Strategic Management Final

D. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

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 with the framework of a mostly uniform global strategy. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

A. becomes more appealing the bigger the country-by-country differences are in buyer tastes, cultural traditions, and market conditions.

A "think local, act local" multidomestic type of strategy A. becomes more appealing the bigger the country-by-country differences are in buyer tastes, cultural traditions, and market conditions. 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. E. employs essentially the same basic competitive strategy theme in all country markets.

C. entails setting both financial and strategic objectives and putting balanced emphasis on their achievement

A balanced scorecard for measuring company performance A. entails balancing the pursuit of good bottom-line profit against the pursuit of nonprofit objectives (although achieving profitability targets is nearly always given greater emphasis). B. involves putting equal emphasis on the achievement of financial objectives, strategic objectives, and social responsibility objectives. C. entails setting both financial and strategic objectives and putting balanced emphasis on their achievement. D. helps prevent the pursuit of strategic objectives from dominating the pursuit of financial objectives. E. is necessary to prevent the drive for achieving financial objectives from weakening the attention paid to social responsibility, community citizenship, and other worthy goals.

C. involves abandoning efforts to beat out competitors in existing markets and, instead, 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.

A blue ocean strategy A. is a preemptive strike type of price-cutting offensive used by a market leader to steal customers away from higher-priced rivals. B. involves deliberately attacking those market segments where a key rival makes big profits. C. involves abandoning efforts to beat out competitors in existing markets and, instead, 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. D. involves using innovative advertising and deep price discounts to grab sales and market share from complacent or distracted rivals. E. employs highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

A. sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit

A viable business model A. sets forth how both strategy and operating approaches will create value for customers and simultaneously generate ample revenues to cover costs to realize a profit. B. lays out a compelling case for how the strategy will yield competitive advantage. C. explains how high profit margins will be achieved despite charging relatively low prices to customers. D. is always closely linked to the company's business strategy. E. is part and parcel of a company's strategic vision.

E. Two answers are correct: is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller; and can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.

A broad differentiation strategy A. is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller. B. can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals. C. works best when the basis for differentiation is superior performance features and buyer switching costs are low. D. offers a better chance for gaining market share than low-cost or best-cost provider strategies and typically allows a firm to charge the highest price in the industry. E. Two answers are correct: is an attractive competitive approach whenever buyers' needs and preferences are too diverse to be satisfied by a product that is essentially identical from seller to seller; and can produce sustainable competitive advantage if the differentiating features possess strong buyer appeal and can't be copied or easily matched by rivals.

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.

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. E. adopting best practices and pushing for continuous improvement tend to reduce costs and reduce overall resource requirements.

D. an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage

A company achieves sustainable competitive advantage when A. it has a best-cost or focused differentiation business model. B. it is able to increase shareholder value. C. sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability. D. an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage. E. it is consistently able to achieve both its strategic and financial objectives.

E. nearly always is relegated to a trailing position in the industry.

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals A. should adopt a new competitive strategy that might better match the circumstances of the marketplace. B. should abandon strategy elements that have caused its weakness in the marketplace. C. should undertake efforts to develop a distinctive competence. D. is virtually blocked from using offensive strategies and must rely on defensive strategies. E. nearly always is relegated to a trailing position in the industry.

C. not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs.

A company's biggest vulnerability in employing a best-cost provider strategy is A. relying too heavily on price discounting. B. adding features not needed by the majority of buyers. C. not having the needed efficiencies in managing value chain activities to add differentiating features without significantly increasing costs. D. being timid in cutting its prices far enough below high-end differentiators to win away many of their customers. E. relying excessively on outsourcing in an attempt to boost gross profit margins.

C. (1) specifies a customer value proposition and (2) develops a profit formula

A company's business model A. determines whether its strategy will be ethical or not. B. is management's story line for how the strategy will result in achieving sustainable competitive advantage. C. (1) specifies a customer value proposition and (2) develops a profit formula. D. identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader. E. sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.

B. will create value for customers and realize a profit.

A company's business model sets forth how its strategy and operating approaches A. help it become a market leader. B. will create value for customers and realize a profit. C. promote its long-term strategic direction. D. support its mission statement. E. diverge from its strategy.

C. the specifics of management's game plan for competing successfully.

A company's competitive strategy deals with A. specific actions management plans to take to develop a better value chain than rivals have. B. how it plans to unify its functional and operating strategies into a cohesive effort aimed at successfully taking customers away from rivals. C. the specifics of management's game plan for competing successfully. D. its plans for underpricing rivals and achieving product superiority. E. specific actions management intends to take to strongly differentiate its product offering from the offerings of rival companies in the industry.

B. how efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies.

A company's cost competitiveness is largely a function of A. whether it does a good enough job of benchmarking its value chain activities against the value chains of competitors so that it knows exactly how low to drive its costs to be cost-competitive. B. how efficiently it manages its internally performed value chain activities and the costs in the value chains of its suppliers and forward channel allies. C. whether it does a better job of building its resource strengths more cost effectively than rivals. D. whether it possesses more core competencies and competitive capabilities than rivals. E. how closely its internally performed activities are linked to the activities performed by suppliers and to the activities performed by forward channel allies.

A. convert the strategic vision into specific performance targets - well-stated objective are quantifiable, or measurable, and contain a deadline for achievement

A company's objectives A. convert the strategic vision into specific performance targets—well-stated objectives are quantifiable, or measurable, and contain a deadline for achievement. B. are typically established after a company decides on a strategic vision and strategy so that they will entail performance targets that truly signal business success. C. are best stated in general terms (maximize profits, reduce costs, increase sales) rather than quantifiable terms (increase after-tax profits by 10 percent in two years, grow sales revenues by 20 percent annually) so that managers will have the latitude to adjust target outcomes to levels that can be achieved. D. should place far more emphasis on financial performance targets than strategic performance targets. E. All of these choices are correct.

B. management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path

A company's strategic plan consists of A. actions and market maneuvers it plans to use to achieve a sustainable competitive advantage. B. management's vision mapping out where a company is headed, the company's financial and strategic objectives, and management's strategy to achieve the objectives and move the company along the chosen strategic path. C. a company's strategic vision, strategic objectives, strategic intent, and strategy. D. an organization's strategy and management's specific, detailed plans for implementing it. E. the specific actions management intends to take in detouring strategic inflection points and executing its overall strategy.

B. the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service.

A company's value chain consists of A. the activities a company performs in converting its resource weaknesses into resource strengths. B. the collection of activities it performs in the course of designing, producing, marketing, delivering, and supporting its product or service. C. those activities a company performs that represent "best practices." D. the activities that a company performs in developing a distinctive competence. E. the activities that represent a company's competencies, core competencies, distinctive competencies, and competitive capabilities.

E. a strategy that is unethical not only damages the company?s reputation, but it also can have costly consequences.

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.

A. seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation.

A firm pursuing a best-cost provider strategy A. seeks to offer more value-adding features than the industry's low-cost providers and lower prices than those pursuing differentiation. B. tries to have the best cost (as compared to rivals) for each activity in the industry's value chain. C. achieves competitive advantage because its operating activities are "best-in-class" or "best-in-world." D. follows a hybrid strategy based upon superior resources and a narrow market niche. E. seeks a "middle of the road" strategic approach that attempts to satisfy the product or service needs of consumers with average household incomes.

