Strategic final
Which one of the following is NOT related to actions and approaches that comprise company's strategy?
Proving to shareholders that the company's business model is viable
Functional strategies
add detail to the overall business strategy and specify what resources and organizational capabilities are needed to put the business strategy into action
A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals
nearly always is relegated to a trailing position in the industry
Company objectives
need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units
A company's biggest vulnerability in employing a best-cost provider strategy is
not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs
Company strategies evolve because
of ongoing management efforts to improve the strategy in light of changing circumstances
Which one of the following is not something that can be learned from doing a competitive strength assessment?
the extent to which a company's customer value proposition is superior to its rivals'
A company's business model
(1) specifies a customer value proposition and (2) develops a profit formula
Which of the following statements about a company's realized strategy is true?
A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements
Strategic actions to eliminate an internal cost disadvantage include
ALL ARE CORRECT implementing the use of best practices. trying to eliminate some cost-producing activities by revamping the value chain. outsourcing high-cost activities to vendors capable of performing the activity more cheaply. investing in productivity-enhancing, cost-saving technology
Identifying the strategic issues that company managers need to address
ALL ARE CORRECT involves using the results of both industry and competitive analysis and evaluations of the company's internal situation using the VRIN tests. is facilitated by analysis of the company's cost structure and customer value proposition relative to its rivals. sets the agenda for deciding what actions to take next to improve the company's performance and business outlook. entails locking in on what challenges the company has to overcome in order to be financially and competitively successful in the years ahead
Every corporation should have a strong, independent board of directors that
ALL ARE CORRECT is well informed about the company's performance. guides and judges the CEO and other top executives. certifies to shareholders that the CEO is doing what the board expects. is intensely involved in debating the pros and cons of key decisions and actions
The industry or market opportunities that are most relevant to a company and those that its strategy should aim at capturing include opportunities
ALL ARE CORRECT that are well-matched to the company's competitive capabilities and resource strengths. that the company has the financial resources to pursue. that offer important avenues for growth. where the company has the greatest potential for competitive advantage.
Approaches to achieving a sustainable competitive advantage include which of the following?
ALL OF THESE ARE CORRECT developing unmatched resource strengths and competitive capabilities focusing on a narrow market niche within an industry strategies supportive of creating a differentiation-based advantage strategies supportive of creating a cost-based advantage
Which of the following is NOT an element of a company's realized business strategy?
Adhering to abandoned strategy elements
Which of the following statements about market opportunity is correct?
Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable.
Evaluating a company's resources, capabilities, and competitive strength relative to its rivals using VRIN tests does not include developing answers to which one of the following questions?
How good is the company's value chain?
Which of the following questions ought to be used to distinguish a winning strategy from a mediocre or losing strategy?
Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance?
Which of the following statements is false?
NONE OF THESE A dynamic capability is the ability to modify, deepen, or reconfigure the company's existing resources and capabilities in response to changes in the environment or market. A company's internal strengths should always serve as the basis for its strategy. Managers must look toward correcting competitive weaknesses that make the company vulnerable, dampen profitability, or disqualify it from pursuing an attractive opportunity. Managers need to keep close track of how cost effectively the company can deliver value to customers relative to its competitors
Which of the following is not one of the most frequently used strategic approaches building a sustainable competitive advantage?
Sticking with an outdated business model
Which of the following statements about a company's strategy is true?
Strategy at its essence is about competing differently - doing what rival firms do not or cannot do
Which of the following is not a distinguishing feature of a low-cost provider strategy?
The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations
Which of the following conditions determines whether buyer bargaining power in an industry is WEAK?
There is a surge in buyer demand that creates a "seller's market."
Striving to be the industry's low-cost provider by achieving lower costs than rivals' entails
Two answers are correct: eliminating or curbing nonessential activities; and doing a better job than rivals in performing essential activities
Successful differentiation allows a firm to
Two answers are correct: gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features)
A broad differentiation strategy
Two answers are correct: is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller; and can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals
For a best-cost provider strategy to be successful, a company must have
a superior value chain configuration and unmatched efficiency in managing essential value chain activities
Which of the following statements concerning producing good company performance is incorrect?
Two of the answers are correct: Existing strategies should never be scrutinized if they are working well; and new initiatives that don't seem to match a company's internal and external situation should always be retained as a contingency
The procedure for constructing a strategic group map involves
Two of the answers are correct: identifying the competitive characteristics that differentiate firms' market positions and competitive approaches; and plotting the firms on a two-variable or two-dimensional map, drawing circles around those firms occupying about the same strategy space, and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues
Which of the following is NOT one of the questions that must 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 a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures?
Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers
Which of the following are distinguishing features of a best-cost provider strategy?
a competitive advantage based on more value for the money
The task of crafting a strategy is
a job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in Figure 2.2).
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.
