Strategic Management Chapter 6-10 Quizzes
Assessing the competitive advantage potential of cross-business strategic fit among the company's various business units involves: a) Examining a company's costs relative to the costs of its chief rivals in the industry. b) Evaluating how much benefit a diversified company can gain from cross-business value chain matchups and resource sharing. c) Considering what competitive value can be generated from a strategic fit. d) Determining if there are opportunities to exploit outsourcing opportunities by a diversified company's lineup of businesses.
a
Which of the following statements about matching organizational structure to strategy execution is not correct? a) Functional structures are common among companies pursuing some form of diversification strategy. b) Simple structures are best matched to small firms and entrepreneurial startups. c) The type of organizational structure that is most suitable for a given firm will depend on the firm's size and complexity, as well as its strategy. d) Matrix organizational structures are most suitable when there is a need for cross-unit communication, collaboration, and coordination.
a
Which of the following is not one of the principal offensive strategy options? a) Adopting and improving on the good ideas of other companies b) Launching preemptive strikes c) Blocking the avenues open to challengers d) Attacking competitors' weaknesses
c
Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries? a) Variations in market growth rates from country to country and important country-to-country differences in consumer buying habits and buyer tastes and preferences b) Country-to-country variations in host-government policies and trade requirements c) Product designs suitable for one country are sometimes inappropriate in another d) Vulnerability to adverse shifts in currency exchange rates e) A need to convince shippers to keep transportation costs low
e
Experience indicates that strategic alliances: a) Have a high "divorce rate." b) Are generally successful. c) Work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. d) Work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies.
a
Multinational competitors tend to concentrate activities in a limited number of locations when: a) Prices and competitive conditions are strongly linked across country markets to form a world market. b) There are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. c) The risk of fluctuating exchange rates is very high. d) Host-country governments can be persuaded to erect high tariff barriers to protect the company's operations from foreign competitors and it is not imperative to be responsive to buyer needs and competitive conditions in each country.
b
Which of the following is not a characteristic of a compensation and reward system designed to help drive successful strategy execution? a) Making the performance payoff a major, not minor, piece of the total compensation package. b) Keeping performance incentives and bonuses to less than 15 percent of total compensation. c) Not skirting the system to find ways to reward effort rather than results. d) Having incentives that extend to all managers and all workers, and generously rewarding people who turn in outstanding performances.
b
Six Sigma quality control: a) Is a tool that is superior to TQM in achieving top-notch quality in manufacturing a product. b) Consists of a disciplined, statistics-based system aimed at producing not more than 2.5 defects per million iterations. c) Is based on three principles: (1) all work is a process, (2) all processes have variability, and (3) all processes create data that explain variability. d) Is the best practice for managing manufacturing and assembly activities.
c
Ethical principles in business: a) Concern the behavioral guidelines a company's top management and board of directors set for company personnel regarding "what is right" and "what is wrong" in conducting the company's business. b) Deal chiefly with the actions and behaviors required to operate companies in a socially responsible manner. c) Are arrived at by picking and choosing among the consensus ethical standards of society to come up with a set of ethical standards that apply directly to operating a business. d) Are not materially different from ethical principles in general and have to be judged in the context of society's standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct.
d
Total quality management (TQM): a) Involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace. b) Is a philosophy of managing that involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace. c) Involves managing company operations in a manner calculated to quickly and efficiently make quantum gains in the quality and effectiveness with which production activities are performed. d) Is incompatible with the ambidextrous organization. e) Is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations, 100 percent accuracy in performing tasks, involvement and empowerment of employees at all levels, team-based work design, benchmarking, and total customer satisfaction.
e
Of the following examples of value chain activities, which is unlikely to be a primary building block in the company's organizational structure? a) In a discount stock brokerage, the critical value chain activities are fast access to information, accurate order execution, and good customer service. b) In apparel retailing, the critical value chain activities include apparel design, supply chain activities, marketing and advertising, and in-store customer service. c) In automobile manufacturing, the critical value chain activities include raw materials procurement, offshore sourcing, and customer service. d) In specialty chemicals, the critical value chain activities are R&D, product innovation, and getting new products on the market quickly.
