Quiz Reviews from Chapter 5,6,7,8,10

Which of the following is not one of the key benefits of employing an outsourcing strategy?

It can hollow out a firm's own capabilities and lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success. explained: The advantages of outsourcing include: (1) an activity can be performed better or more cheaply by outside specialists; (2) said activity is not crucial to the firm's ability to achieve sustainable competitive advantage and won't hollow out its capabilities, core competencies, or technical know-how; (3) it improves organizational flexibility and speeds time to market; (4) it reduces the company's risk exposure to changing technology and/or buyer preferences; and (5) it allows a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best.

Nikki, CEO of an aspiring multinational craft vodka company, is researching cross-country differences in demographic, cultural, and market conditions. She would not likely discover that

Latvia makes low-cost loans to U.S. vodka distillers to stimulate competition in its market. explained: Buyer tastes for a particular product or service sometimes differ substantially from country to country. As it is the primary manufacturing base to some of the world's largest vodka distillers, including Stolichnaya, the former Soviet republic of Latvia is unlikely to provide loans to U.S. rival entrants.

A good example of blue-ocean type of offensive strategy is

a company like Etsy that connected thoughtful consumers with artisans selling unique hand-crafted items. explained: Etsy is prominently mentioned in the chapter as an exemplar of using a blue-ocean strategy, one that seeks to gain a dramatic and durable competitive advantage by inventing a new industry or distinctive market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. All of the other companies mentioned have deployed offensive strategies of one kind or another, but none use a blue-ocean strategy.

Trader Joe's earns over $2,000 of annual sales per square foot—nearly double that of Whole Foods. By selling mainly private label goods under its own brand, Trader Joe's keeps its costs low, enabling it to offer lower prices. By being very selective about the particular products that it carries, it has also managed to ensure that its brand is associated with very high quality. What strategy is Trader Joe's using to gain competitive advantage?

best-cost provider strategy explained: they use a hybrid of focused differentiation strategy and focused low-cost strategy known as best-cost provider strategy

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. explained: Successful differentiation allows a firm to: (1) command a premium price, (2) increase unit sales (because additional buyers are won over by the differentiating features), and/or (3) gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products).

A cash cow type of business

generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash-hog businesses, funding share buyback programs, and/or paying dividends.

Leading the strategy execution process does not require -delegating authority to middle and lower-level managers and creating a sense of empowerment among employees to move the implementation process forward. -spending time with, listening to, and encouraging people in the organization to act on their own initiative. -gathering information firsthand and gauging the progress being made. -blocking input from field managers, relying upon second-hand reports regarding how well operations are going, and challenging the extent and direction of the company's progress. -holding periodic ceremonies to honor people who excel in displaying the company values and ethical principles.

holding periodic ceremonies to honor people who excel in displaying the company values and ethical principles.

The world's leading chemical company, BASF, can sometimes achieve a sizeable cost advantage over rivals via

improving supply chain efficiency.

A think-local, act-local multidomestic type of strategy

is more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and marketing methods.

A company's competitive strategy deals with

management's game plan for securing a competitive advantage relative to rivals. explained: specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular competitive advantage.

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. explained: When a company can incorporate appealing features, good-to-excellent product performance or quality, or more satisfying customer service into its product offering at a lower cost than rivals, then it enjoys "best-cost" status: it is the low-cost provider of a product or service with upscale attributes. A best-cost provider can use its low-cost advantage to underprice rivals whose products or services have similar upscale attributes and still earn attractive profits.

To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use the

the industry attractiveness test, the cost-of-entry test, and the better-off test. explained: The three tests for judging whether a particular diversification move can create value for shareholders are the industry attractiveness test, the cost-of-entry test, and the better-off test.

A low-cost provider strategy works well when:

(1) industry newcomers use low introductory price to attract buyers and build a customer base, (2) the products of rival sellers are essentially identical and/or are readily available from several sellers, (3) commodity-like products and/or ample supplies set the stage for lively price competition, and (4) buyers incur low costs in switching from one seller/brand to another. In such markets, it is the less-efficient, higher-cost companies that are most vulnerable. Changes in competitor power are not the impetus for a low-cost provider strategy.

