MGMT 490 Summary Quiz 1

The total dollar investment needed to enter a market successfully is known as the ________ requirement.

capital requirement

In a weighted competitive strength assessment, the sum of importance weights should add up to a) 100 percent. b) 1.00. c) 10. d) 100. e) 1000.

b) 1.00.

What is the purpose of using the SOAR Framework for Competitor Analysis? a) to evaluate the performance of the company's various product lines b) to predict a business rival's moves and counter-moves c) to determine how well a company is performing in comparison to others within the industry d) to plan a long-term business strategy that will accomplish the company's vision

b) to predict a business rival's moves and counter-moves

Which of the following are concepts or analytic tools for assessing a company's industry and competitive environment? a) multitiered analytics b) competitor analysis c) the five forces framework d) local dynamics

b) competitor analysis c) the five forces framework

Which of the following is not a common type of driving force? a) reductions in uncertainty and business risk b) changing societal concerns, attitudes, and lifestyles c) diffusion of technical know-how across companies and countries d) increasing efforts to collaborate closely with suppliers e) advances in technology and manufacturing process innovation

d) increasing efforts to collaborate closely with suppliers

A blueprint that outlines the means for a company to deliver value to customers in a suitably profitable manner is known as its a) business model. b) strategic reaction. c) emergent strategy. d) proactive strategy.

a) business model

When evaluating strategy options, companies must determine whether a competitive ______ exists where competitors are able to create and capture new demand. a) "blue ocean" b) "white space" c) "product vacuum" d) "headwind"

b) "white space"

In an ideal competitive environment for earning profit, a) there are numerous product substitutes. b) suppliers are in weak bargaining positions. c) customers are in strong bargaining positions. d) rivalry among present sellers is muted.

b) supplies are in weak bargaining positions d) rivalry among present sellers is muted

Typically, a company's strategy making must a) begin at the lowest levels of a company and work its way upward. b) move from the business level to the corporate level. c) begin at the top of a company. d) move from mid-levels to the upper and the lower levels.

c) begin at the top of a company.

Debt-to-equity, long-term debt-to-capital, and total debt-to-assets are all examples of ______ ratios. a) liquidity b) activity c) profitability d) leverage

d) leverage

Lowered switching costs ______ supplier bargaining power. a) moderately increase b) dramatically increase c) stabilize d) limit

d) limit

Costs and price differences among competing companies can have origins in activities performed by a) the company's internally performed activities (its own value chain) compared to the cost structure of the internally performed activities of rival companies. b) value chains of the company's suppliers. c) value chains of a company's distributors and retail dealers and forward channel allies. d) the company's internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies. e) whether the company has a longer or shorter value chain than its close rivals.

d) the company's internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies.

A(n) competence is a key activity that a company executes better than its rivals.

distinctive competence

Market maneuvering among industry rivals a) determines whether the industry's strategic group map will be static or dynamic. b) centers around collaborative efforts to overcome the bargaining power of powerful suppliers and powerful buyers. c) is usually an industry's strongest driving force. d) is usually one of the two or three weakest competitive forces because of the close familiarity that rivals have for one another's likely next moves. e) is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.

e) is ongoing and dynamic, with moves and countermoves of rivals producing a continually evolving competitive landscape that delivers winners and losers.

An option for not remedying an internal cost disadvantage includes a) investing in productivity-enhancing, cost-saving technological improvements. b) redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly. c) implementing the use of best practices throughout the company, particularly for high-cost activities. d) eliminating some cost-producing activities altogether by revamping the value chain. e) performing activities in the same way as done earlier.

e) performing activities in the same way as done earlier.

An activity that a company performs poorly in comparison to its competitors is an example of a competitive deficiency, or _________.

weakness

True or false: Strategically relevant factors typically exist only within a company's industry boundaries.

False

In the retail industry, competition between ______ is more intense than the rivalry among ______. a) Walmart and Target; high-end fashion retailers b) Versace and Prada; large retailers c) Gucci and Walmart; suppliers

a) Walmart and Target; high-end fashion retailers

Which conditions increase rivalry among competing sellers? a) When buyer demand is growing slowly. b) When buyer demand is growing rapidly. c) When the cost of switching brands is low.

a) When buyer demand is growing slowly. c) When the cost of switching brands is low.

Angela and Jeff are co-owners of five specialty cupcake baking stores in their region. Which of the following questions would not help them to predict the next strategic moves and countermoves of their rivals? a) Which mode of transport does the rival's supplier use? b) How does the rival manage door-to-door deliveries at no extra cost? c) What percentage of customers frequent the rival's store? d) Why are the rival's cupcakes so popular among customers? e) How frequently does their rival fulfill special orders for custom cupcakes and how large are those special orders?

a) Which mode of transport does the rival's supplier use?

Better financial performance typically results from which of the following? a) a stronger market standing b) organizational complexity c) competitive advantage d) more competitive vitality

a) a stronger market standing c) competitive advantage d) more competitive vitality

The value of performing a detailed competitive strength assessment is that it allows a company to a) address vulnerabilities. b) pinpoint competitors' relative weaknesses. c) design new product lines. d) plan offensive and defensive strategies.

a) address vulnerabilities. b) pinpoint competitors' relative weaknesses. d) plan offensive and defensive strategies.

Which of the following are examples of trade restrictions? a) antidumping rules b) tariffs c) local content requirements d) high capital requirements e) network effects

a) antidumping rules b) tariffs c) local content requirements

Which of the following are strategically relevant macro-environment factors affecting cigarette producers? a) antismoking ordinances b) cultural stigma c) company resources d) managerial attitudes toward smoking e) cigarette taxes

a) antismoking ordinances b) cultural stigma e) cigarette taxes

Resources and capabilities are difficult for competitors to replicate when they a) are unique. b) take time to build up. c) require large-scale operations. d) are standard to the industry.

a) are unique. b) take time to build up. c) require large-scale operations.

New brands typically "buy" their way into a wholesale or retail investment network a) by giving dealers large promotional allowances. b) by granting intellectual property rights. c) by cutting their prices. d) by reducing their capital requirements.

a) by giving dealers large promotional allowances. c) by cutting their prices.

Detailed examination of a company's value chain, including its customer value proposition and business model, allows for evaluation of which of the following? a) capabilities that enhance differentiation b) market capitalization c) cost structure and pricing d) profit margin

a) capabilities that enhance differentiation c) cost structure and pricing d) profit margin

Strategic performance is measured by the rise and fall of a company's a) competitiveness. b) profit. c) senior executives staff. d) revenue.

a) competitiveness

A company's approach to meeting or exceeding its customers' needs at a price they consider a good value is called the a) customer value proposition. b) business model. c) value-price-cost strategy. d) profit formula.

a) customer value proposition

When evaluating whether an industry's environment presents a company with an above-average profitability and an attractive business opportunity, it primarily involves a) determining the industry's outlook for future profitability. b) determining which firms in the industry have a competitive advantage and how they got their advantage. c) determining the overall strength of the five competitive forces. d) constructing a strategic group map and assessing the attractiveness of the competitive position of each strategic group to determine the overall attractiveness of all the strategic groups. e) using value chain analysis to determine the relative cost positions of rival firms and to learn who the industry's low-cost producer is.

a) determining the industry's outlook for future profitability.