c
Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? a) Picking the new industries to enter and deciding on the means of entry b) Initiating actions to boost the combined performance of the businesses the firm has entered c) Standardizing the resource fit across the group of businesses the company has diversified into d) Establishing investment priorities and steering corporate resources into the most attractive business units
c
Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? a) A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents. b) The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society's social responsibility expectations. c) Social responsibility strategies work to the advantage of shareholders. d) Socially responsible actions yield internal benefits (particularly for employee recruiting, workforce retention, and training costs) and can improve operational efficiency.
b
If one adopts the thinking of the school of ethical relativism, then: a) There are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another. b) There is a "one-size-fits-all" set of authentic ethical standards. c) The preferred set of ethical standards is the one that society at large has put in place in the form of laws and regulations. d) The prevailing ethical standards are the product of a system of "integrated social contracts."
a
Which of the following is an intangible or invisible cost that companies incur when ethical wrongdoing is disclosed? a) Legal and investigative costs incurred by the company b) Costs of taking corrective actions c) Sharp and sudden drops in the company's stock price d) Civil penalties arising from class-action lawsuits and other litigation aimed at punishing the company for its offense and the harm done to others e) Costs of complying with often harsher government regulations
e
Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is: a) total quality management. b) Business process reengineering. c) A properly designed reward structure. d) Making the company a great place to work in terms of pay scales, fringe benefits, and employee perks.
c
Which one of the following is not a good type of rival for an offensive-minded company to target? a) Market leaders that are vulnerable b) Runner-up firms with weaknesses in areas where the challenger is strong c) Small local and regional companies with limited capabilities d) Other offensive-minded companies with a sizable war chest of cash and marketable securities
d
Which of the following are not consequences of a company pursuing a strategy that has unethical or shady components? a) Devastating public relations hits b) Sharp drops in stock price c) Sizable government fines and penalties d) Criminal indictments and convictions of company executives e) Intangible costs such as legal and investigative costs incurred by the company
e
The advantages of using a franchising strategy to pursue opportunities in foreign markets include: a) Being particularly well-suited to the international expansion efforts of companies with global strategies. b) Having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. c) Helping build brand awareness in international markets. d) Being well suited to companies that employ cross-market subsidization.
b
Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical: a) Ultimately depend on a person's own values and beliefs. b) Ultimately depend on the circumstances; nothing is really black or white when it comes to ethical standards. c) Are governed mainly by religious views held in different geographic regions of the world. d) Are present in all societies, organizations, and individuals.
d
The procedure for evaluating a diversified company's strategy involves all of the following steps except: a) Checking whether the firm's resources fit the requirements of its present business lineup. b) Assessing the competitive strength of each business the company has diversified into and determining which ones are strong or weak contenders in their respective industries. c) Ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses. d) Checking the competitive advantage potential of cross-business strategic fit among the company's various business units. e) A determination of the degree of risk involved with each business unit.
e
Which of the following is not an advantage of utilizing a licensing strategy to participate in foreign markets? a) The ability to shift the costs and risks to the licensee b) The ability to generate income from royalties c) The ability to enter international markets even though the company lacks international organizational capabilities and the resources to do so d) The ability to avoid risks of committing resources to country markets that are unfamiliar or otherwise risky e) The ability to safeguard the company's technical know-how or patents
e
Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel: a) Are able to comply with the varying ethical standards of the world's different cultures. b) Have no fair way to judge the ethical correctness of the conduct of company personnel. c) Quickly find themselves on a slippery slope with no ethical standards or principles of their own. d) Have a uniform code of ethical standards that is applied globally.
c
Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of developing country markets? a) Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals. b) Prepare to compete on the basis of low price. c) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). d) Try to change the local market to better match the way the company does business elsewhere.
a
To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: a) The attractiveness test, the barrier-to-entry test, and the growth test. b) The strategic fit test, the resource fit test, and the profitability test. c) The barrier-to-entry test, the growth test, and the shareholder value test. d) The attractiveness test, the cost-of-entry test, and the better-off test.