Leyla and Sofia have been assigned a capstone strategy project to identify approaches to defend against the entry of multinational companies into Vietnam, considered an emerging market. What are two such strategic approaches?

Deploy (1) acquisition and (2) rapid-growth strategies to better defend against expansion-minded internationals. explained: Studies of local companies in developing markets have disclosed five strategies that have proved themselves in defending against globally competitive companies. Develop business models that exploit shortcomings in local distribution networks or infrastructure. Utilize keen understanding of local customer needs and preferences to create customized products or services. Take advantage of aspects of the local workforce with which large international companies may be unfamiliar. Use acquisition and rapid-growth strategies to better defend against expansion-minded internationals. Transfer company expertise to cross-border markets and initiate actions to contend on an international level.

Which of the following is not a typical option that companies have to consider in order to tailor their strategy to fit the circumstances of emerging country markets?

Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly.

Imagine you are the CEO of a regional ridesharing company that is considering diversification into grocery and meal delivery services. How would you determine whether or not your diversification strategy would be successful?

Diversification would result in enhanced shareholder value. explained: Crafting a diversified company's overall corporate strategy is aimed at creating enhanced shareholder value, that is, value that shareholders could not capture on their own by spreading their investments across the stocks of companies in different industries.

Which one of the following statements about a high-performance culture is false? -High-performance cultures are characterized by a pride in doing things right and a no-excuses sense of accountability. -High-performance cultures often have a low regard for high ethical standards, a strong preference for high-risk strategies, and a slow and methodical approach to responding to changes in the marketplace.Correct -The challenge in creating a high-performance culture is to inspire high loyalty and dedication on the part of employees, such that they are energized to do things right. -In a high-performance culture, there's a razor-sharp focus on what needs to be done. -In high-performance cultures, there's a strong sense of involvement on the part of company personnel and emphasis on individual initiative and creativity.

High-performance cultures often have a low regard for high ethical standards, a strong preference for high-risk strategies, and a slow and methodical approach to responding to changes in the marketplace.

Unlikely candidates for divestiture in Nike's corporate restructuring effort are

Nike's businesses that are still compatible with the company's revised diversification strategy.

Success with a best-cost provider strategy designed to outcompete high-end differentiators requires

achieving significantly lower costs in providing the upscale features.

Huawei has hired you to calculate its relative share of the global mobile phone market. How would you conduct this analysis?

by dividing Huawei's percentage share of total industry sales volume by the percentage share held by its largest rival

Whirlpool's capability to shift its production from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs is an example of

cross-border coordination. explained: An example of cross-border coordination is shifting production from a plant in one country to a plant in another to take advantage of exchange rate fluctuations and to respond to changing wage rates, energy costs, or changes in tariffs and quotas.

Essential state-of-the-art operating and information systems that support company strategies and value-creating internal processes include all of the following except -customer database systems. -information systems to track supplier/partner/collaborative ally data. -human resources systems that maintain employee data. -systems to record and report financial performance data. -data management systems for undertaking benchmarking, TQM, and Six Sigma quality control.

data management systems for undertaking benchmarking, TQM, and Six Sigma quality control.

Unrelated diversification makes sense only when doing so

delivers enhanced shareholder value if an undervalued company can be purchased at a bargain price.

To create value for shareholders via diversification, a company must

diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses. explained: Diversification cannot be considered a success unless it results in added shareholder value—value that shareholders cannot capture on their own by spreading their investments across the stocks of companies in different industries.

Companies that aspire to global market leadership need to prioritize competing in the markets where

economies are developing and living standards are climbing toward levels in the advanced industrialized world.

A competitive strategy to be the low-cost provider in an industry typically does not work well when

emergent strategies are required to respond to changes in competitor power.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

franchisees bear most of the costs and risks of establishing foreign locations, and the franchisor is required to expend only the resources to recruit, train, and support foreign franchisees. explained: Franchising has much the same advantages as licensing. The franchisee bears most of the costs and risks of establishing foreign locations, so a franchisor has to expend only the resources to recruit, train, support, and monitor franchisees.