When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called the company's a) dynamic capability. b) core competence. c) distinct competence. d) strategic assessment. e) benchmarking exercise.

a) dynamic capability

The most powerful tool for diagnosing the principal competitive pressure in a market is known as the a) five forces model of competition. b) seven-point competitive analysis. c) diagnostic triangle. d) KSF approach.

a) five forces model of competition.

Benchmarking provides low-cost providers such as Dollar General, Ryanair, T.J.Maxx, and Nucor Steel with a) hard evidence of cost competitiveness. b) proof of resource availability. c) a company strategy. d) verification of total cost ownership. e) improvements to internal processes.

a) hard evidence of cost competitiveness.

The clothing retailer Patagonia remains competitive with a customer value proposition that focuses on which of the following? a) high quality b) corporate environmental responsibility c) narrow selection d) lowest prices in the category

a) high quality b) corporate environmental responsibility

A company is better able to fend off competition when it provides ______ than its rivals. a) higher customer value b) better employee benefits c) larger dividend payments to shareholders d) a longer supply chain

a) higher customer value

To improve a company's cost competitiveness, managers can a) implement best practices throughout the company. b) increase the size of the workforce. c) outsource activities. d) use new technologies to redesign products.

a) implement best practices throughout the company. c) outsource activities. d) use new technologies to redesign products.

Calculating competitive strength ratings for a company and its rivals using the industry's most telling measures of competitive strength or weakness a) is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage. b) is the most reliable indicator of which industry member has the highest overall product quality. c) is a powerful way of revealing which competitors are in the best and worst strategic groups. d) is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader. e) pinpoints which industry rivals are most insulated from the industry's driving forces.

a) is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage.

Organizational capabilities are virtually always a) knowledge based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge. b) more complex than resources and are exercised only through key personnel. c) require constant evaluation to ensure cooperative support from management. d) easier and less challenging to categorize than resources because there are fewer to be concerned about. e) reflective of the industry's driving forces.

a) knowledge based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge.

Nestlé's brand management capabilities for its 2000-plus food, beverage, and pet care brands are a) known as productive inputs or competitive assets, while human assets and intellectual capital are, which are considered capabilities or competencies. b) representative of physical resources only. c) part of an inventory or collection of the firm's strengths, weaknesses, opportunities, and threats. d) categorized as tangible and/or intangible resources e) intangible resources only, because they consist of patents, copyrights, and technological processes.

a) known as productive inputs or competitive assets, while human assets and intellectual capital are, which are considered capabilities or competencies.

Which of the following are key components of a company's competitive strategy? a) marketing b) human resources c) information technology d) accounts payable

a) marketing b) human resources c) information technology

What should a company consider doing when it has competitive strengths in areas where its rivals are weak? a) offensive moves b) negotiate c) defensive moves d) cooperate

a) offensive moves c) defensive moves

Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do so, you would conduct an assessment of Starbucks' a) resources and functions. b) competitive set via a strategy matrix. c) sustainability initiatives and resource bundles. d) cross-functional systems and collaborative resource methodology. e) financial statements and managerial depth charts.

a) resources and functions.

Which of the following factors would lead to higher entry barriers for new industry entrants? a) restrictive trade policies b) easy access to distribution channels c) relaxed government policies d) high capital requirements e) weak brand preferences

a) restrictive trade policies d) high capital requirements

The value chains of a company's distribution-channel partners are significant because they directly affect which of the following? a) sales volumes b) retail prices c) customer satisfaction d) workplace supervision

a) sales volumes b) retail prices c) customer satisfaction

What is the best technique for revealing the different market or competitive position that rival firms occupy in the industry? a) strategic group mapping b) PESTEL analysis c) five forces framework d) the Value Net framework e) competitor analysis

a) strategic group mapping

Which of the following are factors that affect the strength of rivalry among competing sellers? a) substitutes b) suppliers c) government regulation d) new entrants

a) substitutes b) suppliers d) new entrants

Which factors do managers consider when establishing performance objectives? a) the company's internal capabilities b) economic conditions within the industry c) the strategic visions of rival businesses d) competition from other businesses

a) the company's internal capabilities b) economic conditions within the industry d) competition from other businesses

What can be learned through value chain analysis? a) the differences in how competitors perform specific activities b) the competitive differences among rivals c) how each activity of a rival delivers value to customers d) the historical trends of a competitor's stock price

a) the differences in how competitors perform specific activities b) the competitive differences among rivals c) how each activity of a rival delivers value to customers

Threats to a company's profitability and competitive well-being can arise from which of the following external factors? a) the emergence of lower cost or improved technologies b) political stability in the country where products are manufactured c) burdensome new regulations d) unfavorable demographic shifts

a) the emergence of lower cost or improved technologies c) burdensome new regulations d) unfavorable demographic shifts

An external threat to a company's future profitability does not include a) the lack of a distinctive competence b) new legislation that entails burdensome and costly government regulations c) slowdowns in market growth d) more intense competitive pressures e) the introduction of restrictive trade policies in countries where the company does business

a) the lack of a distinctive competence

The stronger the collective impact of competitive pressures associated with the five competitive forces, a) the stronger are the industry's driving forces. b) the greater number of companies that can achieve a competitive advantage via differentiation. c) the larger the number of competitive advantage opportunities for industry members. d) the greater the number of industry key success factors. e) the fewer companies that can achieve a competitive advantage via anything other than being the industry's low-cost leader.

a) the stronger are the industry's driving forces.

For a company to translate its performance of value chain activities into a competitive advantage, it must a) undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages. b) have more core competencies than rivals. c) have at least three distinctive competencies. d) have competencies that allow it to produce the highest-quality product in the industry. e) have more competitive assets than competitive liabilities.

a) undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages. b) have more core competencies than rivals.

What technique is most useful for helping a company analyze how its competitors deliver products or services that their customers want, at an attractive price? a) value chain analysis b) brand analysis c) portfolio analysis d) market reconnaissance

a) value chain analysis

What analytic tools are helpful in evaluating the competitiveness of a company's costs and customer value proposition? a) value chain analysis b) SWOT analysis c) benchmarking d) VRIN test

a) value chain analysis c) benchmarking

Which of the following is not a factor that causes buyer bargaining power to be stronger? a) Some buyers are a threat to integrate backward into the business of sellers and become an important competitor. b) Buyers are small and numerous relative to sellers. c) Buyers have considerable discretion over whether and when they purchase the product. d) Buyers purchase the item frequently and are well-informed about sellers' products, prices, and costs. e) The costs incurred by buyers in switching to competing brands or to substitute products are relatively low.

b) Buyers are small and numerous relative to sellers.

Aggressive price-cutting to win customers away from a rival can be risky for which the following reasons? a) It can increase distribution partner profitability and independence. b) Rivals with stronger relative cost positions might be able to better survive a price war. c) Other competitors might interpret such a move as an attack. d) A company's suppliers might charge higher prices to protest the price cuts.

b) Rivals with stronger relative cost positions might be able to better survive a price war. c) Other competitors might interpret such a move as an attack.

What two elements must management address to maintain the value of the company's resources and capabilities? a) Monitor the performance of business rivals. b) Watch for the chance to develop new capabilities. c) Continually modify existing assets. d) Maintain contact with the firm's customer base.

b) Watch for the chance to develop new capabilities. c) Continually modify existing assets.

Resource and capability analysis is designed to a) ascertain the internal marketplace of non-distinct divisions of the company. b) ascertain which of a company's resources and capabilities are competitively valuable. c) stimulate demand for a product. d) ascertain to what extent a competitor can sustain a competitive advantage. e) stimulate economic growth for companies within the industry.

b) ascertain which of a company's resources and capabilities are competitively valuable.