d
First-mover advantages are unlikely to be present in which one of the following instances? a) When first-time customers remain strongly loyal to pioneering firms in making repeat purchases b) When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products c) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely d) When pioneering helps build a firm's image and reputation with buyers
b
Recruiting and retaining capable employees are: a) Usually much more important to good strategy execution than is assembling a capable top management team. b) Easily the most critical aspect in building competitively valuable core competencies and capabilities. c) More easily done by large multinational corporations because of their deep financial resources and stimulating job assignments. d) Largely a function of the skills and capabilities of the company's human resources staff. e) Important because the quality of an organization's people is always an essential ingredient of successful strategy execution—knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence.
e
Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies? a) Gain wider access to attractive country markets b) Gain better access to scale economies in production and/or marketing c) Fill competitively important gaps in their technical expertise and/or knowledge of local markets d) Better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization
d
Which of the following is not an important nonmonetary approach to enhancing motivation and helping drive successful strategy execution? a) Adopting promotion-from-within policies and acting on suggestions from employees b) Providing attractive perks and fringe benefits c) Creating a work atmosphere in which there is genuine sincerity, caring, and mutual respect among employees and management d) Providing rank-and-file employees with representation on the company's board of directors
d
When trying to change a problem culture, management should undertake such steps as: a) Selecting a team of rank-and-file employees to lead the culture change effort. b) Hosting company outings to help build camaraderie among employees and support for the culture change. drawing up an action plan to change the present c) Culture and then persuading company personnel why this plan of action is good and will be successful. d) Conducting an employee survey to determine the organization's cultural norms and what company personnel like and dislike about the current culture. e) Identifying which aspects of the present culture are supportive of good strategy execution and which ones are not.
e
Which of the following is not a potential advantage of backward vertical integration? a) Adds to a company's differentiation capabilities and perhaps achieves a differentiation-based competitive advantage b) Lessens a company's vulnerability to powerful suppliers inclined to raise prices at every opportunity c) Spares a company the uncertainty of being dependent on suppliers for crucial components or support services d) Offers enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality
d
Calculating quantitative attractiveness ratings for the industries a company has diversified into involves: a) Determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm's ability to compete successfully in each of its industries. b) Determining each industry's average profit margins, calculating how far the firm's profit margins are above or below the industry averages, and then using these values to draw conclusions about industry attractiveness. c) Rating the attractiveness of each industry's strategic and resource fit, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not. d) Selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.
d
Which of the following is one of the eight principal managerial components associated with the process of implementing and executing strategy? a) Allocating ample resources to strategy-critical activities. b) Shifting from decentralized to centralized decision making so as to give senior executives more authority and control in driving cultural change. c) Implementing a management development plan to groom future executives. d) Staffing solely with personnel below the age of 35 who have college degrees and a grade point average of 3.0 or better.
a
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? a) When potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover b) When pioneering helps build up a firm's image and reputation with buyers c) When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases d) When moving first can constitute a preemptive strike, making imitation extra hard or unlikely
a
Which of the following strategic business units generate operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends? a) Cash hogs b) Cash cows c) Star businesses d) Stars
b
Business ethics can be defined as: a) Applying general ethical principles and standards to the various stakeholders of businesses. b) Rules that each company makes about "what is right" and "what is wrong" for top management and the board of directors. c) The application of ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel. d) Special standards and codes of conduct that are only present in business situations.
c
Integrated social contracts theory maintains that: a) All ethical standards are determined by societal norms and individuals have an implied social contract to live up to these standards. b) "First-order" universal ethical norms always take precedence over "second-order" local ethical norms. c) There should be no absolute limits put on what is ethically or morally right. d) Few nations or cultures have common moral agreement on what is ethically right and wrong.
b
The hallmarks of a high-performance corporate culture include: a) A shared willingness to adapt core values and ethical standards to fit the changing requirements of an evolving strategy, use of a balanced scorecard approach to tracking company performance, and a gung-ho approach to discovering best practices. b) Considerable political infighting that typically consumes a great deal of organizational energy, often with the result that what is best for the company takes a backseat to political maneuvering. c) A "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat objectives. d) Charismatic managerial leadership, a lean management bureaucracy, and a must-be-invented-here mind set.
c
Companies committed to environmental sustainability: a) Make major contributions to local civic and charitable organizations. b) Consider the commitment to the environment as a "first-order" priority, commitment to employees as a "second-order" priority, and commitment to shareholders as a "third-order" commitment. c) Believe it is essential to strike a balance between shareholder interests and the interests of stakeholders such as suppliers, customers, employees, and the communities in which they operate. d) Develop and market only products that are environmentally friendly. e) Adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future.