Diversification merits strong consideration whenever a single-business company

faces diminishing market opportunities and stagnating sales in its principal business.

A hit-and-run or guerrilla warfare type offensive strategy

involves unexpected attacks (usually by a small to medium-sized competitor) to grab sales and market share from complacent or distracted rivals.

The generic types of competitive strategies include

low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider strategies.

The disadvantages of a centralized organizational structure include

making the organization sluggish in responding to changing conditions.

Launching a preemptive strike type of offensive strategy entails

moving first to secure an advantageous competitive asset that rivals can't readily match or duplicate.

Etsy promotes its ability to connect thoughtful consumers with artisans selling unique hand-crafted items online. Etsy's strategy is a good example of a(n)

offensive strategy to seek uncharted waters and compete in blue oceans.

A differentiation-based competitive advantage

often hinges on incorporating features that: (1) raise the performance of the product, (2) lower the buyer's overall costs of using the company's product, (3) enhance buyer satisfaction in intangible or noneconomic ways, or (4) deliver value to customers by exploiting competitive capabilities that rivals can't match.

A good example of backward vertical integration is a

producer of organic vegetables deciding to acquire a compost company.

A focused low-cost strategy seeks to achieve competitive advantage by

serving buyers in the target market niche at a lower cost and lower price than rivals.

One of the suggested advantages of an unrelated diversification strategy is that it

spreads the stockholders' risks across a group of truly diverse businesses. explained: The two main advantages of unrelated diversification are that it (1) spreads risks across completely different businesses and (2) builds shareholder value by corporate executives doing a superior job of selecting which businesses to diversify into and managing the whole collection of businesses in the conglomerate's portfolio.

Establishing a wholly-owned subsidiary in a foreign market to take advantage of all essential value chain activities requires a strategy that

supports direct control over all aspects of operating in a foreign market.

The two big drivers of outsourcing are

that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).

For a best-cost provider strategy to be successful, a company must have

the capability to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes. explained: This capability is contingent on: (1) a superior value chain configuration that eliminates or minimizes activities that do not add value, (2) unmatched efficiency in managing essential value chain activities, and (3) core competencies that allow differentiating attributes to be incorporated at a low cost.

The two biggest drawbacks or disadvantages of unrelated diversification are

the difficulties of competently managing a set of fundamentally different businesses and having a very limited competitive advantage potential that cross-business strategic fit provides. explained: The two major disadvantages of unrelated diversification are: (1) unrelated diversification requires that corporate executives rely on the skills and expertise of business-level managers to build competitive advantage and boost the performance of individual businesses and (2) without the competitive advantage potential of strategic-fit, consolidated performance of an unrelated group of businesses is unlikely to be better than the sum of what the individual business units could achieve independently in most instances.

Effective use of cost drivers to support Ikea's low-cost generic strategy involves

using lower-cost inputs wherever doing so will not entail too great a sacrifice in quality.

The process of making corrective adjustments in strategy execution

varies according to the situation.

First-mover advantages are unlikely to be present in which one of the following instances?

when rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products

Although there are many routes to competitive advantage, the two biggest factors that distinguish one competitive strategy from another are

whether a company's target market is broad or narrow and whether the company is pursuing a low cost or differentiation strategy.

When a company operates in the markets of two or more different countries, its foremost strategic decision is

whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries. explained: Deciding upon the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country is perhaps the foremost strategic issue that must be addressed when operating in two or more foreign markets. Figure 7.1 shows the three primary strategic options for competing internationally.

For a backward vertical integration strategy into the business of suppliers to be a viable and profitable, a company must possess

considerable expertise in supply chain management, transportation logistics, and inventory control techniques.

Jo and Lisa, parents of one of your classmates, are starting a business that will provide packing, cleaning, and hauling services to college students. You have been hired as a consultant to help them select from among five generic types of competitive strategy to pursue as their company enters the marketplace. What are the five generic types of competitive strategy?

low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider

An important consideration in designing a strategy-supportive motivation and reward system is to

make both monetary and nonmonetary rewards integral parts of the reward system. explained: The more a manager understands what motivates subordinates and is able to use appropriate motivational incentives, both monetary and nonmonetary, the greater will be employees' commitment to good day-in, day-out strategy execution and achievement of performance targets.

