Midterm Exam
Which of the following is not a good example of a marketing-related key success factor?
Product innovation capabilities.
A company's broad "macro-environment" refers to
all the strategically significant forces and factors outside a company's boundaries—general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. (Strictly speaking, the macro-environment excludes a company's competitively valuable resources and capabilities and instead encompasses all of the relevant factors—political factors, economic conditions in the firm's general environment, sociocultural forces, technological factors, environmental forces, and legal/regulatory factors—making up the broad environmental context in which a company operates. See Figure 3.1.)
A Balanced Scorecard for measuring company performance:
Entails putting equal emphasis on financial and strategic objectives.
A company's value chain identifies
the primary activities that create value for customers and related support activities. (A company's value chain identifies the primary activities that can create customer value and related support activities.)
A company's mission statement typically addresses which of the following questions?
"Who we are, what we do and why we are here
The task of driving forces analysis is to _______________
(1) identifying what the driving forces are, (2) assessing whether the drivers of change are, individually or collectively, acting to make the industry more or less attractive, and (3) determining what strategy changes are needed to prepare for the impact of the driving forces.
Which of the following statements about a company's strategy is true?
**A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole.
Company strategies evolve because ________________
**All of these.
Which of the following factors is not a relevant consideration in judging whether buyer bargaining power is relatively strong or relatively weak?
**Buyer needs and expectations are changing slowly or rapidly. (Figure 3-3 makes no mention of the impact of buyers' needs on the competitive pressures associated with the bargaining power of buyers. All of the other possible responses are mentioned as impactful factors.)
The difference between a company's strategy and a company's business model is that
**The strategy concerns how to compete successfully and the business model concerns how to operate efficiently.
The key success factors in an industry
**are a function of such considerations as how many firms are in the industry, how many have market shares above 5 percent, and whether the business models being used are similar or diverse. (Key success factors are the strategy elements, product attributes, competitive capabilities, or intangible assets with the greatest impact on future success in the marketplace.)
An industry's key success factors _______________
**can best be determined by identifying the similarities in the strategies of rival companies—those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors.
Which one of the following is not an intangible resource?
**human assets and intellectual capital (Refer to Table 4.1 for common types of tangible and intangible resources.)
A company's business model ________________.
**is management's story line for how the strategy will result in achieving sustainable competitive advantage.
A core competence _______________
**is usually tied closely to the caliber of a company's manufacturing capability and/or its proprietary technology and know-how.
Which of the following is not a relevant consideration in identifying an industry's dominant economic features?
**number of strategic groups in the industry as well as which groups are most or least profitable (The correct answer refers to actions in a company's industry and competitive environment, whereas all of the other responses refer to characteristics of a company's economic environment, as shown in Figure 3.1.)
A company's competitive strength scores
**pinpoint its strengths and weaknesses against rivals and point to offensive and defensive strategies capable of producing first-rate results. (Competitive strength scores provide useful conclusions about a company's competitive situation, including the cost-effectiveness of its value chain, as shown in Table 4.3. Moreover, the overall competitive strength scores indicate whether or not a company's value chain places it at a net competitive advantage or disadvantage against each rival.)
A company's business model ________________.
**sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.
It is normal for a company's strategy to end up being
A blend of deliberate planned actions to improve the company's competitiveness and financial performance and as-needed unplanned, reactions to unanticipated developments and fresh market conditions.
Which of the following statements about a company's realized strategy is true?
A company's realized strategy is typically a blend of deliberate/planned initiatives and emergent/unplanned reactive strategy elements.
A company's strategic plan consists of:
A vision of where it is headed, a set of performance targets, and a strategy to achieve them.
A distinctive competence _______________
All of the above.
The industry or market opportunities that are most relevant to a company and those that its strategy should aim at capturing include _______________
All of the above.
A company's resource weaknesses can relate to
All of these choices are correct. (Competitive weaknesses are those that that make the company vulnerable to rivals, hold down profitability, or disqualify it from pursuing an attractive opportunity.)
The common types of valuable resources and competitive capabilities that management should consider when crafting a strategy include
All of these choices are correct. (See Table 4.1 for a complete list of valuable resources and competitive capabilities.)
Approaches to achieving a sustainable competitive advantage include which of the following?
All of these.
