Chapter 6
16) Which of the following signals would not warn challengers that strong retaliation is likely?
Announcing strong quarterly earnings potential to financial analysts
3) Which of the following is not among the principal offensive strategy options that a company can employ?
Blocking the avenues open to challengers
14) Which of the following is not an example of a defensive move to protect a company's market position and restrict a challenger's options for initiating competitive attack?
Challenging struggling runner-up firms that are on the verge of going under
7) Which one of the following is not an offensive strategy option?
Deliberately attacking those market segments where key rivals make big profits
29) Why do mergers and acquisitions sometimes fail to produce anticipated results?
Differences in management styles and operating procedures can prove hard to resolve.
58) Which of the following is not a typical reason that many alliances do not live up to expectations?
Disagreement over how to divide the added market share and profits gained from joint collaboration
56) Which of the following is not a typical reason that many alliances prove unstable or break apart?
Disagreement over how to divide the profits gained from joint collaboration
13) Which one of the following is not a good example of a defensive strategy to protect a company's market share and competitive position?
Engaging in a preemptive strike strategy in an effort to discourage rivals from being aggressive
42) Which of the following is typically the strategic impetus for forward vertical integration?
Gaining better access to end users and better market visibility
15) Which of the following ways are employed by defending companies to fend off a competitive attack?
Gaining product line exclusivity to force competitors to use other distributors
23) ________ is the range of product and service segments that the firm serves within its market.
Horizontal scope
50) Which of the following is not one of the key benefits of employing an outsourcing strategy?
It can hollow out a firm's own capabilities and lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.
Which one of the following is not a good type of rival for an offensive-minded company to target?
Other offensive-minded companies with a sizable war chest of cash and marketable securities
4) Which one of the following is an example of an offensive strategy?
Pursuing continuous product innovation to draw sales and market share away from less innovative rivals
35) Which of the following is not a potential advantage of backward vertical integration?
Reduced business risk because of controlling a bigger portion of the overall industry value chain
31) Which of the following is not among the intended outcomes of horizontal merger and acquisition strategies?
Suppressing a rival's breakthroughs in management or technology
19) First-mover disadvantages (or late-mover advantages) rarely arise when?
The market response is strong and the pioneer gains a monopoly position that enables it to recover its investment
22) What does the scope of the firm refer to?
The range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses
53) Which one of the following is not a strategically beneficial reason a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products?
To enable greater vertical integration
26) Which of the following is not a typical strategic objective or benefit that drives mergers and acquisitions?
To expedite shifting from one strategy to another and gain better access to additional financial capital
44) Which of the following is not a strategic disadvantage of vertical integration?
Vertical integration limits a company's ability to achieve greater product differentiation and to exercise direct control over the costs of performing value chain activities.
24) ________ is the extent to which a firm's internal activities encompass one, some, many, or all activities that make up an industry's entire value chain system.
Vertical scope
11) Which of the following is not an example of a company that uses blue ocean market strategy?
Walmart's logistics and distribution in the retail industry
40) Which one of the following statements about backward vertical integration is false?
What makes backward vertical integration such an attractive strategic option is the opportunity to capture the profit margins of suppliers and thereby increase the company's own profitability.
17) Being first to initiate a strategic move can have a high payoff in all but which one of the following instances?
When pioneering leadership is costlier than followership
18) First-mover advantages are unlikely to be present in which one of the following instances?
When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products
25) The difference between a merger and an acquisition is
a merger is the combining of two or more companies into a single corporate entity (with the newly created company often taking on a new name), whereas an acquisition is a combination in which one company, the acquirer, purchases and absorbs the operations of another, the acquired. C) nonexistent; in both instances, two companies become one.
30) Mergers and acquisitions
all too frequently do not produce the hoped-for outcomes.
39) For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company must
be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop in quality.
60) The Achilles' heel (or biggest danger/pitfall) of relying heavily on alliances and cooperative strategies is
becoming dependent on other companies for essential expertise and capabilities.
45) For a backward vertical integration strategy into the business of suppliers to be a viable and profitable, a company must possess
considerable expertise in supply chain management, transportation logistics, and inventory control techniques.
54) Entering into strategic alliances and collaborative partnerships can be competitively valuable because
cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology.
1) Which of the following choices is not an additional strategic choice that a company makes once it has decided to employ a particular generic competitive strategy?
discontinue disruptive product innovation
27) Mergers and acquisitions are often driven by such strategic objectives as to
expand a company's geographic coverage, extend its business into new product categories, or gain quick access to new technologies or other resources and capabilities.
33) Vertical integration strategies
extend a company's competitive and operating scope because its operations extend across more parts of the total industry value chain.
37) A good example of forward vertical integration is a
footwear manufacturer developing its own-branded retail stores.
41) The strategic impetus for forward vertical integration is to
gain better access to end users, improve market awareness, and/or include the end user's purchasing experience as a differentiating feature.
21) Market conditions and factors that tend not to favor first movers include
growth in demand that depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed before buyer demand can surge.
49) The big risk of employing an outsourcing strategy is
hollowing out the competitive capabilities a company needs to be a master of its own destiny
52) The competitive attraction of entering into strategic alliances and collaborative partnerships is
in allowing companies to bundle resources and competencies that are more valuable in a joint effort than when kept separate.
43) Bypassing regular sales channels in favor of Internet retailing can have strong appeal if it
includes partnering rather than competing with existing distributors.
47) Outsourcing strategies
involve farming out value chain activities presently performed in-house to outside specialists and strategic allies
A blue ocean type of offensive strategy
involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.
5) A hit-and-run or guerrilla warfare type offensive strategy
involves unexpected attacks (usually by a small to medium-sized competitor) to grab sales and market share from complacent or distracted rivals
51) A strategic alliance
is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and mutual dependence.
12) The purposes of defensive strategies include
lowering the risk of being attacked by rivals, weakening the impact of any attack that occurs, and influencing challengers to aim their offensive efforts at other rivals.
28) Merger and acquisition strategies
may offer considerable cost-saving opportunities and can be beneficial in helping a company try to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
32) Merger and acquisition strategies sometimes fail because of the
misinterpretation of the cultural differences, like employee disenchantment and low morale, differences in management styles and operating procedures, and operations integration decision mistakes.
6) Launching a preemptive strike type of offensive strategy entails
moving first to secure an advantageous competitive assets that rivals cannot readily match or duplicate.
10) A blue ocean strategy
offers growth in revenues and profits by discovering or inventing a new industry or distinct market segment that renders rivals largely irrelevant and allows a company to create and capture altogether new demand.
46) Backward integration involves
performing industry value chain activities previously performed by suppliers or other companies engaged in earlier stages of the value chain.
36) A good example of backward vertical integration is a
producer of organic vegetables deciding to acquire a compost company.
59) Among the principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are
resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment.
57) Experience indicates that strategic alliances
stand a reasonable chance of helping a company reduce competitive disadvantage but very rarely form the basis of a durable competitive advantage over rivals.
34) The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to
strengthen the company's competitive position and/or boost its profitability.
38) The two best reasons for investing company resources in vertical integration (either forward or backward) are to
strengthen the company's competitive position and/or boost its profitability.
48) The two big drivers of outsourcing are
that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies)
20) The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when
the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first mover.
55) Strategic alliances are more likely to be long lasting-when
they involve collaboration with suppliers or distribution allies or when both parties conclude that continued collaboration is in their mutual interests.
2) A company's menu of strategic choices to supplement its decision to employ one of the five basic competitive strategies does not include
whether to employ a preemptive strike type of green ocean strategy.