C. offering carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers.

A focused differentiation strategy aims at securing competitive advantage by A. providing buyers in the target market niche with the best performance features at the best price. B. catering to buyers looking for a medium-quality product at an average price. C. offering carefully designed products or services to appeal to the unique preferences and needs of a narrow, well-defined group of buyers. D. developing unique product attributes. E. convincing buyers that the company is a true leader in product innovation.

A. involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors.

A focused low-cost strategy A. involves serving buyers in the target market niche at a lower cost and a lower price than rival competitors. B. is the hardest of the four generic types of competitive strategies to employ successfully. C. involves the use of deep price discounting to capture customers. D. entails trying to wrest market share away from rivals via extra advertising, above-average expenditures for promotional programs, and heavy use of point-of-sale merchandising techniques. E. cannot be sustained over time unless the focuser is aggressive in entering other segments where it also can achieve a low-cost advantage.

E. surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.

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. all of these choices are correct

Approaches to achieving a sustainable competitive advantage include which of the following? A. developing unmatched resource strengths and competitive capabilities B. focusing on a narrow market niche within an industry C. strategies supportive of creating a differentiation-based advantage D. strategies supportive of creating a cost-based advantage E. All of these choices are correct.

E. Two answers are correct: is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions; and has two big drawbacks: (1) it hinders transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.

A localized or multidomestic strategy A. is generally preferable to a global strategy in situations where buyers are price sensitive because a "think local, act local" type of multidomestic strategy is better suited to achieving low unit costs than a global strategy. B. is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. C. has two big drawbacks: (1) it hinders transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost. D. is generally inferior to a global strategy when it comes to pursuing product differentiation. E. Two answers are correct: is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions; and has two big drawbacks: (1) it hinders transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.

D. meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price.

A low-cost provider's basis for competitive advantage is A. using an everyday low pricing strategy to gain the biggest market share. B. larger profit margins than rival firms'. C. high buyer switching costs because of the company's differentiated product offering. D. meaningfully lower costs than competitors' but not necessarily the absolutely lowest cost/price. E. a reputation for charging the lowest prices in the industry.

D. determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions.

A strategic group map is a helpful analytical tool for A. assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. B. determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. C. determining which company is the most profitable in the industry and why it is doing so well. D. determining who competes most closely with whom; evaluating whether industry driving forces and competitive pressures favor some strategic groups and hurt others; and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions. E. pinpointing which of the five competitive forces is the strongest and which is the weakest.

C. describes "where we are going" by delineating the course and direction management has charted for the company's future product-customer-market-technology focus

A strategic vision for a company A. involves how fast to pursue the chosen strategy and reach the targeted levels of performance. B. consists of thinking through what it will take to make the chosen strategy work as planned. C. describes "where we are going" by delineating the course and direction management has charted for the company's future product-customer-market-technology focus. D. spells out how the company is going to get from where it is now to where it wants to go and when it is expected to arrive. E. concerns management's view of how to transition the company's business model from where it is now to where it needs to be.

A. is a company's most reliable ticket to above-average profitability

A strategy that distinguishes a company from its rivals and provides a sustainable competitive advantage A. is a company's most reliable ticket to above-average profitability. B. is based heavily upon the emergent elements of its strategy. C. is a reliable indicator that the company has a profitable business model. D. is logical because the strategies of rival companies are often predicated on strikingly different business models. E. is the best indicator that the company's strategy and business model are well matched and properly synchronized.

D. fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance

A winning strategy is one that A. makes the company a market leader, is ethically and socially responsible, and maximizes profits. B. is highly profitable and boosts the company's market share. C. passes the profitability test, the ethics and social responsibility test, the customer satisfaction test, and the shareholder wealth test. D. fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance. E. passes the ethical standards test, the competitive advantage test, and the profitability test.

C. industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence, when current industry members are unable or unwilling to strongly contest the entry of newcomers, and when a newcomer can reasonably expect to earn attractive profits.

According to both the text discussion and the summary in Figure 3.6, competitive pressures associated with the threat of new entrants grow stronger when A. buyer demand is growing slowly and the pool of entry candidates is small. B. the number of customers for the industry's product is large and the product offerings of rival sellers are strongly differentiated. C. industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence, when current industry members are unable or unwilling to strongly contest the entry of newcomers, and when a newcomer can reasonably expect to earn attractive profits. D. there are not many competitors already in the industry, their products are highly differentiated, and buyers are brand loyal. E. a small percentage of companies in the industry are currently earning above-average profits, entry barriers are high, and buyers are not brand loyal.

E. whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change

According to both the text discussion and the summary in Figure 3.7, which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak? A. whether buyer demand for the product is growing rapidly or slowly B. whether customers' costs to switch brands are low or high C. how active industry rivals are in initiating fresh competitive moves and in using the various weapons of competition to improve their market standing and business performance D. whether there are few or many rival sellers, and whether there are big differences in their sizes and competitive capabilities E. whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change

D. lacking in analysis - based more on managerial emotion and excessive ambition that on what is realistically achievable

According to both the text discussion and the summary in Table 2.3, which of the following is NOT a common shortcoming of company vision statements? A. incomplete or vague—short on specifics B. overly reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of buyers) C. overly broad—so umbrella-like and all-inclusive that the company could head in almost any direction, pursue most any opportunity, or enter most any business D. lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable E. not distinctive—provides no unique company identity; could apply to companies in any of several industries (or at least several rivals operating in the same industry or market arena)

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.

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. E. the only valid ethical standards are those that are universal—and then only if the standards are not absolute and provide some wiggle room according to the circumstances of the each situation.

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

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. many of the same standards of what?s ethical and what?s 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.

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?s ethical and what?s 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.

A. overseeing the company's financial accounting and financial reporting practices

Accounting scandals that led to investigations of such well-known companies as AOL Time Warner, Global Crossing, Enron, Qwest Communications, and WorldCom resulted in the conviction of a number of corporate executives and the passage of the Sarbanes-Oxley Act of 2002. In these cases, the board of directors did not fulfill which of the following important obligations? A. overseeing the company's financial accounting and financial reporting practices B. instituting a compensation plan for top executives that rewards them for actions that serve stakeholder interests C. critically appraising the company's direction, strategy, and business approaches D. creating meeting agendas to deal with regulatory compliance issues E. All of these choices are correct.

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.

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. E. eliminate a company's resource weaknesses and competitive deficiencies, thereby making it invulnerable to competitive attack from would-be challengers.

B. concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry.

An industry's key success factors A. are best determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. B. concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry. C. are mainly a function of an industry's macro-environment and dominant economic features. D. involve identifying the similarities in the strategies of rival companies; those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors. E. usually relate to technology and manufacturing-related capabilities and rarely to distribution or marketing capabilities.

B. business strategy, functional area strategies, and operating strategies

As Figure 2.2 shows, the strategy-making hierarchy in a single business company consists of A. business strategy, divisional strategies, and departmental strategies. B. business strategy, functional area strategies, and operating strategies. C. business strategy and operating strategy. D. managerial strategy, business strategy, and divisional strategies. E. corporate strategy, divisional strategies, and departmental strategies.