Rival sellers may try to differentiate their products from those of competitors by a) reducing KSF levels. b) building higher-performance products. c) providing improved customer service. d) introducing new products less frequently.

b) building higher-performance products. c) providing improved customer service.

What are some of the ways that companies typically implement a competitive strategy? a) by isolating the managerial staff b) by delivering superior customer service c) by focusing on quality d) by diversifying product lines

b) by delivering superior customer service c) by focusing on quality d) by diversifying product lines

In evaluating how well a company's strategy is working, the best place to start is with a a) SWOT analysis. b) clear view of what that strategy entails. c) value chain analysis. d) competitive strength analysis. e) financial ratio analysis.

b) clear view of what that strategy entails.

A distinctive competence has the potential to confer a competitive advantage, especially when it allows a company to a) keep its longtime products on the market even though customer interest is dwindling. b) create new markets. c) create new product demand. d) create new versions of products that failed in the past.

b) create new markets. c) create new product demand.

When a company offers unusually low prices for high-quality products, its business model is based on having a competitive a) leverage capability. b) customer value proposition. c) stock market rating. d) level of employee satisfaction.

b) customer value proposition

If it becomes more costly for a buyer to switch brands, then rivalry between competitors will a) increase b) decrease c) stay the same

b) decrease

The higher the switching costs for industry members, the more it can a) limit supplier bargaining power. b) enhance supplier bargaining power. c) enhance the quality of parts and components being supplied, and in effect reduce defect rates. d) provide important cost savings for the collaborative supplier-seller relationship. e) limit the supply of products and/or services.

b) enhance supplier bargaining power.

If you were asked to conduct a SWOT analysis for Nike, you would not evaluate which of these market opportunities? a) serving additional customer groups or market segments. b) growing buyer preferences for substitutes for the industry's product. c) acquiring rival firms or companies with attractive technological expertise or capabilities. d) expanding into new geographic markets. e) demographic trends that favor increased repeat purchases and/or higher volume purchases of the company's product.

b) growing buyer preferences for substitutes for the industry's product.

Having good competitive intelligence about rivals' strategies and moves to improve their situation is important because a) it identifies who the industry's current market share leaders are. b) it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence. c) it helps identify which rival is in which strategic group. d) it enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. e) it enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.

b) it allows a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves with some confidence.

In addition to human resources, which of the following are intangible assets of a company? a) its manufacturing facilities b) its reputation c) its brands d) its image

b) its reputation c) its brands d) its image

Intel uses its ______ to give top priority to PC manufacturers that primarily use Intel chips. a) legal team b) market dominance c) new-entry status d) labor unions

b) market dominance

A company's tangible resources, typically defined as resources that can be easily quantified, include which of the following? a) intellectual resources b) organizational resources c) technological resources d) financial resources

b) organizational resources c) technological resources d) financial resources

Quantitative measures of a company's competitive strength a) signal which competitor has the most distinctive competencies and which competitor has the fewest. b) provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival. c) reveal which competitors are in the best and worst strategic groups. d) show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities. e) pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces.

b) provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival.

Which indicators of a rival's potential strategic moves are found in the SOAR Framework for Competitor Analysis? a) driving forces b) resources and capabilities c) substitute products d) current profit

b) resources and capabilities

The concept of strategic groups is relevant to industry and competitive analysis because a) firms in the same strategic groups are rarely close competitors—a firm's closest competitors are usually in distant strategic groups. b) strategic group maps help identify how each competing firm is positioned and the relationship to its closest competitors. c) competition grows in intensity as the number and diversity of the strategic groups in an industry increases. d) the profit potential of firms in the same strategic group is usually very similar. e) competitive pressures tend to be weaker within strategic groups than across strategic groups.

b) strategic group maps help identify how each competing firm is positioned and the relationship to its closest competitors.

Which of the following is most. likely to qualify as a driving force? a) increases in price cutting by rival sellers and the launch of major new advertising campaigns by one or more rivals b) successful introduction of innovative new products or new ways to market products c) an increase in the prices of substitute products d) decisions on the part of industry's three biggest competitors not to pursue a strategy of striving to be the industry's low-cost leader e) decisions by one or more outsiders not to attempt to enter the industry

b) successful introduction of innovative new products or new ways to market products

What makes the marketplace a competitive battlefield? a) the race of industry members to build strong defenses against the industry's driving forces b) the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals c) the ongoing race among rival sellers to have the highest-quality product d) the ongoing efforts of industry members to introduce new and improved products/services at a faster rate than their rivals e) the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits

b) the constant rivalry of firms to strengthen their standing with buyers and win a competitive edge over rivals

In analyzing the strength of competition among rival firms, an important consideration is a) the potential for buyers to exercise strong bargaining power. b) the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin. c) the number of firms pursuing differentiation strategies versus the number pursuing low-cost leadership strategies and focus strategies. d) the extent to which some rivals have more than two competitively valuable competencies or capabilities. e) whether the industry is characterized by a strong learning/experience curve and whether the industry is composed of many or few strategic groups.

b) the diversity of competitors in terms of long-term direction, objectives, strategies, and countries of origin.

What factors determine how serious the threat of entry is for a particular market? a) the PESTEL factor b) the effect of barriers to entry c) the likelihood that existing firms will retaliate against new entrants d) the value-price-cost framework

b) the effect of barriers to entry c) the likelihood that existing firms will retaliate against new entrants

A company's resources and capabilities represent a) the firm's net working capital and related determinants for measuring operating performance and capabilities. b) the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace. c) whether the firm has the industry's most efficient value chain. d) management's sources and uses of funding for new strategic initiatives. e) positive trends with relevant cultural factors related to buyers' choices and product modifications.

b) the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace.

The value net framework includes an analysis of a) the firm, substitutes, suppliers, customers, and competitors. b) the firm, suppliers, customers, competitors, and driving forces. c) substitutes, suppliers, customers, competitors, and driving forces. d) the firm, suppliers, customers, competitors, and complementors. e) substitutes, suppliers, customers, competitors, and potential entrants.

b) the firm, suppliers, customers, competitors, and driving forces.

When strategic managers assess the competitive power of company resources, what matters is a) whether it helps differentiate a company's product offering from the product offerings of rival firms. b) whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals. c) whether customers are aware of the resource and view it positively enough to boost the company's brand name reputation. d) whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company's brand image, and if it is the foundation of a cost-based advantage. e) whether the resource is technology based or based on superior marketing know-how.

b) whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.

The impact of the macro-environment on a company's strategic opportunities is not exemplified by the following situation? a) Sales of Stolichnaya Vodka in the United States dwindle on account of a boycott of Russian products. b) Consumer confidence in Volkswagen drops precipitously because of falsified emissions data. c) Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry. d) Traffic increases at the outlets of Whole Foods following its introduction of stores comprised solely of generic products. e) Sales of FitBit surge on account of a new feature that monitors users' blood pressure.

c) Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry.

The strategically relevant factors outside a company's industry boundaries—economic conditions, political factors, sociocultural forces, technological factors, environmental factors, and legal/regulatory conditions—are known as a) the industry and the competitive arena in which the company operates. b) general economic conditions plus the factors driving change in the markets where a company operates. c) a company's macro-environment. d) the competitive market environment that exists between a company and its competitors. e) the dominant economic features of a company's industry.

c) a company's macro-environment.