e
Company strategies and value-creating processes cannot be effectively executed without internal operating systems that include: a) PCs, servers, web applications, and e-business solutions. b) TQM, reengineering, and Six Sigma programs. c) Customer data, employee data, supplier/partner data, operations data, and financial performance data. d) Benchmarking and best practices.
c
Checking a diversified company's business lineup for resource fit does not involve which one of the following "tests"? a) Determining whether a company has or can develop the specific resources and competitive capabilities needed to be successful in each of its businesses. b) Determining whether recently acquired businesses are acting to strengthen the company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thin. c) Determining whether each business adequately contributes to achieving companywide performance targets. d) Determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses.
d
A hit-and-run or guerrilla warfare type of offensive strategy involves: a) Random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals. b) Undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position. c) Tactics that work best if the guerrilla is the industry's low-cost leader. d) Pitting a small company's own competitive strengths head-on against the strengths of much larger rivals. e) Surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.
e
Economies of scope: a) Are derived from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. b) Have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. c) Stem from cost-saving strategic fits along the value chains of related businesses. d) Refer to the cost savings that flow from being able to combine the value chains of different businesses into a single value chain.
c
Using domestic plants as a production base for exporting goods to selected foreign country markets a) Is usually a superior approach to competing in international markets. b) Can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country. c) Can be an excellent initial strategy to pursue international sales. d) Is usually a weak strategy when competitors are pursuing licensing strategies.
c
According to the school of ethical universalism: a) What behaviors are "ethically right" and "ethically wrong" vary across religions, but the boundaries of what is ethical or not are universal within religions. b) Concepts of right and wrong universally apply to all business situations within a given country but can vary across countries or cultures. c) Ethical guidelines exist only when there is universal agreement as to what behaviors are "ethically right" and "ethically wrong"; anything not universally viewed as unethical is thus within the bounds of what is ethically permissible. d) All societies and countries have some definition of what is ethically permissible (in this sense, ethics are universal); however, the definitions of what is ethically permissible vary according to the prevailing religious doctrines in each country. e) Many of the same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.
e
The defining characteristic of related diversification (as opposed to unrelated diversification) is a) That the diversified businesses are utilizing similar competitive strategies. b) The presence of cross-business value chain relationships and strategic fits. c) That each business the company has diversified into has very similar core competencies and competitive capabilities. d) That the company has about the same number of cash cow businesses as it has cash hog businesses.
b
The thesis that because different societies and cultures have divergent values and standards of what is "ethically right" and "ethically wrong," it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores: a) Is the basis for the theory of ethical variation. b) Defines what is meant by "integrated social contracts theory." c) Characterizes the school of ethical relativism. d) Accounts for why there is no such thing as ethical standards for business enterprises.
c
Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is correct? a) Observing and following the lead of local competitors is the sole guarantee of success in developing markets. b) Building a market for the company's products can often turn into a long-term process that involves reeducation of consumers. c) Entering an emerging market should always involve a best-cost strategy. d) Standardized products are typically more successful in emerging country markets. e) Profitability always comes quickly to entrants into developing markets because of global branding.
b and e
Which one of the following statements explaining why merger and acquisition strategies typically fail is true? a) Merger and acquisition strategies typically fail due to the development of effective integration plans conducive to employee satisfaction. b) Merger and acquisition strategies typically fail due to the creation of management-employee programs intended to foster better communication. c) Merger and acquisition strategies typically fail due to a misinterpretation of the cultural differences, like employee disenchantment and low morale, because of differences in management styles and operating procedures, and due to unforeseen challenges in integrating operations. d) Mergers and acquisition strategies typically fail due to an execution of functional and integration activity, while sustaining and capitalizing on the combined sources of revenue.
c
Which one of the following falsely describes a centralized approach to decision making? a) Little discretionary authority is granted to frontline supervisors and rank-and-file employees. b) Hierarchical command-and-control structures speed an organization's responses to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision. c) Tight control by a few senior managers makes it easy to fix accountability when things do not go well. d) There is an assumption that front line personnel have neither the time nor the inclination to direct and properly control the work they are performing, and that they lack the knowledge and judgment to make wise decisions about how best to do their work.