It is normal for a company's realized strategy to end up:
blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions
As Figure 2.2 shows, the strategy-making hierarchy in a single business company consists of
business strategy, functional area strategies, and operating strategies
Which one of the following is not a characteristic of an effectively worded strategic vision statement (see Table 2.2)?
concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders)
Strategic actions to reduce the costs of internally performed value chain activities and improve a company's cost competitiveness
can aim at lowering costs (1) in the suppliers' part of the industry value chain, (2) in a company's own internally performed activities, and/or (3) in the forward channel portion of the value chain
Imitation by rivals is most challenging when
capabilities reflect a high level of social complexity and causal ambiguity
Which of the following is not among the most common types of driving forces?
changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability
In answering the question "How well does the strategy fit the company's situation?", management must be willing and ready to address such issues as
changing market conditions, development of internal capabilities and competencies, and allocation of financial resources
Which one of the following is not an integral part of the managerial process of crafting and executing strategy?
choosing a strategic intent
The biggest factors that distinguish one competitive strategy from another are
choosing between (1) a market target that is either broad or narrow and (2) whether the company should pursue a competitive advantage linked to lower costs or product differentiation
The task of driving forces analysis is to
collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces
What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is
concentrated attention on serving the needs of buyers in a narrow piece of the overall market
An industry's key success factors
concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry.
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.
In a company's broader macro-environment, which of the following have strategic significance?
general economic conditions, societal values and cultural norms, political and legal/regulatory factors, technological factors, and ecological considerations
Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to
decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods
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
Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned?
directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy
Every organization has many resources, capabilities, and routines; however, those few things the company does really well and are performed with a very high proficiency are termed
distinct capabilities
Examples of uniqueness drivers do not include
eliminating low value-added activities and work steps
Which of the following is not among the principal managerial tasks associated with managing the strategy execution process?
engaging the services of staffing firms to maintain the company's personnel data
Corporate strategy
ensures consistency in strategic approach among businesses of a diversified, multi-business corporation
Benchmarking
entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities
Trying to determine what strategic moves rivals are likely to make next
entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options
A balanced scorecard for measuring company performance
entails setting both financial and strategic objectives and putting balanced emphasis on their achievement
A winning strategy is one that
fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance
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
A company's cost competitiveness is largely a function of
how efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies
Which of the following is not a relevant factor in conducting a PESTEL analysis?
how frequently sellers alter their prices, how sensitive buyers are to price differences among sellers, whether an item being purchased is a good or a service, and whether buyers purchase frequently or infrequently
Nothing affects a company's ultimate success or failure more fundamentally than abandoning markets as conditions change
how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence
According to both the text discussion and the summary in Figure 3.6, competitive pressures associated with the threat of new entrants grow stronger when
industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence, when current industry members are unable or unwilling to strongly contest the entry of newcomers, and when a newcomer can reasonably expect to earn attractive profits.
The most appealing approaches to broad differentiation
involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate
A focused low-cost strategy
involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors
A strategy that distinguishes a company from its rivals and provides a sustainable competitive advantage
is a company's most reliable ticket to above-average profitability
SWOT analysis
is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being.
The heart and soul of any strategy
is the actions and moves to gain a competitive edge over rivals in the marketplace
According to both the text discussion and the summary in Table 2.3, which of the following is NOT a common shortcoming of company vision statements?
lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable
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
The five generic types of competitive strategies include
low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider
As a rule, the stronger the collective impact of the five competitive forces, the
lower the combined profitability of industry participants and the more "competitively unattractive" is the industry environment
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
Striving to be the low-cost provider is a particularly attractive competitive strategy when
managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain; for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs
A low-cost provider's basis for competitive advantage is
meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price
A focused differentiation strategy aims at securing competitive advantage by
offering carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers
Accounting scandals that led to investigations of such well-known companies as AOL Time Warner, Global Crossing, Enron, Qwest Communications, and WorldCom resulted in the conviction of a number of corporate executives and the passage of the Sarbanes-Oxley Act of 2002. In these cases, the board of directors did not fulfill which of the following important obligations?
overseeing the company's financial accounting and financial reporting practices
Which of the following is not a good example of a marketing-related key success factor?
proven ability to improve production processes
Options for attacking the high costs of items purchased from suppliers do not include
raising prices to customers (so as to cover the high costs)
Factors that weaken rivalry among competing sellers include
rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals
A firm pursuing a best-cost provider strategy
seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation
A viable business model
sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit
Establishing and achieving strategic objectives merits very high priority on management's agenda because
strategic outcomes are leading indicators of a company's future financial performance and business prospects
Which of the following is not one of the hazards of pursuing a differentiation strategy?
striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)
Based on both the chapter discussion and the summary in Figure 3.4, competitive pressures stemming from substitute products are weaker when
substitutes are higher-priced, buyers don't believe substitute products have equal or better features, and buyers' costs of switching to substitutes are relatively high.
A company's value chain consists of
the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service
Operating strategies consist of
the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations)
A company's competitive strategy deals with
the specifics of management's game plan for competing successfully
Strategies that yield sustainable competitive advantage are important because
these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage
Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers?
to reduce the bargaining power they face from buyers of their products
Which of the following analytical tools are particularly useful for determining whether a company's prices and costs are competitive?
value chain analysis and benchmarking
Which of the following is not an example of an external threat to a company's future business prospects (see Table 4.2)?
weaker brand image and a smaller network of retailer dealers than rivals have
In which one of the following market circumstances is a broad differentiation strategy generally not well suited?
when most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated
According to both the text discussion and the summary in Figure 3.7, which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak?
whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change
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
A company's business model sets forth how its strategy and operating approaches
will create value for customers and realize a profit