Value net analysis can help managers improve their position through ______ as well as competitive interactions. a) surreptitious b) divisive c) cooperative d) legislative

c) cooperative

Actions taken in response to new strategic maneuvers by rival firms or other unanticipated market circumstances make up a company's ______ strategy. a) proactive b) deliberate c) emergent d) abandoned

c) emergent

When two industries are closely related to one another, companies can be threatened by the competitive pressure produced by ______ products. a) complementary b) regulated c) substitute d) differential

c) substitute

There are times, such as the financial crisis of 2008-2009, when adverse market conditions can create ______ that plunges a company into crisis and put its future in jeopardy. a) a spending frenzy b) publicity overexposure c) unexpected high demand d) a sudden-death threat

d) a sudden-death threat

A superior indicator of how sound W.L. Gore's strategy is and whether or not the strategy signals strong execution is a) falling short of its stated financial objectives, that is, its financial performance is well below the industry average, and its market share gains reflect short-term preferences for capacity maximization. b) remaining inattentive to possible improvements in its functional areas, creating stretch business goals, and providing a product-focused value proposition to customers. c) foregoing initiatives designed to build market share and to promote corporate responsibility. d) achieving its stated financial and strategic objectives via improvements in its internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity. e) undertaking new initiatives to promote corporate social responsibility.

d) achieving its stated financial and strategic objectives via improvements in its internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity.

Consumers have the option to delay the purchase of ______ goods such as hot tubs and home entertainment centers. a) undesirable b) discredited c) necessary d) discretionary

d) discretionary

A company's sales revenues minus the cost of goods sold, divided by the sales revenues, is called the company's ______ margin. a) net profit b) current profit c) operating profit d) gross profit

d) gross profit

Suppliers' bargaining power increases when a) they bargain with major customers. b) the well-being of suppliers is tied to the well-being of the suppliers' major customers. c) sales to the industry form a large percentage of their total sales. d) industry members are not major customers of those suppliers.

d) industry members are not major customers of those suppliers.

Intense competitive pressure from ______ of the five competitive forces is sufficient to destroy the conditions for good profitability. a) all five b) at least three c) at least two d) just one

d) just one

The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as a) whether the company is located all over the globe. b) whether the company's key success factors are more dominant than the key success factors of close rivals. c) whether the company has the industry's most efficient and effective value chain. d) what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats. e) what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

d) what the company's resource strengths and weaknesses are in relation to the market opportunities and external threats.

A "balanced scorecard" for measuring company performance a) entails putting equal emphasis on financial and strategic objectives. b) entails putting balanced emphasis on profit and nonprofit objectives. c) prevents the drive for achieving financial objectives from overwhelming the pursuit of strategic objectives. d) prevents the drive for achieving strategic objectives from overwhelming the pursuit of financial objectives. e) strikes a balance between financial and strategic objectives.

e) strikes a balance between financial and strategic objectives.

______ rarely have much bargaining power when negotiating price concessions, but ______ can have considerable bargaining power. a) Business buyers; new entrants b) New entrants; individual consumers c) Business buyers; individual consumers d) Individual consumers; business buyers

d) Individual consumers; business buyers

The "L" in PESTEL analysis stands for a) labor unions. b) local conditions. c) logistical considerations. d) legal/regulatory conditions.

d) legal/regulatory conditions.

Which of the following pairs of variables are least likely to be useful in drawing a strategic group map? a) geographic market scope and degree of vertical integration b) brand name reputation and distribution channel emphasis c) product quality and product-line breadth d) level of profitability and size of market share e) price/perceived quality and image range and the extent of buyer appeal

d) level of profitability and size of market share

All companies operate in a broad ______-environment that is made up of six components, including political factors and technological factors. a) para b) meso c) micro d) macro

d) macro

Powerful ______ can end up eroding industry profitability by ______ higher prices. a) buyers; paying b) government agencies; negotiating c) new entrants; introducing d) suppliers; charging

d) suppliers; charging

Tangible resources include a) human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel. b) reputational assets, which can include the company's reputation for quality, service, and reliability as well as its reputation for fair dealings with suppliers. c) relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets. d) technological assets such as patents, copyrights, and innovation technologies. e) company culture and incentive system, which includes the norms of behavior and business principles.

d) technological assets such as patents, copyrights, and innovation technologies.

In which of the following instances is rivalry among competing sellers not more intense? a) when certain competitors are dissatisfied with their market position and make moves to bolster their standing b) when strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to transform their newly acquired competitors into stronger market contenders c) when competitors are fairly equal in size and capability d) when the products of rivals are weakly differentiated, buyer switching costs are low, and market demand is growing slowly e) when there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

e) when there are vast numbers of small rivals so the impact of any one company's actions is spread thinly across all industry members

Which of the following are characteristics of a company's core competence? a) It is competitively valuable. b) It is central to a company's strategy. c) It exceeds comparable competences of the company's rivals. d) It contributes to the company's profitability.

a) It is competitively valuable. b) It is central to a company's strategy. d) It contributes to the company's profitability.

Rivalry among competing sellers decreases a) when buyer demand is growing rapidly. b) as it becomes less costly for buyers to switch brands. c) as the products of rival sellers become commoditized. d) when there is excess production relative to demand. e) as the number of competitors increases.

a) when buyer demand is growing rapidly.

The strength of competitive pressures that suppliers can exert on industry members is MAINLY a function of a) whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product. b) whether suppliers self-manufacture what they supply or source their items from other manufacturers. c) whether the industry's position in the growth cycle is favorable. d) whether technological change in the businesses of suppliers is rapid or slow. e) whether the needs and expectations of supplier-seller relationships are changing slowly or rapidly.

a) whether needed inputs are in short supply and whether suppliers provide differentiated input that enhances performance of the product.

A winning strategy must pass which three tests? a) the dominant market test, the sustainable advantage test, and the profit test b) the fit test, the competitive advantage test, and the performance test c) the sustainable performance test, the fit test, and the profit test d) the performance test, the dominant market test, and the fit test e) the fit test, the sustainable advantage test, and the dominant market test

b) the fit test, the competitive advantage test, and the performance test

Which of the following is an example of something that establishes a network effect in customer demand? a) walls of patents b) video game systems c) lawn mowers d) gas utilities

b) video game systems

What company invented the business model for fast food restaurants? a) Pizza Hut b) McDonald's c) Burger King d) Kentucky Fried Chicken

b) McDonald's

A sense of "where we are going" is called the company's a) performance objectives. b) strategic vision. c) core values. d) operational strategy.

b) strategic vision

A superior example of a well-stated strategic objective is to a) increase revenues by more than the industry average. b) be among the top five companies in the industry in customer service. c) overtake key competitors on product performance or quality within three years. d) improve manufacturing performance by 5 percent within 12 months. e) obtain 150 new customers during the current fiscal year.

c) overtake key competitors on product performance or quality within three years.

To distinguish a winning strategy from a mediocre or losing strategy, a strategic manager should ask which question? a) How good is the company's business model? b) Is the company a technology leader? c) Does the company have low prices in comparison to rivals? d) Is the company putting too little emphasis on behaving in an ethical and socially responsible manner? e) How well does the strategy fit the company's situation?

d) How well does the strategy fit the company's situation?

