Ch.1 Strategy

Does SiriusXM's cost structure allow for acceptable profit margins? SiriusXM's cost structure allows for an acceptable profit margin. It is difficult to determine whether SiriusXM's cost structure allows for an acceptable profit margin. SiriusXM needs to lower its subscription fees to get more customers. SiriusXM's cost structure does not allow for an acceptable profit margin. SiriusXM needs to raise its subscription fees to earn more profits.

SiriusXM's cost structure allows for an acceptable profit margin.

Are SiriusXM's revenue streams from advertising and equipment sales growing or declining? Advertising revenues and equipment sales are growing. Advertising revenues are declining while equipment sales are growing. Advertising revenues and equipment sales are declining. Advertising revenues are growing while equipment sales are declining.

Advertising revenues and equipment sales are growing.

As you saw in the video, one of the measures used to demonstrate Usain Bolt's competitive advantage in running is the number of gold medals he won during the Olympics. Which of the following measures, as described in the video, similarly demonstrates McDonald's competitive advantage in the fast-food industry? Brand recognition Number of menu options Market share All-day breakfast A strong leadership team

Market share

A company's profit formula consists of the following basic elements: M, the company's market share, multiplied by C, the competitive strength of the company, divided by S, the company's sustainable competitive advantage potential. S, the sustainable competitive advantage potential plus V, the value provided for customers, minus C, the company's costs. C, the competitive strength of the company, multiplied by S, the company's sustainable competitive advantage potential, minus V, the value provided for the customer. P, the price charged to customers, minus C, the company's costs, multiplied by M, the company's market share. P, the price charged to customers, minus C, the company's costs.

P, the price charged to customers, minus C, the company's costs.

The group of runners that finished behind Usain Bolt was closely bunched and was said to have competitive parity. Burger King and Wendy's have a similar market share in the 5% range. Which of the following likely underlies the comparative parity of these firms? Their drive-through performance is poor. They have similar strategic resources and strategies. They both target a similar customer base. They both compete against McDonald's. They are primarily focused on hamburgers.

They have similar strategic resources and strategies.

Sustainable competitive advantage means a firm outperforms its peers over a sustained period of time. Such superior performance is noticed by the peer group that attempts to identify the source of the performance and copy it. This concept is called "benchmarking." Which of the following demonstrates a benchmarking process? Bolt competed in the 100-meter dash against a group of other runners to see which among them was the fastest. When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs. Sogelau Tuvalu switched from the shot put to the 100-meter dash. Winning the 100-meter and 200-meter races in two Olympics will likely never be repeated. Bolt's naturally athletic gifts and hard training drove him to be the best.

When Bolt was younger, he trained against other great runners, comparing his training program and performance to theirs.

Gerard's Paella, a tapas bar and paella restaurant, offers healthy, sustainably sourced, as well as veggie and vegan, cuisine at higher prices than its competitors in the market and has a drive-through and indoor seating casual dining operation. What strategy is Gerard's Paella using to gain competitive advantage? a focused differentiation strategy a low-cost provider strategy a best-cost provider strategy a focused low-cost strategy a broad differentiation strategy

a broad differentiation strategy

You are a strategic consultant to Danielle and Casey, partners in a local upscale coffee-roasting and retail business. In counseling the partners about how to achieve a sustainable competitive advantage, you most likely would advise them to have some distinctive strategic element that draws in customers and produces a competitive edge. utilize copycat product offerings or pursue similar approaches as rivals in order to stake out the same market position. engage in stealth practices to beat competitors at their own game. maintain their business model even at the expense of long-term profits. allow worthy rivals to match or surpass any element of your current competitive advantage.

have some distinctive strategic element that draws in customers and produces a competitive edge.

Types of actions and approaches that often characterize a company's strategy do not include actions to capture emerging market opportunities and defend against external threats to the company's business prospects. improve ethical standards, ensure employees' commitments, and continuously develop new talents. strengthen market standing and competitiveness by acquiring or merging with other companies. enter new product or geographic markets or exit existing ones. upgrade, build, or acquire competitively important resources and capabilities.

improve ethical standards, ensure employees' commitments, and continuously develop new talents.

A company's business model does not consist of two crucial elements: (1) its customer value proposition and (2) its profit formula. set forth the logic for how its strategy will create value for customers, while at the same time generates revenues sufficient to cover costs and realize a profit. constitute management's blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit. reflect management's storyline for how the strategy will be a moneymaker. reflect how efficiently a company can meet customer wants and needs even at the cost of incurring loss.

reflect how efficiently a company can meet customer wants and needs even at the cost of incurring loss.

