Chapter 44

In terms of business strategy, a blue ocean is

an untapped market space or industry opportunity.

Which of the following are examples of outsourcing?

-A company contracts with an overseas plant to assemble and package its product -A company uses an outside information technology firm to manage its IT infrastructure A company contracts with an outside payroll vendor to handle their payroll function

Which of the following are potential disadvantages of vertical integration?

-It increases a firm's risk of loss if the industry experiences a downturn -It can result in capacity matching problems when components must be manufactured in different quantities -Vertically integrated companies may be slow to embrace technological changes due to investments in older technology or facilities.

In what ways can vertical integration make a business less responsive to market changes?

-Significant investments in older technology make the firm less likely to adopt new technologies -A firm may be unable to respond to changes in consumer preferences using its existing facilities.

Which of these are common reasons why companies enter into strategic alliances?

-To make supply chains more efficient -To improve market access and marketing capabilities -To collaborate on the development of a new technology

Offering direct online sales to consumers while also promoting wholesale and retail sales can result in

-channel conflict -a net loss of sales due to disgruntled dealers -cannibalization of retailers' sales

A late-mover strategy may be advantageous when

-consumer needs evolve away from an existing product -a late-mover can enter the market with lower costs than the first mover. -potential buyers are skeptical about the new product offered by the first-mover.

Examples of strategic offensives

-innovating in order to capture market share from competitors -moving quickly to take advantage of a rare opportunity -offering lower prices on superior products NOT a strategic offensive publicly committing to matching competitor's prices

For backward integration to be a profitable strategy, the company must be able to

-maintain a similar cost structure as outside suppliers -produce as efficiently as suppliers without losing quality

A strategic alliance is more likely to be long-lasting when

-there is a high degree of trust between partners -continued collaboration benefits both parties -the alliance is formed by companies who are not in direct competition

What is/are the goals of signalling competitors that strong retaliation is likely in the event of an attack?

-to let competitors know that a challenge will not be profitable -to convince challengers to pursue other strategic options -to prevent challenges from competitors

Which of these are examples of defensive strategies that can be carried out by a company?

Introduce new features or otherwise expand on existing products or brands Grant volume discounts to distributors to discourage them from using other suppliers Maintain low-priced options to defend against low-price attacks by competitors

When two companies combine via a merger, their resource and competitive capability are _____ if they had combined via an acquisition

THE SAME AS

An independent entity that is jointly owned by two or more businesses is known as a

joint venture

Which of the following is not a good target for an offensive attack?

market leaders with strong profitability and solid market share. Recall that market leaders should only be attacked when they show signs of vulnerability, such as poor customer service ratings.

A publishing strategist that predicts a significant future overlap with the activities of digital technology firms should consider

merging with or acquiring a digital technology firm

A first-mover strategy

requires the first-mover to also be a fast learner

Publicly announcing commitment to maintain the company's current market share, publicly committing the company to a policy of matching competitor's prices and maintaining a war chest of cash and marketable securities are examples of

signaling challengers that strong retaliation is likely in the event of an attack.

A company's horizontal scope refers to

the various product and services that it offers

Which of the following is not an example of vertical integration?

A manufacturer ceases manufacturing their own components and instead contracts with another manufacturer to make and supply the components.

Which of the following describes a company's biggest long-term risk with an outsourcing strategy?

The risk of losing control over activities crucial to the company's competitive success.

Which of the following is NOT true regarding defensive strategies?

They usually help enhance a firm's competitive advantage. They don't Defensive strategies can influence competitors to aim their efforts at other rivals. They can weaken the impact of attacks that occur by other firms. They can lower the risk of being attacked by other firms.