Which one of the following is not an integral part of the managerial process of crafting and executing strategy?
Choosing a strategic intent.
Which one of the following is not one of the five stages of the strategic management process?
Developing a profitable business model.
Operating strategies concern
Focused on initiatives and approaches for managing key operating units within a business (plants, distribution centers, geographic units) and for performing strategically significant operating tasks (maintenance, shipping, inventory control, purchasing, advertising).
Which of the following conditions generally raise the barriers to entering an industry?
High capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold.
What are the three main strategic questions that management must ensure it addresses?
How can we learn more about company operations, its competitors, and marketplace?
Which of the following is not an important factor for company managers to consider in drawing conclusions about whether the industry presents an attractive opportunity?
How many of the industry's key success factors do companies in the industry typically incorporate into their strategies.
The three elements of a company's business model are
Its customer value proposition, the profit formula, and an identification of key resources and processes necessary to create and deliver value to customers.
Which one of the following groups of characteristics is least likely to represent valuable company resources or competitive capabilities?
Larger workforce, longer time in business, lower profit margins, and smaller capital investment spend than rivals.
Which of the following statements about a company's strategy is true?
Managers at all companies face three central questions in thinking strategically about their company's present circumstances and prospects: Where are we now? Where do we want to go from here? How are we going to get there?
Which one of the following is not related to actions and approaches that comprise a company's strategy?
Proving to shareholders that the company's business model is viable.
Strategic objectives
Relate to strengthening a company's overall market standing and competitive vitality.
Strategic objectives__________
Relate to strengthening a company's overall market standing and competitive vitality.
Which one of the following is not one of the elements of crafting corporate strategy for a diversified company?
Standardizing the resource fit across the group of businesses the company has diversified into.
Which of the following is not one of the most frequently used strategic approaches to building competitive advantage?
Striving for a competitive edge based on bigger profit margins.
A company's strategy consists of
The distinctive set of creative strategic choices made by its managers that sets it apart from its rivals and produces its competitive edge.
A company needs financial objectives
To translate Communicate management's targets for financial performance and are lagging indicators that reflect the results of past decisions and organizational activities.
A company needs financial objectives__________
To translate Communicate management's targets for financial performance and are lagging indicators that reflect the results of past decisions and organizational activities.
Which of the following is not generally a "driving force" capable of producing fundamental changes in industry and competitive conditions?
Ups and downs in the economy and interest rates (Most drivers of industry and competitive change fall into one of the above categories (see Table 3.2) but not economic cycles or interest rate changes.)
Which of the following is not one of the questions that needs to be answered in thinking strategically about a company's external environment?
What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach?
Which of the following is not one of the five questions that comprise the task of evaluating a company's competitive strength and cost structure?
What are the company's most profitable geographic market segments? (The five questions comprising the task of evaluating a company's competitive strength and cost structure do not include an assessment of the most profitable geographic segments.)
Which one of the following is not a good indicator of how well a company's present strategy is working?
Whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities.
The difference between a company's mission statement and the concept of a strategic vision is that ________________.
a mission statement typically concerns an enterprise's present business scope and purpose —"who we are, what we do, and why we are here" — whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be.
A company achieves sustainable competitive advantage when ________________
an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage.
The rivalry among competing sellers in an industry intensifies _______________
as the number of rivals increases and as they become more equal in size and competitive capability.
Industry conditions change
because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways. (Industry and competitive conditions change because forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways. The most powerful of the change agents are called driving forces because they have the biggest influences in reshaping the industry landscape and altering competitive conditions.)
Which one of the following is not part of conducting a SWOT analysis?
benchmarking the company's resource strengths and competitive capabilities against industry key success factors (A first-rate SWOT analysis sizes up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being.)
Functional strategies ________________.
concern what to do about resolving the specific strategic issues and operating problems a business confronts in each key part of its business—R&D, production, sales and marketing, finance, information technology, human resources, and so on.
When a company is good at performing a particular internal activity, it is said to have a
competence. (A competence or capability is the capacity of a firm to competently perform some internal activity.)
The most powerful of the five competitive forces is usually the
competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage. (The strongest of the five competitive forces is nearly always the rivalry among competing sellers of a product or service.)
