Exam 2 Study Help
Which strategy tends to work best when buyer needs and used of the product are diverse?
A differentiation strategy
Which of the following strategic approaches becomes most appealing when a market is not important to industry leaders?
A focused strategy
Which strategic approach tends to work best when price competition among rival sellers is vigorous, buyers are large, and there are few ways to achieve product differentiation?
A low-cost provider strategy
Which of the following choices represent the five generic types of competitive strategy?
A low-cost provider strategy, A FOCUSED LOW-LOW COST STRATEGY, a focused differentiation strategy, a broad differentiation strategy, and a best-cost provider strategy
When choosing a differentiation strategy which of the following actions can a company select, to deliver superior value to the customers?
All of these are correct
What are the two ways a company can translate its low-cost advantage over rivals into attractive profit performance?
EITHER USING ITS LOW-COST EDGE to under price competitors and attract price-sensitive buyers in large enough numbers to increase total profits or refraining from price cutting and using the low-cost advantage to earn a bigger profit marge on each unit sold
A company's competitive strategy is unlikely to succeed unless _______
IT IS PREDICATED on leveraging a competitively valuable collection of resources and capabilities that match the strategy.
Best-cost provider strategies work best when _________
PRODUCT DIFFERENTIATION IS THE NORM and there is an attractively large number of value-conscious buyers
A best-cost provider's resources and capabilities must allow ________
THE INCORPORATION of upscale attributes into its product offering at a lower cost than rivals
Which of the following is not a distinguishing feature of a low-cost provider strategy? The product line consists of a few basic models having minimal frills and acceptable quality. The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features. The marketing emphasis is on making virtues out of product features that lead to low cost. The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations. Sustaining the strategy revolves around keeping costs down year after year and delivering good value at economical prices.
The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations.
Striving to be the industry's low-cost provider by achieving lower costs than rivals' entails eliminating or curbing nonessential activities. having a smaller labor force than rivals have, paying lower wages than rivals do, locating all facilities in countries where labor costs are low, and outsourcing many value chain activities to suppliers with world-class technological capabilities. doing a better job than rivals in performing essential activities. aggressive use of activity-based costing, utilizing more best practices than rivals use, and having a narrower product line than rivals offer. Two answers are correct: eliminating or curbing nonessential activities; and doing a better job than rivals in performing essential activities.
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.
A differentiation strategy works best in which of the following market circumstances?
WHEN THERE ARE MANY WAYS to differentiate the product or service that have value to buyers
The two factors that most distinguish one competitive strategy from another boil down to
WHETHER A COMPANY' MARKET TARGET is broad or narrow and (2) whether the company is pursuing competitive advantage based on differentiation or costs
A "think local, act local" multidomestic type of strategy a) Focuses on the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. b) Always makes a company vulnerable to rivals employing "think global, act global" strategies. c) Protects a multinational firm against fluctuating exchange rates. d) Is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy.
a
Assessing the competitive advantage potential of cross-business strategic fit among the company's various business units involves: a) Examining a company's costs relative to the costs of its chief rivals in the industry. b) Evaluating how much benefit a diversified company can gain from cross-business value chain matchups and resource sharing. c) Considering what competitive value can be generated from a strategic fit. d) Determining if there are opportunities to exploit outsourcing opportunities by a diversified company's lineup of businesses.
a
Experience indicates that strategic alliances: a) Have a high "divorce rate." b) Are generally successful. c) Work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. d) Work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies.
a
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? a) When potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover b) When pioneering helps build up a firm's image and reputation with buyers c) When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases d) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely
a
One of the biggest strategic challenges to competing in the international arena is: a) Whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers. b) Determining how many foreign firms to license to produce and distribute the company's products. c) Whether to pursue a global strategy or an international strategy. d) Whether to offer a product at a priced based on the median income of the population.
a
The strategic appeal of related diversification is that it: a) Allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities. b) Is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses). c) Involves diversifying into industries having the same kinds of key success factors. d) Is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses.
a
Which of the following instances does not exemplify when a late-mover advantage arises? a) Property rights protections in the form of patents, copyrights, and trademarks prevent the ready imitation of initial moves. b) Rapid market evolution gives fast followers the opening to leapfrog a first mover's products with more attractive next-version products. c) Market uncertainties make it difficult to ascertain what will eventually succeed. d) Products of an innovator are simple, do not need a high customer understanding, and easily penetrate the market.