b
Which of the following is a condition that does not necessarily give rise to unethical business strategies and behavior? a) Confusion over local ethical standards that conflict with those of the company. b) Faulty oversight that implicitly allows the overzealous pursuit of personal gain, wealth, and self-interest. c) An organizational culture that adheres to the philosophy of "the business of business is business, not ethics." d) A company mindset that puts profitability and business performance ahead of ethical behavior
a
The most long-lasting strategic alliances: a) Aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. b) Are those whose purpose is helping a company master a new technology. c) Are those formed to enable the partners to be consistent first movers or fast followers. d) Involve collaboration with suppliers or distribution allies, or conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.
d
Which of the following is not an example of a company pursuing a blue-ocean strategy? a) Starbucks in the coffee house industry b) FedEx in overnight package delivery c) Nordstrom in the retail industry d) Cirque de Soleil in the live entertainment industry
c
In order to use location to build competitive advantage when competing on domestic and international level, a company must: a) Transfer company expertise to cross-border markets and initiate actions to contend on an international level. b) Pursue blue-ocean opportunities both in the company's home country market and in global markets. c) Use acquisition and rapid-growth strategies to better defend against expansion-minded international rivals. d) Try to change the local market to better match the way the company does business elsewhere. e) consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations, and (2) determine in which countries it should locate particular activities.
e
The primary reasons that companies opt to expand into foreign markets are to: a) Boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions. b) Gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base. c) Grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances. d) Avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy.
b
Companies tend to concentrate their activities in a limited number of locations a) Where the costs of manufacturing or other activities are significantly higher. b) Where there are significant scale diseconomies. c) When there is a steep learning curve associated with performing an activity. d) When certain locations have inferior resources or allow for poorer coordination of related activities.
c
According to integrated social contracts theory, a) The views and principles of the school of ethical universalism are definitely wrong; the correct view is that ethics is a matter of personal responsibility, not a matter of management concern. b) The ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms. c) The standards of what is ethically permissible and what is not should be based on a code of ethical and moral conduct that each society/country/culture adopts and then enacts into law. d) The standards of what is ethically permissible should be determined by the terms of an "ethics contract" that each company employee signs as a condition of employment.
b
Among the purposes of defensive strategies are to a) Aggressively retaliate against rivals pursuing offensive strategies and prevent price wars. b) Restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals. c) Guard against adverse changes in the company's macro-environment and insulate the company from the impact of industry-driving forces. d) Strengthen a company's competitive advantage and reduce its exposure to business risk.
b
Companies striving for global market leadership pursue strategic alliances or collaborative partnerships with foreign companies in order to: a) Revamp the global industry value chain, raise needed financial capital from foreign banks, and wage price wars against foreign competitors. b) Exercise better control over efforts to revamp the global industry value chain and combat the bargaining power of foreign suppliers. c) Exercise better control over efforts to revamp the global industry value chain, insulate a company from the impact of the five competitive forces, and use the brand names of their partners to make sales to foreign buyers. d) Increase the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. e) Get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.
e
One of the biggest strategic challenges to competing in the international arena is: a) Whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers. b) Determining how many foreign firms to license to produce and distribute the company's products. c) Whether to pursue a global strategy or an international strategy. d) Whether to offer a product at a priced based on the median income of the population.
a
The defining characteristic of unrelated diversification (as opposed to related diversification) is: a) The presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit). b) That the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company's businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities). c) The presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit). d) That the company's businesses are in different industries.
b
A "think local, act local" multidomestic type of strategy a) Focuses on the same basic competitive approach (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. b) Always makes a company vulnerable to rivals employing "think global, act global" strategies. c) Protects a multinational firm against fluctuating exchange rates. d) Is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy.
a
A change in strategy nearly always entails budget reallocations because: a) New strategic initiatives can be costly or capital intensive. b) 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. c) The accompanying policy revisions and compensation incentives tend to require different levels of funding than before. d) Of corresponding changes in the company's organizational structure and budgetary requirements.