In identifying an industry's key success factors, strategists should
consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. (Key success factors are the strategy elements, product attributes, competitive capabilities, or intangible assets with the greatest impact on future success in the marketplace. In addition, the answers to the following three questions help identify an industry's key success factors: (1) On what basis do buyers of the industry's product choose between the competing brands of sellers? That is, what product attributes are crucial? (2) Given the nature of the competitive forces prevailing in the marketplace, what resources and competitive capabilities does a company need to have to be competitively successful? (3) What shortcomings are almost certain to put a company at a significant competitive disadvantage?)
A company's objectives ________________.
convert the strategic vision into specific performance targets—well-stated objectives are quantifiable, or measurable, and contain a deadline for achievement.
A strategic vision for a company__________
describes "where we are going" by delineating the course and direction management has charted for the company's future product-customer-market-technology focus.
A strategic group map is a helpful analytical tool for _______________
determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions.
A strategic group consists of those firms in an industry that
employ similar competitive approaches and occupy similar positions in the market. (A strategic group is a cluster of industry rivals that have similar competitive approaches and market positions.)
An industry's driving forces
generally act in ways that will strengthen or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability. (An important part of driving forces analysis is to determine whether the individual or collective impact of the driving forces will be to increase or decrease market demand, make competition more or less intense, and lead to higher or lower industry profitability.)
Which of the following is a good example of a manufacturing-related key success factor?
high labor productivity (especially if the production process has high labor content) (KSFs in manufacturing include: (1) ability to achieve scale economies and/or capture experience curve effects (important to achieving low production costs), (2) quality control know-how (important in industries where customers insist on product reliability), (3) high utilization of fixed assets (important in capital-intensive/high-fixed-cost industries), (4) access to attractive supplies of skilled labor, (5) high labor productivity (important for items with high labor content), (6) low-cost product design and engineering (reduces manufacturing costs), and (7) ability to manufacture or assemble products that are customized to buyer specifications.)
Nothing affects a company's ultimate success or failure more fundamentally than ________________
how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence.
Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?
increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration (Most drivers of industry and competitive change fall into one of the above categories (see Table 3.2) but not bargaining leverage or collaborative alliances.)
A company resource weakness or competitive deficiency
is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace. (Competitive weaknesses are those that that make the company vulnerable to rivals, hold down profitability, or disqualify it from pursuing an attractive opportunity.)
Identifying the primary and secondary activities that comprise a company's value chain
is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs). (With its focus on value-creating activities, the value chain is an ideal tool for examining how a company delivers on its customer value proposition. It permits a deep look at the company's cost structure and ability to offer low prices.)
Which of the following is not an example of an external threat to a company's future profitability?
lack of a distinctive competence (See Table 4.2. Lack of a distinctive competence is considered a weakness, not an external threat. All of the other responses are external threats.)
A company's strategic plan consists of ________________
management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path.
Strategy making is ________________.
more of a collaborative group effort that involves managers and key employees throughout the company.
Determining whether a company's prices and costs are competitive
requires looking at the costs of a company's internally performed activities and the costs of its suppliers and forward channel allies (distributors/dealers). (A company's value chain is embedded in a larger system of activities that includes the value chains of its suppliers and the value chains of whatever distribution channel allies it utilizes in getting its product or service to end users.)
The competitive moves and business approaches a company's management uses to grow the business, attract and please customers, compete successfully, conduct operations, and achieve the targeted levels of organizational performance are referred to as its _____________.
strategy.
Accurately assessing the competitiveness of a company's cost structure and value proposition requires
that managers understand an industry's entire value chain system (Accurately assessing the competitiveness of a company's cost structure and customer value proposition requires that company managers understand an industry's entire value chain system for delivering a product or service to customers, not just the company's own value chain, as shown in Figure 4.2.)
Which of the following best describes the market opportunities that tend to be most relevant to a particular company?
those that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage (A company's strategy should be aimed squarely at capturing those market opportunities that are most attractive and suited to the company's collection of capabilities.)
A resource-based strategy
uses a company's valuable and rare resources and competitive capabilities to deliver value to customers that rivals have difficulty matching. (A company's competitive approach requires a tight fit with a company's internal situation and is strengthened when it exploits resources that are competitively valuable, rare, hard to copy, and not easily trumped by rivals' substitute resources.)