The strategic and financial options for allocating a diversified company's financial resources do not include

making acquisitions to establish positions in new businesses or to complement existing businesses.

Which of the following is not a potential advantage of backward vertical integration? the increase in a company's differentiation capabilities and the possibility of a differentiation-based competitive advantage reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity) reduced costs reduced risks of disruptions in obtaining crucial components or support services reduced business risk because of controlling a bigger portion of the overall industry value chain

reduced business risk because of controlling a bigger portion of the overall industry value chain explained: Backward vertical integration can produce a differentiation-based competitive advantage when performing activities internally contributes to a better-quality product or service offering, improves the caliber of customer service, or in other ways enhances the performance of the final product. On occasion, integrating into more stages along the industry value chain system can add to a company's differentiation capabilities by allowing it to strengthen its core competencies, better master key skills or strategy-critical technologies, or add features that deliver greater customer value.

What does the scope of the firm refer to?

the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses

An ambidextrous organization

(1) pursues continuous improvement in operating processes and (2) allows R&D to operate under a set of rules that permit exploration and the development of breakthrough innovations.

Mergers and acquisitions

all too frequently do not produce the hoped-for outcomes.

examples of forward vertical integration

-maker of prescription pharmaceuticals acquiring a chain of drugstores. -consumer products manufacturer acquiring a supermarket chain. -crude oil refiner purchasing gas stations. -footwear manufacturer developing own-branded retail stores.

What does a successful strategy execution require?

A team effort is required, with all managers having strategy-executing responsibility in their areas of authority, and all employees should be active participants in the strategy execution process.

You have been hired as a strategic planning consultant to Acre Pizza, a regional chain of outdoor dining pizza restaurants that is deciding whether or not to outsource home deliveries to third parties such as Grubhub, DoorDash, or UberEats. What would be the major drawback of outsourcing this value chain activity?

Acre Pizza farms out the wrong types of activities, loses direct control over deliveries, and thereby hollows out its own capabilities. explained: The major drawback of outsourcing for Acre Pizza is that the company will farm out the wrong types of activities and thereby hollow out its own capabilities. Another risk of outsourcing comes from the lack of direct control. It may be difficult to monitor, control, and coordinate the activities of outside parties via contracts and arm's-length transactions alone. Vertical integration can result in less flexibility in accommodating shifting buyer preferences.

Your classmate, Ming-Chi, is considering strategies for Chinese market entry by her Napa-based luxury wine company, and she has asked you for advice. What would you be least likely to advise Ming-Chi to do?

Add new wine production capacity in China even if doing so might adversely impact the supply-demand balance in the local market.

Aimée, owner of The Discerning Equestrian, a local apparel, tack, and equipment outlet, is facing growing competition from online retailers such as Equestrian.com. She has sought your student consulting team's advice about the staffing component in the managerial task of executing strategy. What would you not be likely to advise her to do? -Provide promising employees with challenging, interesting, and skill-stretching assignments. -Strive to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks. -Hire only people below the age of 35 who have college degrees and a grade point average of B or better.Correct -Coach average performers to improve their skills and capabilities, while weeding out underperformers. -Foster a stimulating and engaging work environment such that employees will consider the

Hire only people below the age of 35 who have college degrees and a grade point average of B or better. explained: Tactics common among companies dedicated to staffing jobs with the best people they can find include: (1) putting forth considerable effort in screening and evaluating job applicants—selecting only those with suitable skill sets, energy, initiative, judgment, aptitudes for learning, and adaptability to the company's culture; (2) investing in training programs that continue throughout employees' careers; (3) providing promising employees with challenging, interesting, and skill-stretching assignments; (4) rotating people through jobs that span functional and geographic boundaries; (5) striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks; and (6) coaching average performers to improve their skills and capabilities, while weeding out underperformers and benchwarmers. So, all of the above choices except hiring only college graduates with high GPAs who are also below the age of 35, are logical and necessary ways of staffing with the best personnel.

