*Mid-Term Exam (Chapters 1-6)

A potato chip manufacturer purchases a potato farm. Which of the following regarding its strategy is true?

A) The manufacturer has effectively used vertical integration in increase its bargaining position and reduce transaction costs

A company's mission statement typically addresses which question?

A) Who are we and what we do?

The best strategic alliances

A) are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit

Management's strategic vision for an organization

A) charts a strategic course for the organization ("where we are going") and provides a rationale for why this directional path makes good sense

When companies adopt the strategy-making and strategy-execution process, it requires they start by

A) developing a strategic vision and mission, and values

The strategic impetus for forward vertical integration is to

A) gain better access to end users and better market visibility

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

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

Organizational capabilities are virtually always

A) knowledge based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge

A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult. Which of the following will be most helpful in solving the manufacturer's problem?

A) outsourcing

A company achieves a competitive advantage when it

A) provides buyers with superior value compared to rival sellers or offers the value at a lower cost

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

A) reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users

What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry?

A) strategic group mapping

An external threat to a company's future profitability does not include

A) the lack of a distinctive competence

The five forces of competitive pressures do not include

A) the power and influence of social/demographic trends

Rivalry among competing sellers decreases

A) when buyer demand is growing rapidly

The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of

A) whether needed inputs are in shot supply and whether suppliers provide differentiated input that enhances performance of the product

Managers of all types of business organizations must develop a clear answer for which of the following questions?

B) Wha is the set of actions that we need to take to outperform competitors and achieve superior profitability?

The difference between a merger and an acquisition is that

B) a merger is the combing 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)

A company's competitive strategy should

B) be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies

FaberRoad, a respect courier brand, is rapidly losing its market share to competitors who do overnight deliveries of packages or offer lower prices. The company's research department has found that many customers care more about knowing exactly when a package will arrive than getting it the next day. Which strategy would best address the current state of FaberRoad and help it regain its market?

B) developing radio tags that could be attached to packages to allow for real-time tracking by customers' PCs and mobile phones

A route to take in developing a differentiation advantage includes

B) incorporating tangible features that add functionality, and increase customer satisfaction with the product specifications, functions, and styling

In order to be successful with a low-cost leadership strategy, company managers have to

B) perform value chain activities more cost-effectively than rivals and be proactive in revamping the firm's overall value chain to eliminate or bypass "nonessential" cost-producing activities

The concept of strategic groups is relevant to industry and competitive analysis because

B) strategic group maps help identify how each competing firm is positioned and the relationship to its closet competitors

While there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are

B) whether a company's target market is broad or narrow and wether the company is pursuing a low-cost or differentiation strategy

One of the most telling signs of wether a company's market position is strong or precarious is

B) whether its prices and costs are competitive with those of key rivals

ESSAY. Write you answer in the space provided: Why is sustainable competitive advantage so important to a winning business strategy?

Because it is the company's primary ability to focus better in increasing sales, retain customers and employees to switching to another company

The strategy-making, strategy-executing process is shaped by

C) external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities

A good example of a company's resources does not include

C) having higher earnings per share and a higher stock price than key rivals

A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage

C) is a company's most reliable ticket to above-average profitability

A company's strategic plan

C) outlines the competitive moves and approaches to be used in achieving the desired business results

A superior example of a well-stated strategic objective is to

C) overtake key competitors on product performance or quality within three years

Being the overall low-cost provider in an industry has the attractive advantage of

C) putting a firm in the best position to win the business of price-sensitive customers and earn profits by setting the floor on market price

The real purpose of the company's strategic vision

C) serves as management's tool for giving the organization a sense of direction

Common shortcomings of company vision statements include

C) too broad, vague or incomplete, bland/uninspiring, not distinctive, and too reliant on superlatives

Experience indicates that strategic alliances

D) can suffer culture clash and integration problems due to different management styles and business practices

Successful broad differentiation allows a firm to

D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand

In evaluating how well a company's strategy is working , the two best indicators are

D) competitive strength and financial ration analyses

Strategy, at its essence, is about

D) developing lasting success that can support growth and secure the company's future over the long term

A first-rate SWOT analysis

D) provides a good basis for crafting a strategy

Tangible resources include

D) technological assets such as patents, copyrights, and innovation technologies

What does the scope of the firm refer to?

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

Strategic offensives make sense when a company is

D) trying to whittle away at a rival's competitive advantage

The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as

D) what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats

Pizza Port, a craft brewing and pizza chain in southern California, manufactures thin-crust pizzas and offers one free pint of beer with purchase of four large pizzas. What would you advise Pizza Port's owners not to do to craft a strategy that will enhance its future profits?

E) Create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs

While other dating apps were already in existence, Tinder found success in pioneering the swiping phenomenon, thereby easing the process of finding love online and making the use of dating apps commonplace. This is an example of

E) a first-mover advantage

A cleverly crafted and well-executed strategy

E) can withstand the competitive challenges from rival firms

Managers much chart a company's strategic course by

E) developing a thorough understanding of the company's external and internal environment

All other things being equal, the "best" generic competitive strategy for a company to employ is a strategy that

E) is well matched to a company's internal situation; underpinned by an appropriate set of resources, know-how, and competitive capabilities; and difficult for rivals to match

The competitive pressures on companies within an industry come from all of the following except

E) those associated with environmental factors such as water shortages