C. lower the combined profitability of industry participants and the more "competitively unattractive" is the industry environment.

As a rule, the stronger the collective impact of the five competitive forces, the A. more strategic groups there are in an industry. B. lower the number of industry key success factors. C. lower the combined profitability of industry participants and the more "competitively unattractive" is the industry environment. E. weaker the industry's driving forces. E. higher the barriers to entry and the less likely it is that industry members will make fresh strategic moves very frequently.

A. substitutes are higher-priced, buyers don't believe substitute products have equal or better features, and buyers' costs of switching to substitutes are relatively high

Based on both the chapter discussion and the summary in Figure 3.4, competitive pressures stemming from substitute products are weaker when A. substitutes are higher-priced, buyers don't believe substitute products have equal or better features, and buyers' costs of switching to substitutes are relatively high. B. the industry consists of a relatively large number of rival sellers that are fairly equal in size and competitive capability. C. entry barriers are moderately high but by no means prohibitive, and there is a fairly small pool of entry candidates. D. a number of customers buy in large volumes and are in a strong bargaining position to win concessions from sellers. E. buyer loyalty to the products they are currently purchasing is relatively low.

E. All of these choices are correct.

Being first to initiate a particular move can have a high payoff when A. pioneering helps build up a firm's image and reputation with buyers. B. early commitments to new technologies, new-style components, new or emerging distribution channels, and so on can produce an absolute cost advantage over rivals. C. first-time customers remain strongly loyal to pioneering firms in making repeat purchases. D. moving first constitutes a preemptive strike, making imitation extra hard or unlikely. E. All of these choices are correct.

D. are present in all societies, organizations, and individuals.

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. E. vary enormously from country to country across the world.

C. entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities.

Benchmarking A. is inherently unethical if it involves companies that are direct competitors because it involves gathering competitively sensitive information about the operations and costs of rivals. B. is not a valid tool for measuring the cost-effectiveness of an activity unless it is restricted to companies in the same industry. C. entails comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities. D. loses much of its managerial usefulness if it is done with the aid of third-party organizations. E. entails calculating the costs of performing each of the primary and related support activities in a company's value chain.

A. the application of ethical principles and standards to business activities, behavior, and decisions.

Business ethics encompasses A. the application of ethical principles and standards to business activities, behavior, and decisions. B. a business commitment to safe products, high worker compensation, and protection of the environment. C. conducting oneself appropriately in a business setting. D. developing a special set of ethical standards for businesses to observe in conducting their affairs. E. picking and choosing among various ethical standards of society to arrive at a set of ethical standards that apply directly to operating a business.

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

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. E. expediting the development of an important new competitive capability.

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.

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. E. identifying each industry's average price, rating the difficulty of charging an above-average price in each industry, and deciding whether the company's prospects for being able to charge above-average prices make the industry attractive or unattractive.

D. determining whether the company has enough cash hog businesses to supply capital to its cash cow businesses

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 E. determining whether the company has adequate financial strength to fund the needs of its various businesses and maintain a healthy credit rating

E. All of these choices are correct.

Checking a diversified company?s business lineup for the competitive advantage potential of cross-business strategic fits involves searching for and evaluating how much benefit a diversified company can gain from value chain matchups that present opportunities A. to combine the performance of certain activities, thereby reducing costs and capturing economies of scope. B. to transfer skills, technology, or intellectual capital from one business to another, thereby leveraging use of existing resources. C. to share use of a well-respected brand name. D. for sister businesses to collaborate in creating valuable new competitive capabilities (such as enhanced supply chain management capabilities, quicker first-to-market capabilities, or greater product innovation capabilities). E. All of these choices are correct.

E. All of these choices are correct.

Companies are often motivated to enter into strategic alliances or cooperative arrangements in order to A. expedite the development of promising new technologies or products. B. overcome any deficits in their own technical and manufacturing expertise. C. bring together the personnel and expertise needed to D. create desirable new skill sets and capabilities. acquire or improve market access. E. All of these choices are correct.

E. adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future.

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. All of these choices are correct.

Companies tend to concentrate their activities in a limited number of locations A. when the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. B. when there are significant scale economies. C. when there is a steep learning curve associated with performing an activity. D. when certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. All of these choices are correct.

C. quickly find themselves on a slippery slope with no ethical standards or principles of their own.

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. E. end up allowing each company employee to determine what set of ethical standards to observe.

A. need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units

Company objectives A. need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. B. are needed only in those areas directly related to a company's short-term and long-term profitability. C. help answer the question "Where do we want to go?". D. determine the geographic and business scope of the company's operations. E. should be set in a manner that does not conflict with the performance targets of lower-level organizational units.

C. customer data, employee data, supplier/partner data, operations data, and financial performance data.

Company strategies and value-creating processes can't 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. E. All of these choices are correct.

D. of ongoing management efforts to improve the strategy in light of changing circumstances

Company strategies evolve because A. managers need to postpone settling on a deliberate strategy until a company has been in business long enough for them to know which strategies will work best. B. most managers like to develop the strategy in bits and pieces rather than all at once. C. a strategy does not really transition to a well-crafted stage until a company has been trying to execute it for a number of years and has learned what works and what doesn't. D. of ongoing management efforts to improve the strategy in light of changing circumstances. E. All of these choices are correct.

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.

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. ensures consistency in strategic approach among businesses of a diversified, multi business corporation

Corporate strategy A. determines balanced scorecard financial and strategic objectives. B. should be based on a flexible strategic vision and mission. C. is subject to being changed much less frequently than either a company's objectives or its mission statement. D. is primarily concerned with strengthening a company's market position and building competitive advantage. E. ensures consistency in strategic approach among businesses of a diversified, multibusiness corporation.

E. All of these choices are correct; cross-business strategic fits can exist anywhere along the values chains of related businesses.

Cross-business strategic fits can exist A. in the R&D and technology portion of the value chains of related businesses. B. in the supply chain portion of the value chains of related businesses. C. in the manufacturing or production portions of the value chains of related businesses. D. in the sales and marketing portion of the value chains of related businesses. E. All of these choices are correct; cross-business strategic fits can exist anywhere along the values chains of related businesses.

C. stem from cost-saving strategic fits along the value chains of related businesses.

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. E. are like economies of scale and arise from being able to lower costs via a larger volume operation.

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.

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. E. None of these are correct.

B. deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet.

Environmental sustainability involves A. a corporate commitment to address the unmet noneconomic needs of society. B. deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet. C. 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. developing the resource strengths necessary to develop a sustainable competitive advantage. E. All of these choices are correct.

C. strategic outcomes are leading indicators of a company's future financial performance and business prospects

Establishing and achieving strategic objectives merits very high priority on management's agenda because A. strategic outcomes provide better benefits to shareholders in both the short run and the long run. B. a company can't have a shrewd strategic vision without having aggressive and competitively astute strategic objectives. C. strategic outcomes are leading indicators of a company's future financial performance and business prospects. D. well-chosen strategic objectives help managers craft a good strategy. E. a company cannot achieve its strategic intent and strategic vision or gain a competitive advantage over rivals without having and achieving strategic objectives.

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.