Sam Yagan, CEO of Match.com, and other related social media businesses, is considering broadening his company's business scope, for example, by building positions in new related or unrelated mobile app businesses such as a new concept, ShopRunner, which would provide free two-day shipping and seamless checkout at leading online retailers. You would advise Mr. Yagan to pursue this diversification strategy for all of the following reasons EXCEPT?

Match.com has enough cash-hog businesses to supply capital to its cash cow businesses

Which of the following practices most exemplifies good strategy execution? -The policy document of Little Caesar's Pizza discusses strategy but not the routines for running the outlets. -The policy document of Domino's Pizza ensures consistency in service behavior patterns across outlets.Correct -The policy document of Pizza Hut allows for differences in product range and quality across outlets. -The policy document of RoundTable Pizza is adverse to standardization of the way activities are performed. -The policy document of Boston Pizza leaves ample scope for each member of the staff to act independently.

The policy document of Domino's Pizza ensures consistency in service behavior patterns across outlets. explained: Good strategy execution nearly always entails an ability to replicate product quality and the caliber of customer service at every location where the company does business. Policies and procedures serve to standardize the way that activities are performed. This can be important for ensuring the quality and reliability of the strategy execution process. It helps align and coordinate the strategy execution efforts of individuals and groups throughout the organization. Domino's Pizza promotes the creation of a work climate that facilitates good strategy execution by ensuring consistency in service behavior patterns. Variance in product quality at Pizza Hut outlets goes against the norms of good strategy execution. Moreover, in case of good strategy execution, a company's policies and procedures provide a set of well-honed routines for running the company and executing the strategy. Therefore, the policy documents of Boston Pizza, RoundTable Pizza, and Little Caesar's Pizza are not in line with the norms of good strategy execution.

A cross-border alliance was not created when -Yum! Brands offered KFC franchises in China.Correct -Walmart and Rakuten Kobo Inc. partnered to enable Walmart to begin selling eBooks and audiobooks in the United States, and also establish a grocery delivery service in Japan. -Amazon Web Services partnered with Blackberry QNX, an Ottawa, Canada-based security software developer to an Intelligent Vehicle Data Platform named BlackBerry IVY. -Deutsch, a New York-based wine importer, and Casella, an Australian wine producer, developed and marketed the Yellowtail wine brand. -Walgreens in the United States partnered with the U.K. pharmaceutical giant AllianceBoots, which had a global footprint with 3,300 stores across 10 countries.

Yum! Brands offered KFC franchises in China.

The hallmarks of a high-performance corporate culture include

a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate in which people go the extra mile to meet or beat stretch objectives. explained: Some companies have so-called "high-performance" cultures in which the standout cultural traits are a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate in which people go the extra mile to meet or beat stretch objectives.

While other dating apps were already in existence, Tinder found success in pioneering the swiping phenomenon, thereby easing the process of finding love online and making the use of dating apps commonplace. This is an example of

a first-mover advantage. explained: Tinder pioneered the wiping phenomenon, thereby pursuing a first-mover strategy. There are five conditions in which first-mover advantages are most likely to arise: (1) when pioneering helps build a firm's reputation and creates strong brand loyalty; (2) when a first mover's customers will thereafter face significant switching costs; (3) when property rights protections thwart rapid imitation of the initial move; (4) when an early lead enables the first mover to move down the learning curve ahead of rivals; and (5) when a first mover can set the technical standard for the industry.

Unhealthy company cultures typically have such characteristics as

a politicized internal environment; hostility to change; an insular, inwardly focused culture; and unethical or greed-driven behavior on the part of executives.

When IBM created an independent division for information technology infrastructure services that designs, builds, manages and develops large-scale information systems and divested it in November 2021 by distributing to IBM's stockholders new shares in the new business, now known as Kyndryl Holdings, Inc., the strategic action was termed

a spin-off.

The basic premise of unrelated diversification is that

any company that can be acquired on good financial terms and has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity.

Economies of scope

are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation.

Proficient strategy execution requires executive managers to

be current with events and closely monitor progress, put constructive pressure on the organization for operating excellence, and initiate corrective action when necessary to improve performance and achieve desired results.