a
Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of developing country markets? a) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals. b) Prepare to compete on the basis of low price. c) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). d) Try to change the local market to better match the way the company does business elsewhere.
a
Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? a) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling directly to end-users at the company's website b) Allowing a company to reduce its costs if the activity is not crucial to the firm's ability to achieve sustainable competitive advantage and will not hollow out its capabilities, core competencies, or technical know-how c) Improving organizational flexibility and speeding time to market d) Allowing a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best
a
Which of the following is the biggest strategic issue when competing in the markets of foreign countries? a) Determining whether to standardize or customize the company's offerings. b) Learning about the regulation processes and political and capital requirements of each country market. c) Selecting among global, transnational, or international entry strategies. d) Deciding which price strategy to follow.
a
Which of the following are distinguishing features of a best-cost provider strategy?
a competitive advantage based on more value for the money
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.
Cost drivers ___________
are factors having a strong effect on the cost of a company's value chain activities and cost structure.
Avenues for performing value chain activities at a lower cost than rivals include all of the following except
avoiding outsourcing and vertical integration
Among the purposes of defensive strategies are to a) Aggressively retaliate against rivals pursuing offensive strategies and prevent price wars. b) Restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals. c) Guard against adverse changes in the company's macro-environment and insulate the company from the impact of industry-driving forces. d) Strengthen a company's competitive advantage and reduce its exposure to business risk.
b
First-mover advantages are unlikely to be present in which one of the following instances? a) When first-time customers remain strongly loyal to pioneering firms in making repeat purchases b) 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 c) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely d) When pioneering helps build a firm's image and reputation with buyers
b
In order to use location to build competitive advantage when competing on domestic and international level, a company must: a) Transfer company expertise to cross-border markets and initiate actions to contend on an international level. b) Pursue blue-ocean opportunities both in the company's home country market and in global markets. c) Use acquisition and rapid-growth strategies to better defend against expansion-minded international rivals. d) Try to change the local market to better match the way the company does business elsewhere.
b
Multinational competitors tend to concentrate activities in a limited number of locations when: a) Prices and competitive conditions are strongly linked across country markets to form a world market. b) There are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. c) The risk of fluctuating exchange rates is very high. d) Host-country governments can be persuaded to erect high tariff barriers to protect the company's operations from foreign competitors and it is not imperative to be responsive to buyer needs and competitive conditions in each country.
b
Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following? a) Broadening the firm's business scope by diversifying into additional businesses. b) Shifting from a multiple-country to a global strategy. c) Restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup. d) Sticking closely with the existing business lineup and pursuing the opportunities these businesses present.
b
The advantages of using a franchising strategy to pursue opportunities in foreign markets include: a) Being particularly well-suited to the international expansion efforts of companies with global strategies. b) Having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. c) Helping build brand awareness in international markets. d) Being well suited to companies that employ cross-market subsidization.
b
The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to: a) Determine which business unit has the greatest number of resources, competencies, and competitive capabilities and which one has the least. b) Assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender. c) Rank each business unit's strategic fit from highest to lowest. d) Rank each business unit's resource fit from highest to lowest.
b
The defining characteristic of related diversification (as opposed to unrelated diversification) is a) That the diversified businesses are utilizing similar competitive strategies. b) The presence of cross-business value chain relationships and strategic fits. c) That each business the company has diversified into has very similar core competencies and competitive capabilities. d) That the company has about the same number of cash cow businesses as it has cash hog businesses.
b
The defining characteristic of unrelated diversification (as opposed to related diversification) is: a) The presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit). b) That the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities). c) The presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit). d) That the company's businesses are in different industries.
b
The primary reasons that companies opt to expand into foreign markets are to: a) Boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions. b) Gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base. c) Grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances. d) Avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy.
b
Which of the following does not accurately describe entering a new business via acquisition, internal development, or a joint venture? a) The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price. b) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up. c) Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurtle entry barriers. d) Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market.
b
Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is correct? a) Observing and following the lead of local competitors is the sole guarantee of success in developing markets. b) Building a market for the company's products can often turn into a long-term process that involves reeducation of consumers. c) Entering an emerging market should always involve a best-cost strategy. d) Standardized products are typically more successful in emerging country markets.
b
Which of the following strategic business units generate operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends? a) Cash hogs b) Cash cows c) Star businesses d) Stars
b
Companies tend to concentrate their activities in a limited number of locations a) Where the costs of manufacturing or other activities are significantly higher. b) Where there are significant scale diseconomies. c) When there is a steep learning curve associated with performing an activity. d) When certain locations have inferior resources or allow for poorer coordination of related activities.