When evaluating proposed or existing strategies, managers should scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. initiate new strategies even though they don't seem to match the company's internal and external situation. align existing strategies with new strategies to emphasize incremental gains. ensure core capabilities are incorporated synergistically for establishing a competitive advantage. evaluate the firm's business model at least every three years.

scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance.

A company's strategy: tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective. consists of initial and developing approaches aiming to ensure long-term growth. generally consists of new strategy elements and strategic moves that emerge as changing conditions warrant. is mostly proactive and consists of strategy elements that are both planned and realized as planned.is mainly affected by a reactive approach because uncertainty is high.

tends to be a combination of both proactive and reactive elements, with certain elements being abandoned because they have become obsolete or ineffective.

In the video, business strategy was identified as a decision to choose "a different set of activities to deliver a unique mix of value." Which of the automotive firms follows this proposition most closely? Ford Toyota General Motors Hyundai Tesla

Tesla

A cleverly crafted and well-executed strategy can withstand the competitive challenges from rival firms. immunizes a business from changing macroeconomic and market conditions. produces a mediocre financial performance. precludes the capture of emerging opportunities. provides direction only in terms of what the company should do.

can withstand the competitive challenges from rival firms.

What is there about Apple's strategy that can lead to sustainable competitive advantage? Apple has a sustainable competitive advantage by concentrating on a narrow buyer segment and outcompeting rivals by having lower costs and thus being able to serve niche consumers at a lower price. Apple has a sustainable competitive advantage by concentrating on a narrow buyer segment and outcompeting rivals by offering buyers customized attributes that meet their specialized needs and tastes better than rivals' products. Apple has sustained its competitive advantage through being sufficiently innovative to thwart the efforts of rivals to copy or closely imitate the product offering. Apple has a sustainable competitive advantage because it is flexible and can react quickly to copy new features introduced by rivals. Apple has a sustainable competitive advantage by achieving a cost-based advantage over its rivals.

Apple has sustained its competitive advantage through being sufficiently innovative to thwart the efforts of rivals to copy or closely imitate the product offering.

Does the strategy seem to be keyed to a cost-based advantage, differentiating features, serving the unique needs of a niche, or some combination of these? Apple's strategy is keyed in on a cost-based advantage by providing its products at a lower cost, which rivals find hard to match. Apple's strategy is keyed in on the unique needs of a niche market by outcompeting rivals by having lower costs and being able to serve niche consumers at a lower price. Apple's strategy is keyed in on differentiating features from that of its rivals in ways that will appeal to a broad spectrum of buyers. Apple's strategy is keyed in on a best-cost provider strategy, which is a combination of low-cost provider and differentiation strategies which aims at having lower costs than rivals while simultaneously offering better differentiation attributes. Apple's strategy is keyed in on copying the strategies of its most successful industry rivals.

Apple's strategy is keyed in on differentiating features from that of its rivals in ways that will appeal to a broad spectrum of buyers.