Which of the following is not a possible reason why Walgreens opted to expand into foreign markets via a partnership with and followed by the acquisition of Boots Alliance?

because the two companies had conflicting objectives and strategies, deep differences of opinion about how to proceed, and important differences in corporate values and ethical standards

Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less, or it's free!" By using this slogan, what has the pizza maker achieved?

built a unique customer value proposition

How do companies like FedEx, Siemens, and Walmart benefit from state-of-the-art operating systems, information systems, and real-time data?

by tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions

To use location to build competitive advantage when competing in both domestic and foreign markets, a company must

consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

You have been asked by your employer to explain the differences between cost drivers and uniqueness drivers. You would correctly say that

cost drivers are factors that have a strong effect on the cost of a company's value chain activities and ability to become a low-cost provider, whereas uniqueness drivers are value chain activities or factors that can have a strong impact on customer value and create differentiation.

Strategic fit along the value chains of related businesses can result in cost reductions due to

cross-business resource sharing. explained: Economies of scope stem directly from strategic fit along the value chains of related businesses, which in turn enables the businesses to share resources or to transfer them from business to business at low cost.

You have been asked to consult with Sonic.net, a regional Internet service provider, about the advisability of competing abroad. Your assessment of the opportunities for Sonic.net to craft a strategy to compete in one or more countries in the world would not necessarily

evaluate a multidomestic strategy that considers the world market as a mostly homogeneous market. explained: Crafting a strategy to compete in one or more countries of the world involves an evaluation that shows how: (1) different countries have different home-country advantages in different industries; (2) there are location-based advantages to conducting particular value chain activities in different parts of the world; (3) different political and economic conditions make the general business climate more favorable in some countries than in others; (4) companies face risks due to adverse shifts in currency exchange rates when operating in foreign markets; and (5) differences in buyer tastes and preferences present a challenge for companies concerning customizing versus standardizing their products and services.

In 2018, Suelin Chen and Mark Zheng cofounded Cake, a free social media app that catalogs users' end-of-life wishes, instructions, and documents such as obituaries. Cake, based in Boston, makes money through strategic partnerships primarily with health care providers and will eventually add fee-based premium services in global markets. Cake has decided to expand outside its U.S. home market via a strategic alliance in order to

gain access to resources and capabilities located in foreign markets. explained: A company may opt to expand outside its domestic market for any of five major reasons: (1) to gain access to new customers; (2) to achieve lower costs through economies of scale, experience, and increased purchasing power; (3) to gain access to low-cost inputs of production; (4) to further exploit its core competencies; and (5) to gain access to resources and capabilities located in foreign markets. Cross-border strategic alliances create value through resource sharing and risk spreading.

A company's biggest vulnerability in employing a best-cost provider strategy is

getting squeezed between firms employing low-cost provider strategies and those using high-end differentiation strategies. explained: A company's biggest vulnerability in employing a best-cost provider strategy is not having the requisite core competencies and efficiencies in managing value chain activities to support the addition of differentiating features without significantly increasing costs. A company with a modest degree of differentiation and no real cost advantage will most likely find itself squeezed between the firms using low-cost strategies and those using differentiation strategies.

Coordinating the work efforts of internal organization units is best accomplished by

having closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision. explained: Delegating authority to subordinate managers and rank-and-file employees encourages them to take responsibility and exercise initiative, but this can best be accomplished by having closely related activities report to a single executive who has the authority and organizational clout to coordinate, integrate, and arrange for the cooperation of units under their supervision It shortens organizational response times to market changes and spurs new ideas, creative thinking, innovation, and greater involvement on the part of all company personnel. In worker-empowered structures, jobs can be defined more broadly, several tasks can be integrated into a single job, and people can direct their own work.