When management discovers that there are strategic conflicts among the various levels of an organization, what should management do? a) Adapt high-level strategies to incorporate more appealing ideas from lower levels. b) Consider which low-level strategies might be changed to accommodate high-level strategies. c) Not make changes unless the units are in direct competition with each other. d) Ensure all conflicts are resolved.

a) Adapt high-level strategies to incorporate more appealing ideas from lower levels. b) Consider which low-level strategies might be changed to accommodate high-level strategies. d) Ensure all conflicts are resolved.

Why are crafting and executing strategy important managerial tasks? a) They establish a formula for improving performance. b) They lay out the means for pleasing customers. c) They provide a path to competitive advantage. d) They define a company's best practices.

a) They establish a formula for improving performance. b) They lay out the means for pleasing customers. c) They provide a path to competitive advantage.

Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of a) explaining "where we are going and why" and, more importantly, inspiring and energizing company personnel to unite to get the company moving in the intended direction. b) helping company personnel understand why making a profit and having a business plan are so important. c) making it easier for top executives to set and communicate the company's stretch objectives. d) helping lower-level managers and employees better understand the company's business model. e) aiding lower-level managers and employees in formulating and achieving a balanced scorecard.

a) explaining "where we are going and why" and, more importantly, inspiring and energizing company personnel to unite to get the company moving in the intended direction.

Which of the following are impediments to a company's long-term industry success? a) inadequate attempts to improve b) imitative strategies c) illogical strategies d) proactive strategy making

a) inadequate attempts to improve b) imitative strategies c) illogical strategies

A company's business model is comprised of which of the following? a) the cost of goods sold b) the customer value proposition c) the competitive assets d) the profit formula

b) the customer value proposition d) the profit formula

Rivalry among industry members will be high when a) the demand for the products is high. b) there is excess supply in the market. c) the products have low storage costs. d) fixed unit costs are very low.

b) there is excess supply in the market.

If you were advising Rebel Toad Brewing, a local brewpub, about how to set itself apart from rivals and achieve a sustainable competitive advantage, you would most likely not recommend that Rebel Toad Brewing a) strive to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage. b) outcompete rivals on the basis of differentiating features such as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money. c) mimic the successful strategies of rivals. d) focus on a narrow market niche to achieve a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche. e) develop a cost advantage based on offering more value for its patrons' money.

c) mimic the successful strategies of rivals

Apple's strategy of corporate responsibility is illustrated by a) aggressively expanding their company owned stores globally. b) cultivating a diverse work force rooted in transparency. c) requiring suppliers to comply with established standards for safe working conditions, fair treatment of workers and environmentally safe manufacturing. d) designing and developing its own operating systems, hardware, application software and services. continuously investing in R&D and frequently introducing products.

c) requiring suppliers to comply with establishing standards for safe working conditions, fair treatment of workers and environmentally safe manufacturing.

Strategic objectives normally would not include? a) Introducing five new products over the next 10 years. b) Reducing product development time by one third to half the current rate of 24 months. c) Improving teamwork across business units by doubling the number of intracompany projects. d) Boosting internal cash flows by 7 percent to fund new research and development activities. e) Improving security and stability of information technology capabilities to prevent breaches and outages.

d) Boosting internal cash flows by 7 percent to fund new research and development activities.

How do product innovations affect the pattern of competition within an industry? a) The industry tends to grow less rapidly. b) Companies are forced to revise their vision statements. c) Products from various companies tend to become more alike. d) More first-time buyers become interested in the products.

d) More first-time buyers become interested in the products.

Strategy, at its essence, is about a) matching rival businesses' products and quality dimensions in the marketplace. b) building profits for short-term success. c) realigning the market to provoke change in rival companies. d) developing lasting success that can support growth and secure the company's future over the long term. e) re-creating a business model with regularity.

d) developing lasting success that can support growth and secure the company's future over the long term.

The key for a company to achieve competitive advantage is either to provide superior value to customers or to deliver value more a) forcefully. b) subtly. c) collaboratively. d) efficiently.

d) efficiently.

Financial objectives generally are not concerned with a) receiving a bond rating of AA or higher. b) achieving a return on equity greater than 10 percent. c) increasing revenues at a pace greater than the rate of inflation. d) raising earnings per share by 2 percent. e) achieving a market share of 9 percent.

e) achieving a market share of 9 percent.

The profit ___________ is the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.

profit formula

What are three of the most reliable ways a company can distinguish itself in the marketplace, build customer loyalty, and achieve a competitive advantage? (Select all that apply.) a) Low-cost provider strategy b) Broad imitation strategy c) Focused low-cost strategy d) Broad differentiation strategy

a) Low-cost provider strategy c) Focused low-cost strategy d) Broad differentiation strategy

Every strategy needs a) a distinctive element that attracts customers and produces a competitive edge. b) to include similar characteristics to rival company strategies. c) to pursue conservative growth built on historical strengths. d) to employ diverse and sundry operating practices for producing greater control over sales growth targets. e) to mimic the plans of the industry's most successful companies.

a) a distinctive element that attracts customers and produces a competitive edge.

It is incorrect to say that a company's strategy evolves due to a) a need to promote stability and retain the status quo. b) the need to abandon some strategy elements that are no longer working well. c) a need to respond to changing customer requirements and expectations. d) a need to react to fresh strategic maneuvers on the part of rival firms. e) the proactive efforts of company managers to improve obsolete aspects of the strategy.

a) a need to promote stability and retain the status quo.

What performance indicators reveal the most about the merits of a company's strategy? a) competitive strength and market standing b) profitability and financial strength c) resources and capabilities d) short-term competitive advantage

a) competitive strength and market standing b) profitability and financial strength

What are the obligations of a company's board of directors? a) ensuring that the company's financial reports are accurate b) determining who should be promoted to managerial positions from within the company c) evaluating the company's direction and strategy d) evaluating the strategic leadership abilities of the CEO

a) ensuring that the company's financial reports are accurate c) evaluating the company's direction and strategy d) evaluating the strategic leadership abilities of the CEO

A well-designed strategic vision is important to an organization because it a) helps top executives clarify their sense of direction. b) helps managers coordinate efforts toward common goals. c) motivates personnel at all levels to help achieve the vision. d) lists specific objectives and ways to evaluate the organization's performance.

a) helps top executives clarify their sense of direction. b) helps managers coordinate efforts toward common goals. c) motivates personnel at all levels to help achieve the vision.

Anheuser-Busch has partially ______ into metal-can manufacturing to gain bargaining power over manufacturers. a) switched brands b) integrated backward c) standardized differentiation d) slotted fees

a) integrated backwards

Which circumstances commonly require the modification of a company's strategy? a) new market opportunities b) meeting financial targets c) a shift in buyer needs d) technological advances

a) new market opportunities c) a shift in buyer needs d) technological advances

What will a typical strategic plan accomplish? a) Allocate resources that will help implement the plan. b) Establish a time period for accomplishing goals. c) Explore the history of the company in some detail. d) Be written in vague, broad language to allow managers to adapt it as needed.

a) Allocate resources that will help implement the plan. b) Establish a time period for accomplishing goals.