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. E. involve behavioral guidelines for balancing the interests of nonowner stakeholders (customers, employees, suppliers, and the communities in which the company has operations) against the interests of company shareholders.

B. How good is the company's value chain?

Evaluating a company's resources, capabilities, and competitive strength relative to its rivals using VRIN tests does not include developing answers to which one of the following questions? A. Is the resource or capability rare? B. How good is the company's value chain? C. Is the resource or capability competitively valuable? D. Is the resource or capability inimitable or hard to copy? E. Is the resource or capability nonsubstitutable, or is it vulnerable to the threat of substitution from different types of resources and capabilities?

E. All of these choices are correct

Every corporation should have a strong, independent board of directors that A. is well informed about the company's performance. B. guides and judges the CEO and other top executives. C. certifies to shareholders that the CEO is doing what the board expects. D. is intensely involved in debating the pros and cons of key decisions and actions. E. All of these choices are correct.

B. distinct capabilities.

Every organization has many resources, capabilities, and routines; however, those few things the company does really well and are performed with a very high proficiency are termed A. core competencies. B. distinct capabilities. C. sustainable activities. D. socially complex activities. E. distributive factors.

E. eliminating low value-added activities and work steps.

Examples of uniqueness drivers do not include A. product features, design, and performance. B. production R&D. C. customer service. D. continuous quality improvement. E. eliminating low value-added activities and work steps.

A. have a high "divorce rate."

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. E. are rarely useful in helping a company win the race for global industry leadership and establish positions in industries of the future.

D. how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence

Nothing affects a company's ultimate success or failure more fundamentally than A. abandoning markets as conditions change. B. how well the strategy fits the company's business model. C. developing multiple differentiating features in comparison to rivals. D. how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence. E. the creation of shareholder value.

C. rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals.

Factors that weaken rivalry among competing sellers include A. low buyer switching costs. B. slow growth in buyer demand. C. rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on the businesses of its rivals. D. standardized or else weakly differentiated products among rival sellers. E. the presence of one or more rivals that are dissatisfied with their current position and market share.

C. a superior value chain configuration and unmatched efficiency in managing essential value chain activities.

For a best-cost provider strategy to be successful, a company must have A. excellent supply chain capabilities and product design expertise. B. economies of scope or greater scale economies than rivals. C. a superior value chain configuration and unmatched efficiency in managing essential value chain activities. D. superior product innovation skills and manufacturing capabilities. E. a short, low-cost value chain.

D. add detail to the overall business strategy and specify what resources and organizational capabilities are needed to put the business strategy into action

Functional strategies A. describe the mission and strategic intent of each key functional piece of the business. B. consist of what to do about resolving the specific strategic issues and operating problems a business confronts in each key part of its business—R&D, production, sales and marketing, finance, information technology, human resources, and so on. C. are normally crafted by the executive in charge of the overall business and approved by the company's board of directors. D. add detail to the overall business strategy and specify what resources and organizational capabilities are needed to put the business strategy into action. E. are concerned with what competitive capabilities to build in support of the overall company strategy and what to do to unify the firm's skills, competencies, and resource strengths across all the various key pieces of a company's business.

E. All of these choices are correct.

Identifying the strategic issues that company managers need to address A. involves using the results of both industry and competitive analysis and evaluations of the company's internal situation using the VRIN tests. B. is facilitated by analysis of the company's cost structure and customer value proposition relative to its rivals. C. sets the agenda for deciding what actions to take next to improve the company's performance and business outlook. D. entails locking in on what challenges the company has to overcome in order to be financially and competitively successful in the years ahead. E. All of these choices are correct.

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.

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." E. no ethical standards are ever truly "authentic"—they exist only to the extent that there is a temporary shared conviction among company managers and company personnel that a particular behavior is either ethically permissible or ethically impermissible.

C. capabilities reflect a high level of social complexity and causal ambiguity.

Imitation by rivals is most challenging when A. resources are unique. B. resources must be built over time. C. capabilities reflect a high level of social complexity and causal ambiguity. D. resources and capabilities require a high level of capital investment. E. All of the these choices are correct.

E. general economic conditions, societal values and cultural norms, political and legal/regulatory factors, technological factors and ecological considerations

In a company's broader macro-environment, which of the following have strategic significance? A. market size and growth rate, the number of buyers, the scope of competitive rivalry, the number of rivals, demand-supply conditions, product innovation, the presence of scale economies and/or learning or experience curve effects, and the pace of technological change B. the threat of additional entry into the industry and what the industry's key success factors are C. the strength of competitive pressures from producers of substitute products and which competitors are in which strategic groups D. the extent and importance of seller-supplier collaborative partnerships, the extent and importance of seller-buyer collaborative partnerships, and the bargaining leverage of sellers and buyers E. general economic conditions, societal values and cultural norms, political and legal/regulatory factors, technological factors, and ecological considerations

C. changing market conditions, development of internal capabilities and competencies, and allocation of financial resources

In answering the question "How well does the strategy fit the company's situation?", management must be willing and ready to address such issues as A. developing a sound business model and customer base. B. emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. C. changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. D. "Where are we now?" and "Where do we want to go?" E. how to develop copy-cat strategies.

A. when potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover

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 E. when moving first can result in a cost advantage over rivals

C. when most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated

In which one of the following market circumstances is a broad differentiation strategy generally not well suited? A. when buyer needs and preferences are too diverse to be fully satisfied by a standardized product B. when few rivals are pursuing a similar differentiation approach C. when most competitors are using eye-catching ads to set their product offerings apart and build a brand image that is differentiated D. when there are many ways to differentiate the product or service and many buyers perceive these differences as having value E. when technological change is fast-paced and competition revolves around rapidly evolving product features

B. "first order" universal ethical norms always take precedence over "second order" local ethical norms.

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. E. each country/culture/society has commonly held views about what constitutes ethically appropriate actions/behaviors that all individuals in that country/culture/society are obligated to observe.

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

It becomes particularly urgent for a company to consider diversification when there are A. needs to avoid putting all of its "eggs" in one industry basket. B. diminishing market opportunities and stagnating sales in its principal business. C. opportunities to leverage existing competencies and capabilities by expanding into businesses where these same resources are key success factors and valuable competitive assets. D. opportunities 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. All of these choices are correct.

E. blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions

It is normal for a company's realized strategy to end up A. left unchanged from management's original planned set of actions and business approaches since making on-the-spot changes is too risky. B. entailing a combination of defensive moves to protect the company's market share and offensive initiatives to set the company's product offering apart from that of rivals. C. mimicking the strategies of other industry members since all companies are confronting much the same market conditions and competitive pressures. D. becoming a mirror image of its business model, so as to avoid impairing company profitability. E. blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions.

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

Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to A. decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. B. determine whether the company has a balanced scorecard for judging its performance. C. determine what changes should be made to its strategy map. D. determine whether the company's business model is well matched to changing market and competitive circumstances. E. stay on track in achieving the company's mission and strategic vision.

C. a properly designed reward structure.

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. E. effective screening of job applicants such that only the most motivated and energetic people are hired.

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.

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 when it is not imperative to be responsive to buyer needs and competitive conditions in each country. E. competitive conditions make it infeasible to employ a profit sanctuary strategy or an export strategy.