Apple Inc.—Exemplifying a Successful Strategy Apple Inc. is one of the most profitable companies in the world, with revenues of more than $265 billion. For more than 10 consecutive years, it has ranked number one on Fortune's list of the "World's Most Admired Companies." Given the worldwide popularity of its products and services, along with its reputation for superior technological innovation and design capabilities, this is not surprising. The key elements of Apple's successful strategy include: Designing and developing its own operating systems, hardware, application software, and services. This allows Apple to bring the best user experience to its customers through products and solutions with innovative design, superior ease-of-use, and seamless integration across platforms. The ability to use services like iCloud across devices incentivizes users to join Apple's technological ecosystem and has been critical to fostering brand loyalty. Continuously investing in research and development (R&D) and frequently introducing products. Apple has invested heavily in R&D, spending upwards of $11 billion a year, to ensure a continual and timely injection of competitive products, services, and technologies into the marketplace. Its successful products and services include the Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, and Apple Music. It is currently investing in an Apple electric car and Apple solar energy. Strategically locating its stores and staffing them with knowledgeable personnel. By operating its own Apple stores and positioning them in high-traffic locations, Apple is better equipped to provide its customers with the optimal buying experience. The stores' employees are well versed in the value of the hardware and software integration and demonstrate the unique solutions available on its products. This high-quality sale and after-sale support allows Apple to continuously attract new and retain existing customers. Expanding Apple's reach domestically and internationally. Apple operates more than 500 retail stores across 24 countries. During fiscal year 2019, 60 percent of Apple's revenue came from international sales. Maintaining a quality brand image, supported by premium pricing. Although the computer industry is incredibly price competitive, Apple has managed to sustain a competitive edge by focusing on its inimitable value proposition and deliberately keeping a price premium—thus creating an aura of prestige around its products. Committing to corporate social responsibility and sustainability through supplier relations. Apple's strict Code of Conduct requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing. Cultivating a diverse workforce rooted in transparency. Apple believes that diverse teams make innovation possible and is dedicated to incorporating a broad range of perspectives in its workforce. Every year, Apple publishes data showing the representation of women and different race and ethnicity groups across functions. Does Apple's strategy seem to set it apart from rivals? Apple's strategy sets it apart from rivals by providing exciting new products that are beautifully designed, technologically advanced, easy to use, and sold in appealing stores that offer a fun experience, knowledgeable staff, and excellent service. Apple's strategy sets it apart because its expansion policies have allowed the company to focus on providing excellence in customer service via its online accessibility. Apple's strategy sets it apart from its rivals because it offers comparable value to rival sellers at a comparable price. Apple's strategy mimics the strategies of its successful industry rivals. Apple's strategy sets it apart from its rivals because it has been able to charge prices for its products that are well below those of its rivals yet still exceed the low cost of its inputs.

Apple's strategy sets it apart from rivals by providing exciting new products that are beautifully designed, technologically advanced, easy to use, and sold in appealing stores that offer a fun experience, knowledgeable staff, and excellent service.

Flipkart has come to epitomize the Indian e-commerce industry, achieving the top position among online shopping platforms in that country. Notably, Flipkart offered a no-questions-asked return/exchange policy, wherein customers could return goods that did not meet their expectations. Flipkart is now considering entering markets in South Africa and Kenya. What would you advise Flipkart to omit from consideration in crafting a strategy to enhance future profits in these two emerging markets? Chart an acquisition plan that aims at acquiring local small-scale manufacturers that are seeking funding and a larger customer base in those two emerging markets. Establish a supply chain plan to set up more supply outlets than any other rival currently operating in the two country locations. Implement a diversification plan that aims at adding a mobile payments platform to its existing line of web commerce products. Devise a marketing plan that aims at mass customer segments, consisting of attractive advertisements and offers on products.

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

SiriusXM's Business Model The two elements of a company's business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition is established by the company's overall strategy and lays out the company's approach to satisfying buyer wants and needs at a price that customers will consider a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to customers. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a moneymaker. The nitty-gritty issue surrounding a company's business model is whether it can execute its customer value proposition profitably. Just because company managers have crafted a strategy for competing and running the business does not automatically mean that the strategy will lead to profitability—it may or may not. Are SiriusXM's subscription fees increasing or declining? Subscription fees are flat. Subscription fees are increasing. Subscription fees are decreasing. Subscription fees have been unsteady, gaining in some years and declining in other.

Subscription fees are increasing.

In the 'Art of War' Sun Tzu emphasized the fluid nature of competitive situations and the need for the strategist to recognize and incorporate that reality into their strategic planning. Which of the following has created the greatest uncertainty in the business environment across industries over the last 20 years? The European Union The Federal Reserve The U.S. government Tax policy The Internet

The Internet

A strategy to achieve and maintain sustainable competitive advantage is never associated with? competing differently from rivals—doing what competitors do not do or doing what they cannot do. direction and guidance, in terms of not only what the company should do, but also what it should not do. carefully considered moves to compete on dimensions like quality, cost, services, locations, and customers. actions taken by companies to gain sales and market share irrespective of product prices and costs. opportunities to enter strategic alliances and collaborative partnerships to strengthen a company's market position and competitiveness.

actions taken by companies to gain sales and market share irrespective of product prices and costs.

Why does a company's strategy tend to be a "work in progress" and evolve over time? because of changing circumstances and ongoing management efforts to improve the strategy. due to the changing nature of employee skills and capabilities. because of the ongoing need to imitate the strategic moves of the industry's strongest rival. because the change in the company's vision and values cause a constant adaptation of the strategy, with the ongoing need to imitate new strategic moves by the industry leaders. because the competitive advantage potential of developing a new strategy changes annually.

because of changing circumstances and ongoing management efforts to improve the strategy