Which three companies have broad differentiation strategies that have allowed them to maintain long-term competitive advantages? a) BMW b) Johnson & Johnson c) Apple d) Walmart

a) BMW b) Johnson & Johnson c) Apple

Which one of the five generic competitive strategies discussed in Chapter 1 most closely approximates the competitive approach Apple Inc. is employing? a) broad differentiation b) low-cost provider c) best-cost provider d) focused low-cost provider e) focused differentiation

a) broad differentiation

Management's strategic vision for an organization a) charts a strategic course for the organization ("where we are going") and provides a rationale for why this directional path makes good sense. b) describes in fairly specific terms the organization's strategic objectives, and strategy. c) spells out how the company will become a big moneymaker and boost shareholder value. d) addresses the critical issue of "why our business model needs to change and how we plan to change it." e) spells out the organization's strategic intent and the actions and moves that will be undertaken to achieve it.

a) charts a strategic course for the organization ("where we are going") and provides a rationale for why this directional path makes good sense.

Which actions are often helpful for a company when it adopts a value statement? a) combining its values, vision, and mission in one document b) distributing an early draft of the document to clients so that they can give feedback c) mimicking the values of its most formidable competitor d) posting the finished values statement on the company's website

a) combining its values, vision, and mission in one document d) posting the finished values statement on the company's website

A typical company's strategy is often both ______, meaning that it plans ways to improve the company's competitiveness, and ______, meaning that it responds to unforeseen market conditions. a) proactive; reactive b) reactive; deliberate c) emergent; proactive d) reactive; proactive

a) proactive; reactive

Financial objectives are important for achieving a) shareholder satisfaction. b) dominance of the market. c) financial strength. d) profits.

a) shareholder satisfaction. c) financial strength. d) profits.

The general profit formula for fast-food restaurants as invented by McDonald's involves which of the following? a) standardized store design b) advertising and in-store promotions c) strict specifications for ingredients d) commitment to corporate responsibility

a) standardized store design b) advertising and in-store promotions c) strict specifications for ingredients

In the past, Microsoft has used its dominant market status in which of the following ways? a) to charge PC makers premium prices b) to pressure PC makers to load only Microsoft products c) to encourage industry competition by reducing barriers to entry d) to create and organize dominant labor unions

a) to charge PC makers premium prices b) to pressure PC makers to load only Microsoft products

A business strategy becomes unethical when it involves what elements? a) unreasonable damage to the environment b) deceitfulness c) disreputable behavior d) unusual competitive advantage

a) unreasonable damage to the environment b) deceitfulness c) disreputable behavior

Which circumstances would increase the bargaining power of buyers? a) when the cost for buyers to switch brands is low b) when industry goods are not standardized c) when the differentiation of industry goods is strong d) when buyers pose a threat of forward integration e) when buyers are comparatively large and few

a) when the cost for buying to switch brands is low e) when buyers are comparatively large and few

Apple's strategy has proven successful, largely due to a) competing head-on in the existing technology market. b) Apple's ability 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. c) being an early mover in essentially creating a distinctive new market segment and using a differentiation strategy to build demand for its brand. d) keeping prices competitive with rivals. e) limiting store growth to maintain the "exclusivity" of the brand image.

b) Apple's ability 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.

What aspect of a company's operations is usually the easiest thing for competitors to duplicate? a) The company's experience b) Attributes of the company's products or services c) Expertise of the company's personnel d) Specialized capabilities that the company has developed

b) Attributes of the company's products or services

What are two basic approaches in company strategy to improve chances of success in competing against rivals? a) Soften ethical guidelines. b) Clearly differentiate a company from its rivals. c) Always aim for a low-cost strategy. d) Establish a position in an uncrowded market.

b) Clearly differentiate a company from its rivals. d) Establish a position in an uncrowded market.

A luxury bathtub manufacturer offered scented bubble bath foams and massage coupons as a gimmick when its bathtubs did not sell. The bubble foam became famous among some women and led to a line of exclusive bath products for women. The manufacturer established shops in various regional locations and hired celebrities to market its products to enhance sales. Now its products are sold through retail outlets and online sites throughout the world. Which of the following is accurate? a) Offering scented bubble bath foams and massage coupons was an emergent strategy. b) Creating a subbrand that offered exclusive bath products for women was an emergent strategy. c) Establishing shops in regional locations was an emergent strategy. d) Hiring celebrities to market its products was an emergent strategy. e) Creating a worldwide presence through retail outlets and online sites was an emergent strategy.

b) Creating a subbrand that offered exclusive bath products for women was an emergent strategy.

What are the two basic ways that companies achieve competitive advantage over their business rivals? a) Design more effective advertisements. b) Deliver higher perceived value to customers. c) Produce products or services at a lower cost. d) Appeal to a larger target market.

b) Deliver higher perceived value to customers. c) Produce products or services at a lower cost.

Components of a fit test, used to evaluate how well a company's strategy matches its situation, include which of the following? a) Aesthetic fit b) External fit c) Internal fit d) Dynamic fit

b) External fit c) Internal fit d) Dynamic fit

Which performance indicators are signs of a winning strategy? a) Growing number of employees b) Increased market share c) Above-average financial performance d) Gains in competitive position

b) Increased market share c) Above-average financial performance d) Gains in competitive position

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? a) The U.S. government b) The Internet c) Tax policy d) The European Union e) The Federal Reserve

b) The Internet

Which of the following are not likely to happen if a company's financial objectives are met or exceeded? a) The company's creditors will be pleased. b) The company will go into bankruptcy. c) Revenues will decrease. d) Senior executives will be fired.

b) The company will go into bankruptcy. c) Revenues will decrease. d) Senior executives will be fired.

Why do some companies state their core values but make little effort to ensure that individual personnel and the company in general will abide by them? a) The top management of the company strongly believes in its stated values. b) The statement about values serves only to make the company look good. c) In most states it is illegal to require employees to demonstrate good character on the job. d) Core values seldom help a company achieve its purposes.

b) The statement about values serves only to make the company look good.

Corporate governance failures at Volkswagen included all of the following except a) a unique ownership structure where a single family, Porsche, controlled more than 50 percent of voting shares. b) a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions. c) inadequate monitoring of the CEO and other senior executives. d) elevating management to the supervisory board even though they had presided over past scandals. e) unwillingness of the board of directors to accept any responsibility for the allowing use of "defeat devices" on at least 11 million vehicles with diesel engines.

b) a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions.

A company achieves sustainable competitive advantage when a) it has a profitable business model. b) a sufficiently large number of buyers have a lasting preference for its products or services as compared to the offerings of competitors. c) it is able to maximize shareholder wealth. d) it is consistently able to achieve both its strategic and financial objectives. e) its strategy and its business model are well matched and in sync.

b) a sufficiently large number of buyers have a lasting preference for its products or services as compared to the offerings of competitors.

Management's blueprint for how and why the company's business approaches will generate revenues sufficient to cover costs and produce attractive profits and returns on investment a) best describes what is meant by a company's strategy. b) best describes what is meant by a company's business model. c) accounts for why a company's financial objectives are at the stated level. d) portrays the essence of a company's business purpose or mission. e) is what is meant by the term strategic intent.

b) best describes what is meant by a company's business model.

A sound company strategy is essentially about ______ in comparison to company rivals. a) carrying less debt b) competing differently c) being faster to market d) having a better trained workforce

b) completely different

The primary difference between a company's mission statement and the company's strategic vision is that a) mission statement explains why it is essential to make a profit, whereas the strategic vision explains how the company will be a moneymaker. b) mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why." c) mission statement deals with how to please customers, whereas a strategic vision deals with how to please shareholders. d) mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there?" e) mission statement addresses "how we are trying to make a profit today," while a strategic vision concerns "how will we make money in the markets of tomorrow?"

b) mission statement typically concerns a company's present business scope and purpose, whereas a strategic vision sets forth "where we are going and why."