c
Economies of scope: a) Are derived from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. b) Have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. c) Stem from cost-saving strategic fits along the value chains of related businesses. d) Refer to the cost savings that flow from being able to combine the value chains of different businesses into a single value chain.
c
Ranking a diversified company's businesses in terms of priority for resource allocation and new capital investment: a) Should be done chiefly on the basis of appealing industry attractiveness and resource fit and secondarily on the basis of competitive strength and strategic fit with other businesses. b) Entails arraying the various businesses from the biggest cash hog down to the biggest cash cow; big cash hogs get the highest priority for resource allocation and big cash cows get the lowest priority. c) Should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and have solid and appealing strategic fits and resource fits. d) Should be based chiefly on relative market share, recent profitability, and potential for achieving cash cow status.
c
The advantages of manufacturing goods in a particular country and exporting them to foreign markets a) Are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country. b) Are greatest when local consumers prefer products manufactured inside the country's borders. c) Are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. d) Can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
c
Using domestic plants as a production base for exporting goods to selected foreign country markets a) Is usually a superior approach to competing in international markets. b) Can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country. c) Can be an excellent initial strategy to pursue international sales. d) Is usually a weak strategy when competitors are pursuing licensing strategies.
c
Which of the following is not an example of a company pursuing a blue-ocean strategy? a) Starbucks in the coffee house industry b) FedEx in overnight package delivery c) Nordstrom in the retail industry d) Cirque de Soleil in the live entertainment industry
c
Which of the following is not an example of unrelated diversification? a) Homebuilder acquiring a forest products company b) A manufacturer of golf shoes acquiring a retailer of fishing rods and lures c) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans) d) A steel producer acquiring a hardware store
c
Which of the following is not one of the principal offensive strategy options? a) Adopting and improving on the good ideas of other companies b) Launching preemptive strikes c) Blocking the avenues open to challengers d) Attacking competitors' weaknesses
c
Which of the following is typically the strategic impetus for forward vertical integration? a) To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers b) To make it easier to expand the company's product line c) To gain better access to end users and better market visibility d) To achieve greater control over advertising and in-store retail merchandising
c
Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? a) Whether and when to go on the offensive and initiate aggressive strategic moves to improve the company's market position, or to go on the defensive b) Which value chain activities, if any, should be outsourced c) Whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy d) Whether to integrate forward or backward into more stages of the industry value chain
c
Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? a) Picking the new industries to enter and deciding on the means of entry b) Initiating actions to boost the combined performance of the businesses the firm has entered c) Standardizing the resource fit across the group of businesses the company has diversified into d) Establishing investment priorities and steering corporate resources into the most attractive business units
c
Which one of the following statements concerning the impact of fluctuating exchange rates on companies competing in foreign markets is not true? a) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. b) Exchange rate shifts can produce sometimes favorable and sometimes unfavorable effects on a company's competitiveness. c) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made. d) Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries to which goods are being exported.
c
Which one of the following statements explaining why merger and acquisition strategies typically fail is true? a) Merger and acquisition strategies typically fail due to the development of effective integration plans conducive to employee satisfaction. b) Merger and acquisition strategies typically fail due to the creation of management-employee programs intended to foster better communication. c) Merger and acquisition strategies typically fail due to a misinterpretation of the cultural differences, like employee disenchantment and low morale, because of differences in management styles and operating procedures, and due to unforeseen challenges in integrating operations. d) Mergers and acquisition strategies typically fail due to an execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue.
c
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.
Successful differentiation allows a firm to
command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand
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.
A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when: a) Customer preferences vary significantly from country to country. b) It is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions. c) Plants need to be scattered across many countries to avoid high shipping costs. d) Country-to-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy.
d
Calculating quantitative attractiveness ratings for the industries a company has diversified into involves: a) Determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm's ability to compete successfully in each of its industries. b) Determining each industry's average profit margins, calculating how far the firm's profit margins are above or below the industry averages, and then using these values to draw conclusions about industry attractiveness. c) Rating the attractiveness of each industry's strategic and resource fit, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. d) Selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.
d
Checking a diversified company's business lineup for resource fit does not involve which one of the following "tests"? a) Determining whether a company has or can develop the specific resources and competitive capabilities needed to be successful in each of its businesses. b) Determining whether recently acquired businesses are acting to strengthen the company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thin. c) Determining whether each business adequately contributes to achieving companywide performance targets. d) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses.