B. shifting from a multiple-country to a global strategy

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 E. divesting some businesses and retrenching to a narrower base of business operations

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.

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. E. whether to charge the same price in all country markets.

B. the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations).

Operating strategies consist of A. what a company's various operating departments plan to do to help execute the company's overall strategy. B. the strategic intent of each operating unit. C. the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities (the management of specific brands, supply chain-related activities, and website sales and operations). D. the specific actions a company's various operating departments plan to take to unify efforts to achieve a sustainable competitive. E. what a company will do once its strategic plan is adopted and approved by the company's board of directors.

D. raising prices to customers (so as to cover the high costs).

Options for attacking the high costs of items purchased from suppliers do not include A. pressuring suppliers for more favorable prices. B. integrating backward into the business of high-cost suppliers and making the item in-house so as to better control the cost. C. switching to lower-priced substitute inputs. D. raising prices to customers (so as to cover the high costs). E. collaborating closely with suppliers to identify mutual cost-saving opportunities.

E. All of these choices are correct.

Strategic actions to eliminate an internal cost disadvantage include A. implementing the use of best practices. B. trying to eliminate some cost-producing activities by revamping the value chain. C. outsourcing high-cost activities to vendors capable of performing the activity more cheaply. D. investing in productivity-enhancing, cost-saving technology. E. All of these choices are correct.

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.

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. E. should be based primarily on cross-business resource fit considerations, each business unit's relative market share, and each business's projected ability to cover its debt payments and generate positive cash flows.

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.

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.

A. is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being.

SWOT analysis A. is a simple but powerful tool for sizing up a company's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being. B. is a tool for benchmarking whether a firm's strategy is closely matched to industry key success factors. C. reveals whether a company is competitively stronger than its closest rivals. D. examines the company's cost position activity by activity. E. is a competitive intelligence tool that discloses rivals' key weaknesses.

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.

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. E. is a disciplined, statistics-based approach to manufacturing or assembling a product and results in five defects per million iterations when implemented properly.

A. can aim at lowering costs (1) in the suppliers? part of the industry value chain, (2) in a company?s own internally performed activities, and/or (3) in the forward channel portion of the value chain.

Strategic actions to reduce the costs of internally performed value chain activities and improve a company?s cost competitiveness A. can aim at lowering costs (1) in the suppliers? part of the industry value chain, (2) in a company?s own internally performed activities, and/or (3) in the forward channel portion of the value chain. B. work best when they aim at lowering the costs of performing those tasks and activities where the company has core competencies and distinctive competencies. C. work best when aimed at increasing the amount of the company?s low-cost competitive assets and decreasing the amount of its high-cost competitive assets. D. are likely to be most effective when they are aimed at lowering the costs of the value chain activities that a company performs internally. E. are most likely to be successful when they involve efforts to concentrate more company resources and talents on those value chain activities in which the company already has the lowest costs.

E. are formal agreements between two or more companies to work cooperatively toward some common objective.

Strategic alliances A. are the cheapest means of developing new technologies and getting new products to market quickly. B. are a proven means of reducing the costs of performing value chain activities. C. are best used to insulate a company from the impact of the five competitive forces. D. help insulate a firm from the adverse impacts of industry driving forces. E. are formal agreements between two or more companies to work cooperatively toward some common objective.

B. these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage

Strategies that yield sustainable competitive advantage are important because A. a competitive advantage is what enables a company to achieve its strategic objectives. B. these enable a company to attract sufficiently large numbers of buyers who have a lasting preference for its products or services over those offered by rivals, despite the efforts of competitors to offset that appeal and overcome the company's advantage. C. competitive advantage forms the underpinnings of a company's strategic vision. D. increases in shareholder value are contingent on a sustainable competitive advantage. E. None of these choices are correct.

E. Two answers are correct: eliminating or curbing nonessential activities; and doing a better job than rivals in performing essential activities.

Striving to be the industry's low-cost provider by achieving lower costs than rivals' entails A. eliminating or curbing nonessential activities. B. having a smaller labor force than rivals have, paying lower wages than rivals do, locating all facilities in countries where labor costs are low, and outsourcing many value chain activities to suppliers with world-class technological capabilities. C. doing a better job than rivals in performing essential activities. D. aggressive use of activity-based costing, utilizing more best practices than rivals use, and having a narrower product line than rivals offer. E. Two answers are correct: eliminating or curbing nonessential activities; and doing a better job than rivals in performing essential activities.

A. managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain; for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs.

Striving to be the low-cost provider is a particularly attractive competitive strategy when A. managers must launch a concerted, ongoing effort to ferret out cost-saving opportunities in every part of the value chain; for example, cost drivers such as number of products in the product line, capacity utilization, production technology and design, and labor productivity and compensation costs. B. most rivals are trying to differentiate their product offering from those of rivals. C. there are many ways to achieve higher product quality that have value to buyers. D. buyers are not swayed by advertising and are not very brand-loyal. E. most rivals are pursuing best-cost or broad differentiation strategies.

E. Two answers are correct: gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features).

Successful differentiation allows a firm to A. gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). B. earn the highest profit margins of any company in its industry. C. attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. D. command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features). E. Two answers are correct: gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products); and command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features).

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.

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. E. pinpoints which of a diversified company's businesses are resource-rich cash cows and which are resource-poor cash hogs.

C. are weakened when that country?s currency grows stronger relative to the currencies of the countries where the output is being sold.

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. E. are largely unaffected by tariffs or quotas.

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.

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. E. gaining support from local governments in the form of subsidies and meeting local content requirements.

E. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

The advantages of using a licensing strategy to participate in foreign markets include A. being especially well suited to exploit a profit sanctuary. B. being able to charge lower prices than rivals. C. enabling a company to achieve competitive advantage quickly and easily. D. being able to achieve lower costs than with a localized multidomestic strategy. E. being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

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.

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. E. rank each business unit's strategy from best to worst.

A. evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves A. evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts. B. assessing whether the diversification move will make the company better off by increasing its resources and competitive capabilities. C. evaluating whether the diversification move will make the company better off by making it less subject to the bargaining power of customers and/or suppliers. D. assessing whether the diversification move will make the company better off by increasing its profit margins and returns on investment. E. All of these choices are correct.

E. choosing between (1) a market target that is either broad or narrow and (2) whether the company should pursue a competitive advantage linked to lower costs or product differentiation.

The biggest factors that distinguish one competitive strategy from another are A. a customer value proposition, profit formula, and collection of valuable resources. B. a high degree of customer loyalty to the company's brand and captive suppliers. C. a wide portfolio of company resources, competitive capabilities, and core competencies. D. a better credit rating than rivals and superior financial ratios. E. choosing between (1) a market target that is either broad or narrow and (2) whether the company should pursue a competitive advantage linked to lower costs or product differentiation.

B. emphasizes that pursuing unethical strategies not only damages a company?s reputation but can also have costly, wide-ranging consequences.