b
According to the triple bottom line, which of the following statements is not accurate? a) The three dimensions of performance are often referred to in terms of the "three pillars" of people, planet, and profit. b) The term "planet" refers to the company's overriding legal obligation to incorporate protection of the environment into its mission. c) The term "people" refers to various social initiatives such as charitable contributions, serving endeavors, and engaging in broader philanthropic initiatives. d) The term "profit" not only encompasses the profit earned for its shareholders but also the economic impact that the company has on society more generally.
b
Business process reengineering is a tool for: a) Remodeling and refreshing a strategy-critical core competence. b) Pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work. c) Reducing the size of a company's managerial bureaucracy. d) Boosting the quality of a company's product and the caliber of its customer service.
b
Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following? a) Broadening the firm's business scope by diversifying into additional businesses. b) Shifting from a multiple-country to a global strategy. c) Restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup. d) Sticking closely with the existing business lineup and pursuing the opportunities these businesses present.
b
Teresa is reconfiguring the structure, staffing, and reporting relationships within the IT department in her company. Which of the following organization-building actions is Teresa undertaking? a) Assembling a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution. b) Building an organization—consisting of the capabilities, people, and structure needed to execute the strategy successfully. c) Instilling a corporate culture for good strategy execution. d) Strengthening key resources for a strategy change.
b
The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to: a) Determine which business unit has the greatest number of resources, competencies, and competitive capabilities and which one has the least. b) Assess how strongly positioned each business unit is in its industry and the extent to which it already is or can become a strong market contender. c) Rank each business unit's strategic fit from highest to lowest. d) Rank each business unit's resource fit from highest to lowest.
b
Ranking a diversified company's businesses in terms of priority for resource allocation and new capital investment: a) Should be done chiefly on the basis of appealing industry attractiveness and resource fit and secondarily on the basis of competitive strength and strategic fit with other businesses. b) Entails arraying the various businesses from the biggest cash hog down to the biggest cash cow; big cash hogs get the highest priority for resource allocation and big cash cows get the lowest priority. c) Should be done principally on the basis of which businesses offer the best prospects (given their industry attractiveness and competitive strength) and have solid and appealing strategic fits and resource fits. d) Should be based chiefly on relative market share, recent profitability, and potential for achieving cash cow status.
c
The advantages of manufacturing goods in a particular country and exporting them to foreign markets a) Are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country. b) Are greatest when local consumers prefer products manufactured inside the country's borders. c) Are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold. d) Can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
c
The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on: a) The contribution it makes to improving labor productivity and reducing labor costs. b) The benefits of keeping the layers of management to a minimum. c) The thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact they need, they have to be centerpieces in the organizational scheme. d) The benefit of keeping the organization structure simple and easy for employees to understand.
c
Which of the following is not an example of unrelated diversification? a) Homebuilder acquiring a forest products company b) A manufacturer of golf shoes acquiring a retailer of fishing rods and lures c) A producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans) d) A steel producer acquiring a hardware store
c
Which of the following is typically the strategic impetus for forward vertical integration? a) To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers b) To make it easier to expand the company's product line c) To gain better access to end users and better market visibility d) To achieve greater control over advertising and in-store retail merchandising
c
A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when: a) Customer preferences vary significantly from country to country. b) It is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions. c) Plants need to be scattered across many countries to avoid high shipping costs. d) Country-to-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy.
d
Which of the following is the biggest strategic issue when competing in the markets of foreign countries? a) Determining whether to standardize or customize the company's offerings. b) Learning about the regulation processes and political and capital requirements of each country market. c) Selecting among global, transnational, or international entry strategies. d) Deciding which price strategy to follow.
a
The biggest drawback of relying heavily on alliances and cooperative strategies is: a) That partners will not divide profits from the alliance in an equitable manner. b) That strategic allies and partners frequently become rivals in the marketplace. c) Having to compromise the company's own priorities and strategies in reaching agreements with partners. d) Incurring excessive administrative expenses associated with engaging in collaborative efforts. e) Becoming dependent on other companies for essential expertise and capabilities.
e
The multidomestic strategy of "think local, act local" a) Is most appropriate when the need for local responsiveness is low. b) Avoids host country ownership requirements and import quotas. c) Facilitates the transfer of a company's capabilities, knowledge, and other resources across country borders. d) Is the only global market entry strategy conducive to building a single worldwide competitive advantage. e) Becomes more appealing when country-to-country differences in buyer tastes, cultural traditions, and market conditions vary significantly.
