. finding the optimal strategic solution B. brainstorming C. assessing the need for strategic change D. conducting a situational analysis ANS: D

According to strategic reference point theory, what are the two basic strategic alternatives that managers have?

A. following strategy and pioneering strategy B. risk-maintenance strategy and conflict-avoidance strategy *C. risk-avoiding strategy and risk-seeking strategy* D. frontal attack strategy and guerilla strategy ANS: C

Cost leadership, differentiation, and focus are discussed in the text. Which of the following defines these three types of strategies?

A. grand B. niche *C. positioning* D. restructuring ANS: C

What is an organization said to have if it has the assets, capabilities, processes, information, and knowledge used to improve its effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem?

A. grand strategies B. distinctive competencies C. competitive advantages** *D. resources* ANS: D

What type of strategy are companies most likely following when they are trying to improve the way in which they sell the same goods or services to the same customers?

A. growth B. pioneering C. retrenchment/recovery *D. stability* ANS: D

In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical products from its production and concentrated on specialty chemicals, a less capital intensive, less cyclical business. Which type of strategy will ICI more than likely implement if it is successful in making the needed changes?

A. harvesting B. revitalization C. revival *D. recovery* ANS: D

Under which of the following conditions is a competitive attack by the stronger of two rivals more likely to produce sustained competitive advantage for that rival?

A. high market commonality B. high competitive autonomy C. high resource similarity *D. low resource similarity* ANS: D

What is an organization said to be experiencing when there is a discrepancy between upper management's intended strategy and the strategy implemented by the lower levels of management?

A. horizontal conflict B. character of the rivalry *C. strategic dissonance* D. competitive inertia ANS: C

What is the term for the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs in any organization?

A. imperfectly imitable resources B. valuable resources C. distinctive competencies *D. core capabilities* ANS: D

Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford Charcoal and Prime Choice brand steak sauce. What is this action an example of?

A. internal growth B. a stability strategy C. a pioneering strategy *D. external growth* ANS: D

Companies in the chemical industry are struggling to attract the most talented college and university graduates. One big challenge facing these companies is attracting new talent to organizations with an old economy image. In a situational analysis, what term would be associated with this challenge?

A. internal threat B. external opportunity *C. internal weakness* D. internal opportunity ANS: C

What is the term for a portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share to help them decide how to invest corporate funds?

A. investment matrix B. SWOT matrix *C. BCG matrix* D. portfolio management matrix ANS: C

What is another term for SWOT analysis?

A. market audit analysis B. firm-level strategy analysis C. competitive advantage analysis *D. situational analysis* ANS: D

What is it called when the strategic actions that your company takes can probably be matched by your direct competitors, from a competitive standpoint?

A. market commonality *B. resource similarity* C. character of the rivalry D. competitive inertia ANS: B