Whirlpool's efforts to link its product R&D and manufacturing operations in North America, Latin America, Europe, and Asia did not enable the company to

impart technical knowledge to high-cost human resources in developing nations. explained: A company like Whirlpool may opt to expand its R&D activities outside its domestic markets to gain access to new customers; to achieve lower costs through economies of scale, experience, and increased purchasing power; and to further exploit its core competencies. Whirlpool's efforts to link its product R&D and manufacturing operations in North America, Latin America, Europe, and Asia allowed it to accelerate the discovery of innovative appliance features, coordinate the introduction of these features in the appliance products marketed in different countries, and create a cost-efficient worldwide supply chain. Whirlpool's conscious efforts to integrate and coordinate its various operations around the world have helped it achieve operational excellence and speed product innovations to market.

The competitive attraction of entering into strategic alliances and collaborative partnerships is

in allowing companies to bundle resources and competencies that are more valuable in a joint effort than when kept separate. explained: Among most common reasons companies enter into strategic alliances is to bundle the resources and competencies (such as personnel and expertise needed to create desirable new skill sets and capabilities) that are more valuable in a joint effort than when going it alone.

The competitive strategy of a firm pursuing a think-global, act-local approach to strategy-making

is essentially the same in all country markets where it competes, but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. explained: Transnational strategies (think global, act local) are approaches to accommodate cross-country variations in buyer tastes, local customs, and market conditions while also striving for the benefits of standardization. This middle-ground approach entails utilizing the same basic competitive theme (low-cost, differentiation, or focused) in each country but allows local managers the latitude to (1) incorporate whatever country-specific variations in product attributes are needed to best satisfy local buyers and (2) make whatever adjustments in production, distribution, and marketing are needed to respond to local market conditions and compete successfully against local rivals.

A well-designed reward system

is focused on "what to achieve" to be rewarded as opposed to "what to do" and is management's most powerful tool for gaining employee commitment to superior strategy execution.

The nine-cell industry attractiveness-competitive strength matrix

is useful for helping decide which businesses should have high, average, and low priorities in allocating corporate resources.

Toyota and Panasonic formed a strategic alliance known as Primearth EV Co. in order to develop new batteries with improved prismatic cells for pure electric cars. This alliance is known as a

joint venture. explained: A joint venture entails forming a new corporate entity that is jointly owned by two or more companies that agree to share in the revenues, expenses, and control of the newly formed entity.

A change in strategy nearly always entails budget reallocations because

organizational units important in the prior strategy but having a lesser role in the new strategy may need downsizing, while units and activities that now have a bigger and more critical strategic role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets.

Business process reengineering is a tool for

pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group.

Deloitte's successful execution of its talent management strategy does not involve

punishment for missed deadlines, misdirected or wasteful efforts, and managerial ineptness.

An outstanding corporate parent like Berkshire Hathaway is not likely to benefit its portfolio of businesses by

purchasing competitively weak businesses or businesses in unattractive industries.

Which of the following is not a factor surrounding the decision to enter into the markets of foreign countries? -market growth rates that vary from country to country -country-by-country differences in consumer tastes and buying habits -fluctuating exchange rates and country-by-country variations in host-government restrictions and requirements -product designs that may be suitable for one country but inappropriate for another -repatriation of foreign company assets by governments in countries outside of home market(s)Correct

repatriation of foreign company assets by governments in countries outside of home market(s)

The hallmarks of Tesla's vertical integration strategy do not include

research and development and rapid deployments of Tesla's control integration systems (creating control factors across its entire value chain).

Economies of scope differ from economies of scale in that

scope stems directly from strategic fit along the value chains of related businesses, while scale refers to cost savings that accrue directly from larger-sized operations.

Evan, the co-founder, owner, and CEO of a Filipino fusion restaurant and a growing fleet of food trucks selling similar cuisine, has asked you to help his company managers promote continuous improvement (operating excellence) in performing value-chain activities. Among the continuous improvement approaches, which would you be unlikely to recommend to Evan for this purpose? -an ambidextrous organization that provides incremental improvements in operating efficiency, while R&D and other processes that allow the company to develop new ways of offering value to customers are given freer rein -Six Sigma quality control techniques, entailing the use of advanced statistical methods to identify and remove the causes of defects (errors) and undesirable variability in performing an activity or business process -total quality management (TQM), an approach that emphasizes continuous improvement in all phases of operations, 100 p