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

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

An engaging and convincing strategic vision a) ought to put "who we are and what we are doing" in writing rather than orally so as to leave no room for company personnel to misinterpret what the strategic vision really is. b) should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. c) tends to be more effective when top management avoids trying to capture the essence of the strategic vision in a catchy slogan. d) is most efficiently and effectively done by posting the strategic vision prominently on the company's website and encouraging employees to read it. e) should be explained after the company's strategic intent, strategy, and business model have been conveyed to company personnel.

b) should be done in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction.

What is the role of a company's board of directors? a) to develop and execute the company strategy b) to oversee top executives and ensure that they craft and implement an effective strategy c) to ensure that the company is operating in the best interests of shareholders and other stakeholders d) to direct all employees and managers on a day-to-day basis to ensure that everyone is working diligently

b) to oversee top executives and ensure that they craft and implement an effective strategy c) to ensure that the company is operating in the best interests of shareholders and other stakeholders

To produce a value statement for a new company, management will typically a) begin with a standard list of values that are important to every company. b) write an initial draft and have employees read it. c) ask employees to write down their own values and then vote for the values to use for the company. d) consider feedback from employees.

b) write an initial draft and have employees read it. d) consider feedback from employees.

Which mission statement is written in the most effective manner? a) "to inspire flights of fancy and be there whenever our customers need us" b) "to help people achieve their dreams" c) "to provide nutritious food at an affordable price, served with a smile" d) "to make a profit every quarter of every year"

c) "to provide nutritious food at an affordable price, served with a smile"

What are two characteristics of a broad differentiation strategy? a) Appealing to a niche market b) Offering products at the lowest possible prices c) Appealing to a wide range of consumers d) Offering products or services that are difficult to imitate

c) Appealing to a wide range of consumers d) Offering products or services that are difficult to imitate

The video explains the military origins of the term strategy, but then goes on to explain how Michael Porter closed the gap between military and business thinking with his definition of business strategy. Select the option that best defines strategy in the context of business. a) Generals make battle plans based upon the forces available to them and their understanding of the enemy's forces. Business leaders create strategies based upon their firm's capabilities and their understanding of their competitor's capabilities. b) Battle plans often need to be changed by field commanders due to shifting battlefield realities. Business strategies often have to adapt to changing competitive conditions. c) Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete. d) Generals are trying to win battles, against enemy combatants. Business leaders are trying to win market share against competitors. e) Generals can be so removed from the front lines that they lose touch with the common soldiers. Senior executives can be so insulated by the organization hierarchy that they don't understand the realities of the common worker.

c) Generals win wars by degrading the enemy's ability and willingness to fight. Businesses win market share by degrading a competitor's ability and willingness to compete.

The task of crafting a company's strategy would not normally be described as which of the following? a) In most companies, crafting strategy is a team effort, involving managers and often key employees at many organization levels. b) Ultimate responsibility for leading the strategy-making task rests with the chief executive officer. c) The task of crafting strategy is best done by a company's chief strategic planning officer, who should report directly to the company's CEO and board of directors. d) It is the responsibility and duty of a company's board of directors to ensure that new strategy proposals can be defended as superior to alternatives and, ultimately, to approve or disapprove of the strategy formulated and proposed by the company's management. e_ In most of today's companies, every company manager has a strategy-making role, ranging from major to minor, for his or her area of responsibility.

c) The task of crafting strategy is best done by a company's chief strategic planning officer, who should report directly to the company's CEO and board of directors.

The payoffs of having a strategic vision that describes management's aspirations for the company's future and the course and direction charted to achieve those aspirations are not typically connected with a) reducing the risks of rudderless decision making. b) helping the organization prepare for the future. c) avoiding strategic inflection points and management's reaction in aligning decision choices. d) helping to crystallize top management's own view about the firm's long-term direction. e) providing a tool for winning the support of organizational members for internal changes that will help make the vision a reality.

c) avoiding strategic inflection points and management's reaction in aligning decision choices.

When a business is more successful than its rivals at attracting customers and handling competition, it is said to have a(n) ______ advantage. a) long-term b) marketing c) competitive d) organizational

c) competitive

Crafting a deliberate strategy involves developing strategy elements that a)imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. b) comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan period; big changes in strategy are thus made only once every five years. c) consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods. d) deliberately eliminate the ongoing strategic elements and implement new planned initiatives. e) consist of adaptive change plans to new market situations along with abandoned redundant ongoing elements.

c) consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods.

Among the principal managerial tasks associated with managing the strategy execution process, strategic managers would be most unlikely to a) ensure that policies and procedures facilitate rather than impede effective execution b) create a company culture and work climate conducive to successful strategy implementation and execution c) survey employees for their opinions about how to implement strategies for cost reductions and improvements in employee morale and job satisfaction d) exert the internal leadership needed to drive implementation forward and keep improving on how the strategy is being executed e) motivate people and link rewards and incentives directly to the achievement of performance objectives and good strategy execution

c) survey employees for their opinions about how to implement strategies for cost reductions and improvements in employee morale and job satisfaction

Which of the following are examples of regulated industries that require government-controlled entry? a) software development b) fashion retailing c) telecommunications d) liquor retailing e) railroads

c) telecommunications d) liquor retailing e) railroads

What is the purpose of a company's strategic vision? a) to predict what the market will look like in future decades b) to produce a catalog of all the company's products c) to steer the company toward long-term growth and profits d) to expand the company's operations as broadly as possible

c) to steer the company toward long-term growth and profits

Which of the following tend to reduce competitive activity among sellers? a) when rivals are of comparable size b) having many competitors in a market c) when there are few competitors in a market d) fear of retaliation

c) when there are few competitors in a market d) fear of retaliation

Which of the following is most accurate regarding Apple's ability to maintain a sustainable competitive advantage in the desktop and laptop computer, smartphone, and entertainment technology industry? a) Competitors would find it relatively easy to imitate Apple's strategy and take substantial market share from it. b) Apple must lower its prices dramatically if it is to effectively compete against lower-priced rivals in the long term. c) Apple's strategy is virtually impossible to imitate and it's highly unlikely that any competitors could grab market share away from it. d) Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for. e) Apple's customer value proposition and profit formula do not allow it to maintain a sustainable competitive advantage long term.

d) Apple can maintain a sustainable competitive advantage to the extent that it can continue offering a differentiated product and customer experience that customers are willing to pay for

Consider the following five companies and their situations.• Company A is an established online fantasy sports gaming company that has been accused of game-rigging, bribes and kickbacks.• Company B, a ride share company, has delayed its planned initial public offering due to reports of having an inhospitable workplace characterized by sexual harassment and discrimination.• Company C, a pharmaceutical manufacturer, charges higher prices for life-saving drugs in some countries than it charges in others.• Company D, a manufacturer and marketer of high-end consumer electronics, has a strict Code of Conduct that requires its suppliers to comply with several standards regarding safe working conditions, fair treatment of workers, and environmentally safe manufacturing.• Company E, a pizza delivery business, is a being boycotted by customers and losing sponsored tie-ins with professional sports due to racist comments by its founder and CEO.Which of the above companies is distinguished by an ethical strategy as opposed to an unethical or flawed strategy? a) Company A b) Company B c) Company C d) Company D e) Company E

d) Company D

Which statement about the connection between good strategy and good execution is true? a) The marker of good management is a solid strategy that focuses on customer value above all else. b) As long as a company has a strong strategy, successful execution is a sure thing. c) A company can enjoy long-term success with a weak strategy if the execution is strong and aggressive. d) Good management consists of good strategy and good strategy execution.

d) Good management consists of good strategy and good strategy execution.