The business case for an ethical strategy A. focuses primarily on costs that are difficult to quantify (for example, customer defections and adverse effects on employee productivity) but can often be the most devastating. B. emphasizes that pursuing unethical strategies not only damages a company?s reputation but can also have costly, wide-ranging consequences. C. starts with numerous ethical rules and guidelines, and an environment where employees rely on these rules for moral guidance. D. starts with managers who understand there is big difference between adopting values statements and codes of ethics that serve merely as window dressing and those that truly paint the white lines for a company?s actual strategy and business conduct. E. begins with ethical guidelines that help send the message that management takes the observance of ethical norms seriously and that behavior falling outside ethical boundaries will have negative consequences.

E. All of these choices are correct.

The business case for why companies should act in a socially responsible manner includes such reasons as A. improving operational efficiency. B. avoiding criticism from consumer, environmental, and human rights activist groups. C. contributing to lower employee turnover and better worker productivity. D. the potential for increased buyer patronage. E. All of these choices are correct.

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.

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. E. a "think global, act global" approach involves selling under a single brand worldwide, whereas a "think global, act local" approach involves the use of multiple brands (often a local brand for each local market).

E. increased dividend payouts to restore the trust of its shareholders.

The costs companies incur when ethical wrongdoing is discovered and punished do not primarily include A. the costs to shareholders in the form of a lower stock price (and possibly lower dividends). B. the costs of providing remedial education and ethics training to company personnel. C. lost employee morale and higher degrees of employee cynicism. 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. increased dividend payouts to restore the trust of its shareholders.

B. the presence of cross-business value chain relationships and strategic fits.

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. E. the existence of cross-industry resource fits and similar key success factors from industry to industry.

B. involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate.

The most appealing approaches to broad differentiation A. are those that hinge upon first-rate R&D and frequent product innovation. B. involve features or attributes that have considerable buyer appeal and are hard or expensive for rivals to duplicate. C. are those that either lower buyer switching costs or enhance the differentiator's brand image. D. generally relate to product superiority or clever merchandising. E. are typically based on either superior product quality or superior customer service.

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).

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. E. the presence of cross-business financial fit.

D. a mission statement typically concerns an enterprise's present business scope and purpose - "who we are, what we do, and why we are here" - whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be

The difference between a company's mission statement and the concept of a strategic vision is that A. the mission statement lays out the desire to make a profit, whereas the strategic vision addresses what strategy the company will employ in trying to make a profit. B. a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there." C. a mission statement deals with what a company is trying to do, and a vision concerns what a company ought to do. D. a mission statement typically concerns an enterprise's present business scope and purpose —"who we are, what we do, and why we are here"—whereas the focus of a strategic vision is on the direction the company is headed and what its future product-customer-market-technology focus will be. E. a mission statement is about what to accomplish for shareholders, whereas a strategic vision concerns what to accomplish for customers.

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

The five generic types of competitive strategies include A. offensive strategies, best-cost provider, defensive strategies, differentiation strategies, and low-cost strategies. B. low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider. C. offensive strategies, defensive strategies, low-price strategies, technological leadership strategies, and product innovation strategies. D. low-price strategies, premium price strategies, middle-of-the-road strategies, best-cost provider, and market share leadership strategies. E. attacking competitor strengths, broad differentiation, attacking competitor weaknesses, market leadership strategies, and product superiority strategies.

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.

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's 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. E. strong inclinations to adopt a wait-and-see posture, carefully analyze several alternative responses, learn from the missteps of early movers, and then move forward cautiously and conservatively with initiatives that are deemed safe.

B. is the actions and moves to gain a competitive edge over rivals in the marketplace

The heart and soul of any strategy A. is its ability to increase shareholder value. B. is the actions and moves to gain a competitive edge over rivals in the marketplace. C. deals with how management plans to maximize profits while, at the same time, operating in a socially responsible manner. D. is the day-to-day demands of delivering a service or producing goods to be sold. E. is its linkage with its business model.

E. All of the these choices are correct.

The industry or market opportunities that are most relevant to a company and those that its strategy should aim at capturing include opportunities A. that are well-matched to the company's competitive capabilities and resource strengths. B. that the company has the financial resources to pursue. C. that offer important avenues for growth. D. where the company has the greatest potential for competitive advantage. E. All of the these choices are correct.

D. (1) involve collaboration with suppliers or distribution allies, or (2) conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.

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. (1) involve collaboration with suppliers or distribution allies, or (2) conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging. E. aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.

A. assemble a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution.

The overriding aim in building a management team should be to A. assemble a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution. B. select people who are charismatic and good communicators. C. choose managers who have substantial experience in the industry. D. assemble a team of people who believe in the same leadership approaches and use the same approaches to people management. E. choose managers who have the same core values and ethical standards.

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.

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. E. raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.

E. Two of the answers are correct: identifying the competitive characteristics that differentiate firms' market positions and competitive approaches; and plotting the firms on a two-variable or two-dimensional map, drawing circles around those firms occupying about the same strategy space, and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues.

The procedure for constructing a strategic group map involves A. identifying the competitive characteristics that differentiate firms' market positions and competitive approaches. B. selecting variables for the map's axes that are highly correlated. C. using only variables for the map's axes that are quantitative in nature (qualitative measures of market positions and competitive approaches are too subjective and unreliable). D. plotting the firms on a two-variable or two-dimensional map, drawing circles around those firms occupying about the same strategy space, and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues. E. Two of the answers are correct: identifying the competitive characteristics that differentiate firms' market positions and competitive approaches; and plotting the firms on a two-variable or two-dimensional map, drawing circles around those firms occupying about the same strategy space, and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues.

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.

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. E. making it easier to capture the benefits of centralized decision making.

D. as the number of rivals increases and as they become more equal in size and competitive capability.

The rivalry among competing sellers in an industry intensifies A. when buyer demand for the product is growing rapidly. B. when customers are brand loyal and their costs to switch to competing brands or substitute products are relatively high. C. when buyer demand is strong and sellers have little or no excess capacity and only minimal inventories. D. as the number of rivals increases and as they become more equal in size and competitive capability. E. when the products of rival sellers are highly differentiated products and the industry consists of so many rivals that any one company's actions have little direct impact on rivals' business.

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.

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. E. facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.

D. disagreement over how to divide the added market share and profits gained from joint collaboration

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 E. diverging objectives and priorities

D. a job for a company's whole management ream - senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in figure 2.2)

The task of crafting a strategy is A. the function and responsibility of a few high-level executives. B. more of a collaborative group effort that involves all managers and sometimes key employees striving to arrive at a consensus on what the overall best strategy should be. C. the function and responsibility of a company's strategic planning staff. D. a job for a company's whole management team—senior executives plus the managers of business units, operating divisions, functional departments, manufacturing plants, and sales districts (as per the strategy-making hierarchy shown in Figure 2.2). E. first and foremost the function and responsibility of a company's board of directors.

E. collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces.

The task of driving forces analysis is to A. identify all the underlying factors that can cause industry profitability to rise or fall in the years ahead. B. predict what new forces of competitive and market change will emerge next. C. determine which of the five competitive forces is the biggest driver of industry change. D. identify which companies are being driven to move from one strategic group to another strategic group. E. collectively (1) identify the driving forces, (2) assess whether the drivers of change are acting individually or in concert to make the industry more or less attractive, and (3) determine what strategy changes are needed to prepare for the impact of the driving forces.

E. the company's responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen.

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.

C. characterizes the school of ethical relativism.

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. E. is the reason codes of ethical and social morality have been established country by country.