e
The theory of corporate social responsibility concerns: a) A company's duty to maximize shareholder value. b) The blending of shareholder interests and employee interests. c) A company's duty to establish socially acceptable core values and to have a strictly enforced code of ethical conduct. d) The responsibility that top management has for ensuring that the company's actions and decisions are in the best interest of society at large. e) The company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.
e
Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find, particularly if intellectual capital greatly aids good strategy execution? a) Providing promising employees with challenging, interesting, and skill-stretching assignments b) Striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks c) Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work. d) Coaching average performers to improve their skills and capabilities, while weeding out underperformers e) Hiring only people below the age of 35 who have college degrees and a grade point average of B or better
e
Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? a) Acting in a socially responsible manner is in the overall best interest of shareholders. b) Acting in a socially responsible manner can generate internal benefits (as concerns employee recruiting, workforce retention, training, and improved worker productivity). c) To the extent that a company's socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage. Acting in a socially responsible manner reduces the risk of reputation-damaging incidents. d) Every business has a moral duty to be a good corporate citizen.
e
A company's strategy needs to be ethical because: a) Of the potential for embarrassment to top management if the company's unethical behavior is publicly exposed. b) Unethical strategies are inconsistent with or weaken the corporate culture. c) Ethics watchdogs are sure to blow the whistle on the company's unethical behavior. d) Of the risks of prosecution by governmental authorities if an unethical strategy is disclosed. e) A strategy that is unethical not only damages the company's reputation, but it also can have costly consequences.
e
The Nine-Cell Industry Attractiveness-Competitive Strength Matrix: a) Is a valuable tool for ranking a company's different businesses from best to worst based on strategic fit. b) Shows which of a diversified company's businesses have a good or poor resource fit. c) Indicates which businesses have the highest or lowest economies of scale and which have the highest or lowest economies of scope. d) Involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business's location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.
d
The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that: a) A "think global, act local" approach involves charging much different prices in the various country markets where the company competes. b) A "think global, act local" approach involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused) in all country markets. c) A "think global, act local" approach involves considerably less adherence to utilizing the same capabilities, distribution channels, and marketing approaches worldwide. d) Local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.
d
Which of the following is not a typical reason that many alliances do not live up to expectations? a) Inability of partners to work well together b) Emergence of more attractive technological paths c) Changing conditions make the purpose of the alliance obsolete d) Disagreement over how to divide the added market share and profits gained from joint collaboration
d
Which of the following makes acquisition an attractive approach to diversifying into another industry? a) If it is not time-consuming and allows the firm to realize great profits and a sustainable competitive advantage b) Only if it is less expensive, less risky, and more effective than launching a new startup operation c) If it satisfies all three diversity tests (industry attractiveness test, cost-of-entry-test, better-off test) to grow shareholder value over the long term d) If it is quicker than trying to launch a brand-new operation, offers an effective way to hurtle entry barriers, and allows the acquirer to move directly to the task of building a strong position in the target industry
d
The strategic appeal of related diversification is that it: a) Allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities. b) Is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses). c) Involves diversifying into industries having the same kinds of key success factors. d) Is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses.
a
Which of the following help in changing an unhealthy or problematic company culture? a) Management needs to be quickly and aggressively striving to ingrain new behaviors and work practices that will enable first-rate strategy execution, which may take a longer period of time. b) Managers need to learn the weaknesses of their subordinates to begin the change process. c) The strategy has to be changed as rapidly as possible to regain harmony with cultural norms. d) Management needs to go on the offensive to reinterpret the culture and explain to company personnel why there really is a good overall cultural fit with the strategy.
a
Which of the following instances does not exemplify when a late-mover advantage arises? a) Property rights protections in the form of patents, copyrights, and trademarks prevent the ready imitation of initial moves. b) Rapid market evolution gives fast followers the opening to leapfrog a first mover's products with more attractive next-version products. c) Market uncertainties make it difficult to ascertain what will eventually succeed. d) Products of an innovator are simple, do not need a high customer understanding, and easily penetrate the market.