A company's strategic vision concerns a) management's storyline of how it intends to make a profit with the chosen strategy "who we are and what we do." b) what future actions the enterprise will likely undertake to outmaneuver rivals and achieve a sustainable competitive advantage. c) "who we are and what we do." d) a company's directional path and future product-customer-market-technology focus. e) why the company does certain things in trying to please its customers.

d) a company's directional path and future product-customer-market-technology focus.

Amy's Drive-Thru, a fast food facility, offers healthy, sustainably grown veggie and vegan fast food at higher prices than its competitors in the market and has a drive-through and indoor seated casual dining operation. What strategy is Amy's Drive-Thru using to gain competitive advantage? a) a low-cost provider strategy b) a broad differentiation strategy c) a focused low-cost strategy d) a differentiation strategy e) a best-cost provider strategy

d) a differentiation strategy

A company that pursues and achieves strategic objectives a) is likely to weaken the achievement of its short-term and long-term financial objectives. b) believes that the company's financial performance is not as important as it really is. c) is generally not strongly focused on its true mission of making a profit. d) is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives. d) is likely to be a weak financial performer because diverting resources to the pursuit of strategic objectives takes away from the achievement of financial performance targets.

d) is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives.

What separates a powerful strategy from a run-of-the-mill or ineffective one? a) the ability of the strategy to keep the company profitable b) the proven ability of the strategy to generate maximum profits c) the speed with which it helps the company achieve its strategic vision d) management's ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals and produces sustainable competitive advantage e) whether it allows the company to maximize shareholder value in the shortest possible time.

d) management's ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals and produces sustainable competitive advantage

A company's strategy is a "work in progress" and evolves over time because of the a) importance of developing a fresh strategic plan every year that keeps employees from becoming bored with executing the same strategy year after year. b) ongoing need to imitate the new strategic moves of the industry leaders. c) need to make regular adjustments in the company's strategic vision. d) ongoing need of company managers to react and respond to changing market and competitive conditions. e) frequent need to modify key elements of the company's business model.

d) ongoing need of company managers to react and respond to changing market and competitive conditions.

The customer value proposition lays out the company's approach to a) meeting profitability guidelines without the risk of losing customers. b) operating efficiently given the current level of customers. c) embracing rival company approaches to gaining customers. d) satisfying customer wants and needs at a price that customers will consider a good value. e) assuring that the company makes enough profits based on its per-unit cost.

d) satisfying customer wants and needs at a price that customers will consider a good value.

The difference between a company's strategy and a company's business model is that a) a company's strategy is management's game plan for achieving strategic objectives while its business model is management's game plan for achieving financial objectives. b) the strategy concerns how to compete successfully and the business model concerns how to operate efficiently. c) a company's strategy is management's game plan for realizing the strategic vision, whereas a company's business model is the game plan for accomplishing its corporate responsibility goals. d) strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues flowing from the strategy are sufficient to cover costs and realize a profit. e) a company's strategy is solely concerned with how to please customers while its business model is solely concerned with how to please shareholders.

d) strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the revenues flowing from the strategy are sufficient to cover costs and realize a profit.

A superior example of a company vision that is short, specific, memorable, clearly articulated, and forward-looking is a) Hilton Hotel's vision "to fill the earth with light and the warmth of hospitality." b) Whole Foods' vision "to be a dynamic leader in the quality food business. We are a mission-driven company that aims to set the standards of excellence for food retailers. We are building a business in which high standards permeate all aspects of our company. Quality is a state of mind at Whole Foods Market." c) Keurig's vision "to become the world's leading personal beverage systems company." d) Nike's vision "to create products, services and experiences for today's athlete while solving problems for the next generation." e) Google's vision "to organize the world's information and make it universally accessible and useful."

e) Google's vision "to organize the world's information and make it universally accessible and useful."

Winning a sustainable competitive edge over competitors does not hinge on which of the following? a) having a distinctive competitive product offering b) building competitively valuable expertise and capabilities not readily matched, and offering distinctive products c) building experience, know-how, and specialized capabilities that have been perfected over a long period of time d) having hard-to-beat capabilities and impressive product innovation e) building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

e) building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

The heart and soul of a company's strategy-making effort is determining how to a) become the industry's low-cost provider. b) maximize profits and shareholder value. c) improve the efficiency of its business model. d) maximize profits while simultaneously operating in a socially responsible manner that keeps the company's prices as low as possible. e) come up with moves and actions that produce a durable competitive edge over rivals.

e) come up with moves and actions that produce a durable competitive edge over rivals.

Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to a) determine whether the company has a balanced scorecard for judging its performance. b) stay on track in achieving the company's mission and strategic vision. c) keep the company's board of directors well-informed about the company's future outlook. d) determine whether the company's business model is well-matched to changing market and competitive circumstances. e) decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods.

e) decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods.

Strategic objectives for lululemon inc. do not include a) exploring new concepts such as stores that are tailored to each community. b) continuing to expand the brand globally through international expansion. c) increasing total comparable sales, which includes comparable store sales and direct to consumer. d) building a robust digital ecosystem with key investments in customer relationship management, analytics, and capabilities to elevate guest experience across all touch points. e) improving employee job satisfaction.

e) improving employee job satisfaction.

Adopting a set of "stretch" financial and stretch strategic objectives a) pushes the company to strive for lesser but adequate profitability levels, because the stretch objectives are considered unattainable. b) is a widely held method for creating a "scorecard" for monitoring company performance. c) helps convert the mission statement into meaningful company values. d) challenges company personnel to execute the strategy with greater enthusiasm, proficiency, and understanding. e) is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.

e) is an effective tool for pushing the company to perform at its full potential and deliver the best possible results.

For most modern, highly diversified, global corporations, the CEO's role in strategy-making normally does not involve a) being held accountable for the results the strategy produces, whether good or bad. b) acting as captain of the ship, carrying the mantles of chief direction setter, chief objective setter, chief strategy maker, and chief strategy implementer for the total enterprise. c) involving as many company personnel as possible in the strategy-making process. d) functioning as chief architect of the strategy, personally deciding what the key elements of the company's strategy will be. e) knowing enough about the situation in every organizational unit to direct every strategic move made in a company's worldwide organization.

e) knowing enough about the situation in every organizational unit to direct every strategic move made in a company's worldwide organization.

To improve performance, there are many different avenues for outcompeting rivals such as a) realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growth. b) creating products analogous with competitors so as to be competitive in the same markets. c) pursuing similar personalized customer service or quality dimensions as rivals. d) being undecided whether or not to concentrate operations on local versus global markets. e) strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

e) strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

Every corporation should have a strong independent board of directors that does all of the following except a) remain well-informed about the company's performance and exercises its fiduciary duty to protect shareholders responsibly. b) guide management in choosing a strategic direction and makes independent judgments about the validity and wisdom of management's proposed strategic actions. c) evaluate the leadership skills of the CEO and other senior executives. d) retain sufficient courage to curb management actions deemed inappropriate or unduly risky. e) take responsibility for leading the strategy-making, strategy-executing process.

e) take responsibility for leading the strategy-making, strategy-executing process.