Chapter 1:

23. A company's strategy provides direction and guidance, in terms not only what the company should do, but also what it should not do. A. True B. False

A. True

27. A strategy stands a better chance of succeeding when it is predicated on actions, business approaches, and competitive moves aimed at (1) appealing to buyers in ways that set a company apart from its rivals and (2) staking out a market position that is not crowded with strong competitors. A. True B. False

A. True

28. Strategy is about competing differently from rivals--doing what competitors don't do or, even better, doing what they can't do. A. True B. False

A. True

34. The nitty-gritty issue surrounding a company's business model is whether it can execute its customer value proposition profitably. A. True B. False

A. True

9. A company achieves a competitive advantage whenever it has some type of edge over rivals in attracting buyers and coping with competitive forces. A. True B. False

A. True

8. Which of the following are not elements to look for when trying to identify a company's strategy? A. Actions to strengthen market standing and competitiveness by acquiring or merging with other companies. B. Actions to gain sales and market share with lower prices based on lower costs. C. Actions to ensure that executive compensation levels match, or exceed, those of relevant competitors. D. Actions to strengthen the firm's bargaining position with suppliers, distributors, and others. E. Actions to enter new product or geographic markets or to exit existing ones.

C. Actions to ensure that executive compensation levels match, or exceed, those of relevant competitors.

20. Which of the three tests of a winning strategy assess how well a company's strategy matches the company's situation? A. The performance test. B. The competitive advantage test. C. The fit test. D. The cost of entry test. E. The better off test.

C. The fit test.

17. A company's ______________ sets forth the logic for how its strategy will create value for customers and at the same time generate revenues sufficient to cover costs and realize a profit. A. factor structure B. competitive map C. business model D. strategic plan E. planned strategy

C. business model

15. The evolving nature of a company's strategy means that the typical company strategy is a blend of ___________ initiatives and ___________ activities. A. proactive; defensive B. reactive; defensive C. proactive; reactive D. offensive; proactive E. offensive; defensive

C. proactive; reactive

6. The _____________ 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. A. business model B. cost system C. profit formula D. operating margin E. value proposition

C. profit formula

25. A company's strategy in toto is commonly called its __________ strategy. A. proactive B. reactive C. realized D. emergent E. deliberate

C. realized

19. Reactive strategy adjustments developed on the fly as changing conditions warrant typically make up which portion of the firm's strategy? A. Fixed B. Deliberate C. Abandoned D. Emergent E. Realized

D. Emergent

10. A company's profit formula, on a per-unit basis, can be expressed as A. V - C, where V is the value provided and C is the cost. B. V + C, where V is the value provided and C is the cost. C. V + P, where V is the value provided and P is the price. D. P - C, where P is the price and C is the cost. E. V - P, where V is the value provided and P is the price.

D. P - C, where P is the price and C is the cost.

1. Which of the following are the three tests that can be applied to determine whether a strategy is a winning strategy? A. The fit test, the uniqueness test, and the better off test. B. The fit test, the competitive advantage test, and the sustainability test. C. The competitive advantage test, the uniqueness test, and the better off test. D. The fit test, the competitive advantage test, and the performance test. E. The competitive advantage test, the sustainability test, and the better off test.

D. The fit test, the competitive advantage test, and the performance test.

11. 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 is known as the company's A. competitive map. B. factor structure. C. planned strategy. D. business model. E. strategic plan.

D. business model.

30. Which of the following are not among the four most frequently used and dependable strategic approaches to setting a company apart from rivals, building strong customer loyalty, and winning a competitive advantage? A. focused differentiation B. low-cost provider C. broad differentiation D. focused low-cost E. flexible adaptive

E. flexible adaptive

21. A company's strategy is the set of actions that is managers take to outperform the company's competitors and achieve superior profitability. A. True B. False

A. True

18. __________ involves either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm. A. Competitive advantage B. Customer satisfaction C. Capital D. Profit E. Dominant market share

A. Competitive advantage

16. A company's strategy includes choices about: A. How to attract customers. How to compete against rivals. How to position the company in the marketplace. B. How to achieve the company's performance targets. How to position the company in the marketplace. How to maximize shareholder wealth. C. How to minimize costs. How to maximize shareholder wealth. How to manage executive compensation. D. How to maximize shareholder wealth. How to compete against rivals. How to attract customers. E. How to attract customers. How to minimize costs. How to manage executive compensation.

A. How to attract customers. How to compete against rivals. How to position the company in the marketplace.

12. Which of the following is not a common reason why a company must be willing and ready to modify a strategy? A. Managerial angst. B. Emerging market opportunities. C. Shifting buyer needs. D. Advancing technology. E. Unexpected moves by competitors.

A. Managerial angst.

4. A winning strategy must pass which three tests? A. The fit test, the competitive advantage test, and the performance test. B. The competitive advantage test, the cost test, and the value maximization test. C. The performance test, the cost test, and the value proposition test. D. The fit test, the competitive advantage test, and the cost test. E. The competitive advantage test, the cost test, and the value proposition test.

A. The fit test, the competitive advantage test, and the performance test.

14. The profit formula reveals how efficiently a company can meet customer wants and needs and deliver on the value proposition. A. True B. False

A. True

7. Winning a sustainable competitive advantage over rivals generally hinges on both A. building competitively valuable expertise and capabilities that rivals cannot readily match and being first to market. B. having a distinctive product offering and maintaining the largest market share. C. building competitively valuable expertise and capabilities that rivals cannot readily match and having a distinctive product offering. D. being first to market and maintaining the largest market share. E. having a distinctive product offering and being first to market.

A. building competitively valuable expertise and capabilities that rivals cannot readily match and being first to market.

33. The biggest portion of most company's current strategies are A. deliberate. B. reactive. C. defensive. D. emergent. E. realized.

A. deliberate.

29. The two crucial elements of a company's business model are A. its customer value proposition and its profit formula. B. its mission and its competitive strategy. C. its vision and its competitive strategy. D. its competitive strategy and its profit formula. E. its customer value proposition and its competitive strategy.

A. its customer value proposition and its profit formula.

22. A company's strategy can be determined to be a winning strategy if it passes two of the three tests of a winning strategy, but fails the third test. A. True B. False

B. False

26. A company's mission is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability. A. True B. False

B. False

3. The nitty-gritty issue surrounding a company's business model is whether it can specify its profit formula accurately. A. True B. False

B. False

32. ____________ is a common defining characteristic that requires companies to repeatedly adapt their strategies. A. Sub-par profitability B. High-velocity industry change C. Market saturation D. Problematic execution E. Industry stagnation

B. High-velocity industry change

5. A company's strategy does not include choices about which of the following? A. How to achieve the company's performance targets. B. How to maximize shareholder wealth. C. How to position the company in the marketplace. D. How to position the company in the marketplace. E. How best to respond to changing economic and market conditions.

B. How to maximize shareholder wealth.

24. A company's customer value proposition is defined as A. V - C, where V is the value provided and C is the cost. B. V - P, where V is the value provided and P is the price. C. P - C, where P is the price and C is the cost. D. V + P, where V is the value provided and P is the price. E. V + C, where V is the value provided and C is the cost.

B. V - P, where V is the value provided and P is the price.

31. The ____________ lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value. A. operating strategy B. customer value proposition C. competitive advantage D. cost system E. profit formula

B. customer value proposition

13. The most telling and trustworthy signs of good management are A. good top management team stability and good share price. B. good strategy and good strategy execution. C. good profitability and good market share. D. good executive compensation and good share price. E. good market share and good profitability.

B. good strategy and good strategy execution.

2. When a company possesses elements of a strategy that give buyers lasting reasons to prefer a company's products or services over those of competitors, it is said to have a A. profit pool. B. sustainable competitive advantage. C. competitive advantage. D. tactical win. E. strategic barrier.

B. sustainable competitive advantage.