strategic group mapping, an aid in examining what strategic groups exist, identifying the companies within each group, and determining if a competitive "white space" exists where industry competitors are able to create and capture new demand explained: Business process reengineering and other continuous improvement efforts such as variable reduction analyses, TQM, and Six Sigma aim at operating excellence in all value-chain activities, improved efficiency, better product quality, and greater customer satisfaction. A blended approach to Six Sigma implementation that is gaining in popularity pursues incremental improvements in operating efficiency, while R&D and other processes that allow the company to develop new ways of offering value to customers are given freer rein. Managers of these ambidextrous organizations are adept at employing continuous improvement in operating processes but allowing R&D to operate under a set of rules that allows for exploration and the development of breakthrough innovations. Strategic group mapping, an aid in examining what strategic groups exist, identifying the companies within each group, and so forth, is not an approach used by companies to foster continuous improvement.

What is not likely to guide Four Seasons Hotels' strategic approach to develop new properties in the Middle East and Southeast Asia? -combining local architectural and cultural experiences with globally consistent luxury service -identifying and contracting with a local capital partner who has an understanding of local custom and business relationships -hiring a local architect and design consultant for each new property -assessing the future growth potential of these emerging markets striving to create one uniform -customer experience globallyCorrect

striving to create one uniform customer experience globally

Throwback Brewery, a New Hampshire-based craft beer and hospitality business located on a 12-acre working farm, is considering a backward vertical integration strategy into supplying its own hops for brewing beer, as hops is one of the major cost components for brewing craft beer. For this action to be viable and profitable, Throwback Brewery must possess

the capability to achieve the same scale economies as outside suppliers of hops and also match or beat suppliers' production efficiency with no drop in quality. explained: Backward vertical integration works best in situations where: (1) suppliers have very large profit margins, (2) the item being supplied is a major cost component, and/or (3) the requisite technological skills are easily mastered or acquired. Backward integration has no payoff unless it produces sufficient cost savings to justify the extra investment, adds materially to a company's technological and competitive strengths, and/or helps differentiate the company's product offering.

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when

the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. explained: Any company that seeks competitive advantage by being a first mover thus needs to ask some hard questions. Does market takeoff depend on the development of complementary products or services that currently are not available? Is new infrastructure required before buyer demand can surge? Will buyers need to learn new skills or adopt new behaviors? Will buyers encounter high switching costs in moving to the newly introduced product or service? Are there influential competitors in a position to delay or derail the efforts of a first mover? When the answers to any of these questions are yes, then a company must be careful not to pour too many resources into getting ahead of the market opportunity—the race is likely going to be closer to a ten-year marathon rather than a two-year sprint.

The essential requirement for different businesses to be "related" is that

their value chains possess competitively valuable cross-business relationships. explained: Businesses are "related" when their value chains possess competitively valuable cross-business relationships.

Strategic alliances are more likely to be long-lasting when

they involve collaboration with suppliers or distribution allies or when both parties conclude that continued collaboration is in their mutual interests. explained: Alliances are more likely to be long-lasting when (1) they involve collaboration with partners that do not compete directly; (2) a trusting relationship has been established; and (3) both parties conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.

Adidas located its first robotic "speedfactory" in Germany to accomplish which objective?

to benefit from Germany's superior technological resources and allow greater oversight from company headquarters, also located in Germany

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

using its low-cost edge to underprice 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 higher profit margin on each unit sold. explained: A company has two options for translating a low-cost advantage over rivals into attractive profit performance. Option 1 is to use the lower-cost edge to underprice competitors and attract price-sensitive buyers in great enough numbers to increase total profits. Option 2 is to maintain the present price (refrain from price-cutting), be content with the present market share, and use the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising the firm's total profits and overall return on investment.

In which one of the following market circumstances is a broad differentiation strategy generally not well suited?

when buyers are homogeneous in their needs and preferences, and are generally satisfied with standardized product

In which of the following circumstances is a strategy to be the industry's overall low-cost provider not particularly well-matched to the market situation?

when buyers have widely varying needs and special requirements, and when the costs of switching purchases from one seller to another are relatively high