d
Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous a) When high transportation costs make it expensive to operate from central locations. b) Whenever buyer-related activities are best performed in locations close to buyers. c) If economies of scale are essential to achieving acceptable production costs. d) Two answers are correct when high transportation costs make it expensive to operate from central locations and whenever buyer-related activities are best performed in locations close to buyers.
d
The Nine-Cell Industry Attractiveness-Competitive Strength Matrix: a) Is a valuable tool for ranking a company's different businesses from best to worst based on strategic fit. b) Shows which of a diversified company's businesses have a good or poor resource fit. c) Indicates which businesses have the highest or lowest economies of scale and which have the highest or lowest economies of scope. d) Involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.
d
The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that: a) A "think global, act local" approach involves charging much different prices in the various country markets where the company competes. b) A "think global, act local" approach involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused) in all country markets. c) A "think global, act local" approach involves considerably less adherence to utilizing the same capabilities, distribution channels, and marketing approaches worldwide. d) Local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.
d
The most long-lasting strategic alliances: a) Aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. b) Are those whose purpose is helping a company master a new technology. c) Are those formed to enable the partners to be consistent first movers or fast followers. d) Involve collaboration with suppliers or distribution allies, or conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.
d
To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: a) The attractiveness test, the barrier-to-entry test, and the growth test. b) The strategic fit test, the resource fit test, and the profitability test. c) The barrier-to-entry test, the growth test, and the shareholder value test. d) The attractiveness test, the cost-of-entry test, and the better-off test.
d
Which of the following is not a potential advantage of backward vertical integration? a) Adds to a company's differentiation capabilities and perhaps achieves a differentiation-based competitive advantage b) Lessens a company's vulnerability to powerful suppliers inclined to raise prices at every opportunity c) Spares a company the uncertainty of being dependent on suppliers for crucial components or support services d) Offers enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality
d
Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies? a) Gain wider access to attractive country markets b) Gain better access to scale economies in production and/or marketing c) Fill competitively important gaps in their technical expertise and/or knowledge of local markets d) Better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization
d
Which of the following is not a strategic disadvantage of vertical integration? a) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. b) Vertical integration increases a firm's capital investment in the industry. c) Integrating into more industry value chain segments increases business risk if industry growth and profitability sour. d) Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities.
d
Which of the following is not a typical reason that many alliances do not live up to expectations? a) Inability of partners to work well together b) Emergence of more attractive technological paths c) Changing conditions make the purpose of the alliance obsolete d) Disagreement over how to divide the added market share and profits gained from joint collaboration
d
Which of the following makes acquisition an attractive approach to diversifying into another industry? a) If it is not time-consuming and allows the firm to realize great profits and a sustainable competitive advantage b) Only if it is less expensive, less risky, and more effective than launching a new startup operation c) If it satisfies all three diversity tests (industry attractiveness test, cost-of-entry-test, better-off test) to grow shareholder value over the long term d) If it is quicker than trying to launch a brand-new operation, offers an effective way to hurtle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry
d
Which one of the following is not a good type of rival for an offensive-minded company to target? a) Market leaders that are vulnerable b) Runner-up firms with weaknesses in areas where the challenger is strong c) Small local and regional companies with limited capabilities d) Other offensive-minded companies with a sizable war chest of cash and marketable securities
d
A hit-and-run or guerrilla warfare type of offensive strategy involves: a) Random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals. b) Undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position. c) Tactics that work best if the guerrilla is the industry's low-cost leader. d) Pitting a small company's own competitive strengths head-on against the strengths of much larger rivals. e) Surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.
e
Architects of mergers and acquisition strategies typically set sights on which of the following objectives? a) Revamping a company's value chain b) Facilitating the employment of both offensive and defensive strategies c) Creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories d) Gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities e) Two answers are correct: creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories, and gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
e
As long as a single-business company can achieve profitable growth opportunities in its present industry, a) It needs to avoid putting all of its "eggs" in one industry basket. b) It will face diminishing market opportunities and stagnating sales in its principal business. c) Its opportunities are limited to leverage existing competencies and capabilities by expanding into businesses where these same resources are key success factors and valuable competitive assets. d) It has diminished prospects to lower costs by entering closely related businesses and/or an opportunity to transfer a powerful and well-respected brand name to the products of other businesses and thereby increase the sales and profits of these newly entered businesses. e) There is no urgency to pursue a diversification strategy.