a
Which of the following is not a strategic disadvantage of vertical integration? a) It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. b) Vertical integration increases a firm's capital investment in the industry. c) Integrating into more industry value chain segments increases business risk if industry growth and profitability sour. d) Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities.
a
Architects of mergers and acquisition strategies typically set sights on which of the following objectives? a) Revamping a company's value chain b) Facilitating the employment of both offensive and defensive strategies c) Creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories d) Gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities e) Two answers are correct: creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories, and gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
e
Corporate restructuring strategies: a) Focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability. b) Involve rightsizing the company's labor force to reduce the costs of salaries and benefits. c) Are directed at achieving a 1 + 1 = 3 effect from the company's diversification strategy. d) Focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. e) Involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup
e
Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? a) Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling directly to end-users at the company's website b) Allowing a company to reduce its costs if the activity is not crucial to the firm's ability to achieve sustainable competitive advantage and will not hollow out its capabilities, core competencies, or technical know-how c) Improving organizational flexibility and speeding time to market d) Allowing a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best
a
As long as a single-business company can achieve profitable growth opportunities in its present industry, a) It needs to avoid putting all of its "eggs" in one industry basket. b) It will face diminishing market opportunities and stagnating sales in its principal business. c) Its opportunities are limited to leverage existing competencies and capabilities by expanding into businesses where these same resources are key success factors and valuable competitive assets. d) It has diminished prospects to lower costs by entering closely related businesses and/or an opportunity to transfer a powerful and well-respected brand name to the products of other businesses and thereby increase the sales and profits of these newly entered businesses. e) There is no urgency to pursue a diversification strategy.
e
Which of the following does not accurately describe entering a new business via acquisition, internal development, or a joint venture? a) The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price. b) Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up. c) Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurtle entry barriers. d) Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market.
b
Which of the following is not generally on a company's menu of actions to consider in crafting a strategy of social responsibility? a) Efforts to employ an ethical strategy and observe ethical principles in operating the business b) Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins c) Making charitable contributions, supporting community service endeavors, engaging in broader philanthropic initiatives, and reaching out to make a difference in the lives of the disadvantaged d) Actions to build a workforce that is diverse with respect to gender, race, national origin, and other aspects that different people bring to the workplace
b
Which of the following statements is accurate concerning a company's environmental sustainability strategy? a) Environmental sustainability consists of a corporate commitment to address the unmet noneconomic needs of society. b) Environmental sustainability consists of deliberate actions to protect the environment, provide for the longevity of natural resources, and maintain ecological support systems for future generations. c) Environmental sustainability consists of striking a balance between (1) the economic responsibility to reward shareholders with profits, (2) the legal responsibility by the company to laws in countries where it operates, (3) the ethical responsibility to abide by society's moral norms, and (4) the discretionary philanthropic responsibility to contribute to the noneconomic needs of society. d) Environmental sustainability consists of developing the resource strengths necessary to develop a sustainable competitive advantage.
b
Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? a) Whether and when to go on the offensive and initiate aggressive strategic moves to improve the company's market position, or to go on the defensive b) Which value chain activities, if any, should be outsourced c) Whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy d) Whether to integrate forward or backward into more stages of the industry value chain
c
Which one of the following statements concerning the impact of fluctuating exchange rates on companies competing in foreign markets is not true? a) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets. b) Exchange rate shifts can produce sometimes favorable and sometimes unfavorable effects on a company's competitiveness. c) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made. d) Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries to which goods are being exported.
c
Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous a) When high transportation costs make it expensive to operate from central locations. b) Whenever buyer-related activities are best performed in locations close to buyers. c) If economies of scale are essential to achieving acceptable production costs. d) Two answers are correct when high transportation costs make it expensive to operate from central locations and whenever buyer-related activities are best performed in locations close to buyers.
d
Which one of the following is not something that shapes and helps define a company's culture? a) Core values, beliefs, business principles, and traditions that permeate the workplace b) Work practices and behaviors that define "how we do things around here": the company's standards of what is ethically acceptable and what is not, along with the legends and stories that people repeat to illustrate and reinforce the company's core values, traditions, and business practices c) A company's approach to managing people and its style of operating d) The strategy and business model that the company has adopted
d
