ORGANIZATIONAL STRATEGY: Chapter 6 Quiz

is the measure of the intensity of competitive behavior between companies in an industry.

Character of the rivalry

Aveda is a manufacturer and marketer of cosmetics, perfumes, hair-care, and skin-care products. To differentiate its products from other similar brands, Aveda focuses on educating its customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. Aveda has used customer education and employee training to .

Create a competitive advantage

Bargaining power of buyers tends to be higher when a company sells a popular product to multiple buyers than when a company is dependent on just a few high-volume buyers.

False

Companies face very little uncertainty in their strategic business environments.

False

Differentiation is the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors.

False

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

FedEx and UPS

_____ are the assets, capabilities, processes, information, and knowledge that an organization uses to improve its effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem.

Resources

A strategic group is a group of other companies, within an industry, that top managers choose for comparing, evaluating, and benchmarking their company's strategic threats and opportunities.

True

Companies often choose a stability strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.

True

Companies use their resources to improve organizational efficiency and effectiveness.

True

Corporate-level strategy is the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"

True

Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.

True

Strategic dissonance is a discrepancy between upper management's intended strategy and the strategy actually implemented by the lower levels of management.

True

The threat of substitute products or services is a measure of the ease with which customers can find substitutes for an industry's goods or services.

True

The three positioning strategies are cost leadership, differentiation, and focus.

True

There are four conditions that must be met if a firm's resources are to be used to achieve a sustainable competitive advantage. The resources must be valuable, rare, imperfectly imitable, and nonsubstitutable.

True

An organization is experiencing _____ when it is reluctant to change strategies or competitive practices that have been successful in the past.

competitive inertia

An ad for a major brand of clothes washer reads, "Since our humble beginnings back in 1950, we have been dedicated to building machines with superior cleaning power, reliability, and style." This manufacturer is more than likely using which kind of positioning strategy?

differentiation

According to the text, valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage only if they are resources.

nonsubstitutable

According to Harvard professor Michael Porter, five industry forces (character of rivalry, threat of new entrants, threat of substitute products or services, bargaining power of suppliers, and the bargaining power of buyers) determine an industry's overall attractiveness and its .

potential for long-term profitability

The research on diversification in portfolio management indicates that the best approach is probably .

related diversification

Significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or manufacturing plants, or closing or selling entire lines of products or services would be characteristic of a strategy.

retrenchment

A _____, also called a SWOT analysis for strengths, weaknesses, opportunities, and threats, is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.

situational analysis

Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980. Two-thirds of its profits come from the sale of mountain bikes. Specialized bikes have a large share of a fast-growing market. According to the BCG matrix, specialized mountain bikes would be classified as .

stars

Top-Flite manufactures Strata golf balls and prices these balls at about three times what ordinary golf balls cost. The Strata ball sells exceptionally well because customers perceive its patented three-layer construction to improve handling and increase distance. The patent on these golf balls gives Top-Flite a(n) .

sustainable competitive advantage