e
Companies striving for global market leadership pursue strategic alliances or collaborative partnerships with foreign companies in order to: a) Revamp the global industry value chain, raise needed financial capital from foreign banks, and wage price wars against foreign competitors. b) Exercise better control over efforts to revamp the global industry value chain and combat the bargaining power of foreign suppliers. c) Exercise better control over efforts to revamp the global industry value chain, insulate a company from the impact of the five competitive forces, and use the brand names of their partners to make sales to foreign buyers. d) Increase the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. e) Get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.
e
Corporate restructuring strategies: a) Focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability. b) Involve rightsizing the company's labor force to reduce the costs of salaries and benefits. c) Are directed at achieving a 1 + 1 = 3 effect from the company's diversification strategy. d) Focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. e) Involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup
e
The biggest drawback of relying heavily on alliances and cooperative strategies is: a) That partners will not divide profits from the alliance in an equitable manner. b) That strategic allies and partners frequently become rivals in the marketplace. c) Having to compromise the company's own priorities and strategies in reaching agreements with partners. d) Incurring excessive administrative expenses associated with engaging in collaborative efforts. e) Becoming dependent on other companies for essential expertise and capabilities.
e
The multidomestic strategy of "think local, act local" a) Is most appropriate when the need for local responsiveness is low. b) Avoids host country ownership requirements and import quotas. c) Facilitates the transfer of a company's capabilities, knowledge, and other resources across country borders. d) Is the only global market entry strategy conducive to building a single worldwide competitive advantage. e) Becomes more appealing when country-to-country differences in buyer tastes, cultural traditions, and market conditions vary significantly.
e
The procedure for evaluating a diversified company's strategy involves all of the following steps except: a) Checking whether the firm's resources fit the requirements of its present business lineup. b) Assessing the competitive strength of each business the company has diversified into and determining which ones are strong or weak contenders in their respective industries. c) Ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses. d) Checking the competitive advantage potential of cross-business strategic fit among the company's various business units. e) A determination of the degree of risk involved with each business unit.
e
Which of the following is not an advantage of utilizing a licensing strategy to participate in foreign markets? a) The ability to shift the costs and risks to the licensee b) The ability to generate income from royalties c) The ability to enter international markets even though the company lacks international organizational capabilities and the resources to do so d) The ability to avoid risks of committing resources to country markets that are unfamiliar or otherwise risky e) The ability to safeguard the company's technical know-how or patents
e
Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries? a) Variations in market growth rates from country to country and important country-to-country differences in consumer buying habits and buyer tastes and preferences b) Country-to-country variations in host-government policies and trade requirements c) Product designs suitable for one country are sometimes inappropriate in another d) Vulnerability to adverse shifts in currency exchange rates e) A need to convince shippers to keep transportation costs low
e
Examples of uniqueness drivers do not include product features, design, and performance. production R&D. customer service. continuous quality improvement. eliminating low value-added activities and work steps.
eliminating low value-added activities and work steps.
Activities that managers can pursue to enhance differentiation through the systematic management of uniqueness drivers include the following except:
finding ways to cut labor cots and trim the workforce as much as possible
The marketing emphasis of a company pursuing a focused differentiation strategy usually is to _________
highlight carefully designed products or services appealing to the unique preferences and needs of a narrow, well-defined group of buyers
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 company achieves low-cost leadership when ____________
it becomes the industry's low-cost provider rather than just being one of perhaps several competitors with comparatively low costs
The five generic types of competitive strategies include
low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider.
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 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.
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.
A focused low-cost strategy aims at
securing a competitive advantage BY SERVING BUYERS in the target market niche at lower cost than those of rival competitors
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.
Which of the following is not one of the hazards of pursuing a differentiation strategy? charging too high a price premium for the differentiating features over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) using features or attributes that rivals can easily copy overspending on efforts to differentiate the company's product offering
striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)
Successful use of a focused differentiation strategy depends on
the EXISTENCE of a buyer segment that is looking for special product attributes or seller capabilities
A company's competitive strategy deals with
the specifics of management's game plan for competing successfully.
The strategic target of a best-cost provider is ______
the value-conscious buyer
In which one of the following market circumstances is a broad differentiation strategy generally not well suited? when buyer needs and preferences are too diverse to be fully satisfied by a standardized product when few rivals are pursuing a similar differentiation approach when most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated when there are many ways to differentiate the product or service and many buyers perceive these differences as having value when technological change is fast-paced and competition revolves around rapidly evolving product features
when most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated
