Chapter 6

Break Technologies has five strategic business units (SBUs)—computers, refrigerators, washing machines, air conditioners, and televisions. Its computers unit is quite profitable in spite of operating in a slow-growing market, and it is profitable enough to provide funds for the operation of the other business units as well. In the context of the BCG matrix, which of the following categories of SBUs best describes the computers unit?

Cash cows

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

Character of the rivalry

Which of the following is the last step of a strategy-making process?

Choosing strategic alternatives

Zinfizz is a beverage manufacturer. It presents WYB, a zero-calorie drink to compete with MoodFresh's Shire, a low-calorie drink. When WYB is released in the market, MoodFresh cuts down the price on Shire to match WYB's price. Identify the strategic move that is most likely being implemented by MoodFresh in this scenario.

Attack

is a strategy for reducing risk by buying a variety of items so that the failure of one stock or one business does not doom the entire portfolio.

Diversification

Which of the following can help managers improve the speed and accuracy with which they determine the need for strategic change?

Looking for signs of strategic dissonance

Which of the following is the first step of a strategy-making process?

Assessing the need for strategic change

BoundStar and ClipKlik are two of the biggest companies in the smartphone industry. When BoundStar launched a new ultra-slim smart phone, ClipKlik also shortly launched a super-sleek smartphone. Phones launched by both the companies are similar in quality and build. ClipKlik will be able to remain competitive in the market though BoundStar launched its phone before ClipKlik. Which of the following strategies was used by ClipKlik to defend its market share?

A response strategy

Spade and Marcher Corp. manufactures and sells toy guns. These toy guns are a perfect imitation of real weapons. Inspired by Spade and Marcher's success, Hudy & Sons, an arms manufacturer in Korowlla, starts to manufacture toy guns too. Which of the following adaptive strategies is used by Hudy & Sons?

Analyzers

is the positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium price for it.

Differentiation

is one of the grand strategies that focuses on increasing profits, revenues, market share, or the number of places in which a company does business.

Growth strategy

In the context of the BCG matrix, which of the following businesses would be classified as a cash cow?

HappyTot, a children's toy company that has been earning steady profits in a slow-growing industry

Which of the following best defines a SWOT analysis?

It involves assessment of the strengths and weaknesses in an organization's internal environment.

Which of the following statements is true of a portfolio strategy?

It is a corporate-level strategy with the purpose of reducing risk in the entire collection of stocks.

Which of the following best defines strategic dissonance?

It is a discrepancy between a company's intended strategy and the strategic actions taken by managers while implementing that strategy.

Which of the following statements is true of direct competition?

It is determined by market commonality and resource similarity.

Which of the following best defines cost leadership?

It is the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can so that a firm can offer the product or service at the lowest price in the industry.

Which of the following statements is true of the BCG matrix?

It is used to categorize a corporation's businesses by growth rate and relative market share.

are used by managers to measure whether their firm has developed the core competencies that it needs to achieve a sustainable competitive advantage.

Strategic reference points

_______is a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate.

Sustainable competitive advantage

TinkTV, PopoNet, and Kreti Broadcast are merging together to form a large television network called Tale Broadcast. This was done in an attempt to increase profitability by combining the customers and services owned by the three companies. Which of the following grand strategies does the given scenario best exemplify?

The growth strategy

Which of the following conditions must be met if a firm's resources are to be used to achieve a sustainable competitive advantage?

The resources must be valuable, rare, and nonsubstitutable.

Limeria Inc., an industrial paint manufacturing company, has been incurring losses. In an attempt to stop this, it removed synthetic distempers from its product list and concentrated on enamel paints, a less capital-intensive business. Which of the following grand strategies was used by Limeria in this scenario?

The retrenchment strategy

In the context of adaptive strategies, which of the following is true of defenders?

They aggressively hold their current strategic position by doing the best job they can to hold on to customers in a particular market segment.

Which of the following statements is true of analyzers?

They are a blend of the defender and prospector strategies.

Which of the following best defines cash cows in the BCG matrix?

They are the companies that have a large share of a slow-growing market.

In the context of adaptive strategies, which of the following best describes prospectors?

They seek fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market.

In the context of portfolio strategy, _____ is the purchase of a company by another company.

acquisition

SmartHand, a company that manufactures wrist watches, has started manufacturing and selling sunglasses in the American market. The products turn out to be a huge success. Inspired by SmartHand's success, Jeremy & Daniel, manufacturers of wrist watches in Europe, start selling sunglasses in the European market. In the context of adaptive strategies, Jeremy & Daniel would most likely be categorized as a(n) _____.

analyzer

Ziff Corp. was a leading electronics firm for about three decades. As new competitors entered the industry, Ziff Corp's market share dropped. The managers at Ziff Corp. refuse to change any of their strategies, as they believe that their existing strategies will help them become one of the market leaders as they did in the past. This scenario is an example of _____.

competitive inertia

A competitive advantage becomes a sustainable competitive advantage when:

other companies cannot duplicate the value a firm is providing to customers.

Bob's Assembly is a hardware manufacturer. It specializes in builders' hardware for doors, cabinets, windows, and bathrooms. Bob's Assembly products are economical and more durable than 95% of its competitors' products. This scenario illustrates the concept of _____.

distinctive competence

FasterRides Inc. has introduced a new bike in the market. Majority of its profits come from the sale of bikes. The company is recognized worldwide for its ability to design and produce bikes with superior handling, smooth transmission, powerful brakes, and other premium features that its competitors are lacking. This ability to produce superior quality bikes is the company's _____.

distinctive competence

Growth, stability, and retrenchment are all types of portfolio strategies that companies use to decide which businesses they should be in.

false

Strategic reference points are the less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs.

false

Renee Farm grows genetically modified fruits and vegetables by using nutrient enriched soil and chemically enhanced fertilizers. Its products are extremely popular among health conscious individuals who believe that natural fruits and vegetables do not have adequate amount of nutrients. Renee Farm's products are popular even though their market is very niche. In the context of industry-level strategy, Renee Farm is most likely using a(n) _____.

focus strategy

FreeSpirit is a global consumer products company. It manufactures a number of new products ranging from personal care to food and beverages. Its products are sold all across the world, and it continuously keeps searching for new markets to sell its products. It has also doubled its investment to market its products, and it invests heavily in social media and other advertisement mediums. In the context of adaptive strategies, FreeSpirit is most likely to be categorized as a(n) _____.

prospector

Organizations can achieve a competitive advantage by using their resources to:

provide greater value for customers than competitors can.

According to the BCG matrix, are companies that have a small share of a fast-growing market.

question marks

In the context of direct competition between firms _____ largely affects response capability, that is, how quickly and forcefully a company can respond to an attack.

resource similarity

PeoplePapers, a greeting cards manufacturing company, has retail stores in most parts of the country. It hires its employees from the best universities around the world and uses the best equipment in its manufacturing processes. In this scenario, the organization's processes, its employees, and its equipment are examples of its:

resources.

A situational analysis is an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment.

true