D. the attractiveness test, the cost-of-entry test, and the better-off test.

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. E. the resource fit test, the strategic fit test, the profitability test, and the shareholder value test.

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.

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. entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

Trying to determine what strategic moves rivals are likely to make next A. usually has little bearing on a company's own best strategic moves. B. requires evaluating the industry's key success factors as well as determining how many driving forces are present. C. is best done by monitoring each rival's market share, earnings per share, and stock price. Adverse changes in these measures signal the coming of a fresh move, but as long as a company's performance on these measures is satisfactory, the chance of fresh moves is slim. D. cannot be done effectively without first drawing a strategic group map. E. entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

A. overzealous or obsessive pursuit of personal gain, wealth, and other self-interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance targets.

Unethical managerial behavior tends to be driven by such factors as A. overzealous or obsessive pursuit of personal gain, wealth, and other self-interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance targets. B. the lack of a company code of ethics. C. a lack of training in what is ethical and what is not. D. confusing differences between what is ethical behavior in one?s personal life and what is ethically permissible in business. E. All of these choices are correct.

C. can be an excellent initial strategy to pursue international sales.

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. E. can be a powerful strategy because the company is not vulnerable to tariffs or quotas.

B. concentrated attention on serving the needs of buyers in a narrow piece of the overall market.

What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is A. extra attention paid to establishing a distinctive competence. B. concentrated attention on serving the needs of buyers in a narrow piece of the overall market. C. greater opportunity for brand loyalty. D. suitability for market situations where technological change is fast-paced and continuous product innovation is a key success factor. E. bold strategic intent of global market leadership via heavy advertising.

E. identifying which aspects of the present culture are supportive of good strategy execution and which ones are not.

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. C. drawing up an action plan to change the present 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.

C. value chain analysis and benchmarking

Which of the following analytical tools are particularly useful for determining whether a company's prices and costs are competitive? A. SWOT analysis, strategy assessment, activity-based costing analysis, and key success factor analysis B. SWOT analysis, competitive strength assessment, best practices analysis, and value chain analysis C. value chain analysis and benchmarking D. competitive position assessment, competitive strength assessment, strategic group mapping, SWOT analysis, and value chain analysis E. SWOT analysis, best practices analysis, activity-based costing analysis, and competitive strength assessment

E. All of these choices are correct.

Which of the following are consequences of pursuing a strategy that has unethical or shady components? A. government fines and penalties B. legal and investigative costs incurred by the company C. customer defections D. adverse effects on employee productivity E. All of these choices are correct.

D. a competitive advantage based on more value for the money

Which of the following are distinguishing features of a best-cost provider strategy? A. a strategic target that has price-conscious buyers B. a marketing emphasis on charging a slightly higher price than rival brands having comparable features and attributes C. a product line that stresses wide selection, many product variations, and differentiating features D. a competitive advantage based on more value for the money E. constant product innovation, excellent R&D skills, and periodic technological breakthroughs to sustain the strategy

A. There is a surge in buyer demand that creates a "seller's market."

Which of the following conditions determines whether buyer bargaining power in an industry is WEAK? A. There is a surge in buyer demand that creates a "seller's market." B. Buyer demand is weak or declining. C. Buyer switching costs to competing brands is low. D. Buyers who make large-volume purchases are important to sellers. E. Buyers can postpone purchases until later if they are not satisfied with sellers' prices.

D. high capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold

Which of the following conditions generally raise the barriers to entering an industry? A. low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry B. rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty C. product offerings that are pretty much standardized from rival to rival D. high capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold E. The industry is not characterized by scale economies and/or sizable learning or experience curve effects, and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer.

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.

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 hurdle 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. E. The big drawbacks to entering a new industry via internal development include the costs of overcoming entry barriers, building an organization from the ground up, and the extra time it takes to build a strong and profitable competitive position.

E. hiring only people below the age of 35 who have college degrees and a grade point average of B or better

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

B. keeping performance incentives and bonuses to less than 15 percent of total compensation

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 E. making sure the time between achieving the target performance outcome and the payment of the reward is as short as possible

A. strengthening its capability to employ offensive strategies, especially those that involve preemptive strikes

Which of the following is not a typical reason for a company to expand into the markets of foreign countries? A. strengthening its capability to employ offensive strategies, especially those that involve preemptive strikes B. spreading business risk across a wider geographic market base C. capitalizing on company competencies and capabilities D. achieving lower costs and enhancing the firm's competitiveness E. Gaining access to new customers

D. The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations.

Which of the following is not a distinguishing feature of a low-cost provider strategy? A. The product line consists of a few basic models having minimal frills and acceptable quality. B. The production emphasis is on continuously searching for ways to reduce costs without sacrificing acceptable quality and essential features. C. The marketing emphasis is on making virtues out of product features that lead to low cost. D. The strategic target is value-conscious buyers, and sustaining the strategy depends on frequent advances in technology and occasional product innovations. E. Sustaining the strategy revolves around keeping costs down year after year and delivering good value at economical prices.

D. Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers

Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures? A. Whether certain needed inputs are in short supply B. Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs C. Whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price D. Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers E. Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product

C. proven ability to improve production processes

Which of the following is not a good example of a marketing-related key success factor? A. well-known and well-respected brand name B. breadth of product line and product selection C. proven ability to improve production processes D. clever advertising E. courteous, personalized customer service

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

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 E. contributes to a better-quality product/service offering

D. better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization

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 E. share distribution facilities and dealer networks, thus mutually strengthening the allies' access to buyers

C. to reduce the bargaining power they face from buyers of their products

Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers? A. to enhance the quality of parts and components being supplied and/or to reduce defect rates B. to speed the availability of next-generation components C. to reduce the bargaining power they face from buyers of their products D. to squeeze out important cost savings for both themselves and their suppliers E. to reduce inventory and logistics costs

A. how frequently sellers alter their prices, how sensitive buyers are to price differences among sellers, whether an item being purchased is a good or a service, and whether buyers purchase frequently or infrequently

Which of the following is not a relevant factor in conducting a PESTEL analysis? A. how frequently sellers alter their prices, how sensitive buyers are to price differences among sellers, whether an item being purchased is a good or a service, and whether buyers purchase frequently or infrequently B. interest rates, exchange rates, unemployment rates, inflation rates, and economic growth C. cultural, lifestyle, and demographic changes D. the birth of new industries, new knowledge, and disruptive technologies E. weather, climate change, and water shortages

A. It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs.

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. E. Integrating backward potentially results in less flexibility in accommodating shifting buyer preferences when a new product design doesn't include parts and components that the company makes in-house.

A. Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals.

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. E. Stay away from those emerging markets where it is impractical or uneconomical to modify the company?s business model to accommodate local circumstances.

C. changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability

Which of the following is not among the most common types of driving forces? A. product innovation, marketing innovation, and increasing globalization of the industry B. changes in the long-term industry growth rate, changes in who buys the product and how they use it, and growing buyer preferences for differentiated products C. changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability D. emerging new Internet applications and capabilities, technological change, and the diffusion of technical know-how across more companies and more countries E. changes in cost and efficiency, the entry or exit of major firms, and changing societal concerns, attitudes, and lifestyles

D. engaging the services of staffing firms to maintain the company's personnel data

Which of the following is not among the principal managerial tasks associated with managing the strategy execution process? A. ensuring that policies and procedures facilitate rather than impede effective execution B. installing information and operating systems that enable company personnel to perform essential activities C. exerting the internal leadership needed to drive implementation forward D. engaging the services of staffing firms to maintain the company's personnel data E. tying rewards and incentives directly to the achievement of performance objectives

A. being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company's website

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 direct to end-users at the company's website B. allowing a company to reduce costs if the 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 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 E. being able to reduce the company's risk exposure to changing technology and/or buyer preferences

E. adhering to abandoned strategy elements

Which of the following is not an element of a company's realized business strategy? A. actions and approaches used in managing R&D, production, sales and marketing, finance, and other key activities B. actions to strengthen competitiveness via strategic alliances and collaborative partnerships C. actions to capture emerging market opportunities and defend against external threats to the company's business prospects D. actions to enter new geographic or product markets E. adhering to abandoned strategy elements

B. weaker brand image and a smaller network of retailer dealers than rivals have

Which of the following is not an example of an external threat to a company's future business prospects (see Table 4.2)? A. increasing intensity of competition among industry rivals and costly new regulatory requirements B. weaker brand image and a smaller network of retailer dealers than rivals have C. shifts in buyer needs and preferences away from using the industry's product D. vulnerability to unfavorable industry driving forces and adverse demographic changes that are likely to curtail demand for the industry's product E. growing bargaining power on the part of customers and/or suppliers

D. providing rank-and-file employees with representation on the company's board of directors

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 E. using frequent words of praise to recognize employees for commendable performance

B. actions to provide suppliers, distributors, and other value chain partners with handsome profit margins

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 E. actions to protect the environment and, in particular, to minimize or eliminate any adverse impact on the environment stemming from the company's own business activities

A. bureaucratic cultures

Which of the following is not one of the five types of unhealthy company cultures? A. bureaucratic cultures B. change-resistant cultures C. unethical and greed-driven cultures D. politicized cultures E. insular, inwardly focused cultures

C. striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability)

Which of the following is not one of the hazards of pursuing a differentiation strategy? A. charging too high a price premium for the differentiating features B. over-differentiating so that the features and attributes incorporated exceed buyer needs and requirements C. striving to create strong brand loyalty rather than being content with weak brand loyalty (which usually means lower costs and higher profitability) D. using features or attributes that rivals can easily copy E. overspending on efforts to differentiate the company's product offering

A. sticking with an outdated business model

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? A. sticking with an outdated business model B. focusing on a narrow market niche within an industry C. striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals D. developing an advantage based on offering more value for the money E. creating a differentiation-based advantage over rivals

D. reducing the layers of management to a bare minimum and making sure employees are empowered

Which of the following is not one of the principal managerial components associated with implementing and executing strategy? A. adopting an organizational structure that supports strategies intended to create customer value B. ensuring that policies and procedures facilitate rather than impede strategy execution C. staffing the organization with people having the right skills and expertise D. reducing the layers of management to a bare minimum and making sure employees are empowered E. instilling a corporate culture that promotes good strategy execution

C. blocking the avenues open to challengers

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 E. offering an equal or better product at a lower price

D. What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach?

Which of the following is not one of the questions that must be answered in thinking strategically about a company's external environment? A. What kinds of competitive forces are industry members facing, and how strong is each force? B. What market positions do industry rivals occupy—who is strongly or weakly positioned, and who is not? C. What are the strategically relevant factors in the company's macro-environment? D. What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach? E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

B. pursuing blue ocean opportunities in the company's home country market

Which of the following is not one of the ways in which a company can pursue competitive advantage by expanding outside its domestic market and competing multinationally? A. locating value chain activities among various countries in a manner that lowers costs B. pursuing blue ocean opportunities in the company's home country market C. locating value chain activities among various countries in a manner that helps achieve greater product differentiation D. coordinating its cross-border activities in ways that contribute to building a competitive edge E. None of these.

D. a producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans)

Which of the following is the best example of related diversification? A. a manufacturer of golf shoes diversifying into the production of fishing rods and fishing lures B. a homebuilder acquiring a building materials retailer C. a steel producer acquiring a manufacturer of farm equipment D. a producer of snow skis and ski boots acquiring a maker of ski apparel and accessories (outerwear, goggles, gloves and mittens, helmets and toboggans) E. a publisher of college textbooks acquiring a publisher of magazines

C. to gain better access to end users and better market visibility

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 E. to gain better access to greater economies of scale

B. is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance?

Which of the following questions ought to be used to distinguish a winning strategy from a mediocre or losing strategy? A. Did the strategy develop from an inclusive cooperative relationship between top-level management, line managers, and hourly personnel? B. Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance? C. Has management responded to changing market conditions with emergent strategy elements? D. Is the strategy built upon a viable business model? E. Does the strategy strike a balance between shareholder interests and social responsibility?

E. Two answers are correct: Is new infrastructure needed before market demand can surge? and How rapid is technological change, and will follow-on rivals find it easy to derail us with next-generation products of their own?

Which of the following questions should companies ask before seeking a first-mover advantage? A. Are the costs of pioneering much higher than being a follower, and will only negligible buyer loyalty or cost savings accrue to the pioneer? B. Is new infrastructure needed before market demand can surge? C. Are our skills, know-how, and products easily copied, or could they even be bested by fast-followers and late movers? D. How rapid is technological change, and will follow-on rivals find it easy to derail us with next-generation products of their own? E. Two answers are correct: Is new infrastructure needed before market demand can surge? and How rapid is technological change, and will follow-on rivals find it easy to derail us with next-generation products of their own?

C. A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements

Which of the following statements about a company's realized strategy is true? A. A company's realized strategy is usually kept secret. B. A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. C. A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. D. A company's realized strategy generally changes very little over time unless a newly appointed CEO decides to take the company in a new direction with a new strategy. E. A company's realized strategy is developed mostly on a day-to-day basis because of the constant efforts of managers to keep rival companies at a disadvantage.

C. standardizing the resource fit across the group of businesses the company has diversified into

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 E. pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage

C. Strategy at its essence is about competing differently—doing what rival firms do not do or cannot do.

Which of the following statements about a company's strategy is true? A. Crafting an excellent strategy is more important than executing it well. B. A company's strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole. C. Strategy at its essence is about competing differently—doing what rival firms do not do or cannot do. D. Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers. E. Whether a company's strategy is ethical or not does not matter much because most customers and most suppliers are relatively unconcerned with whether a company they do business with engages in sleazy practices or turns a blind eye to below-board behavior on the part of its employees.

E. None of these

Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is incorrect? A. Profitability in emerging markets rarely comes quickly or easily. 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 often involves upgrading the local infrastructure (the supplier base, transportation systems, distribution channels, labor markets, and capital markets). D. Tailoring products to fit conditions in an emerging country market often involves more than making minor product changes and becoming more familiar with local cultures. E. None of these

B. Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable.

Which of the following statements about market opportunity is correct? A. Market opportunity is a big factor in shaping a company's strategy. B. Depending on the prevailing circumstances, a company's opportunities can be plentiful or scarce and can range from wildly attractive to unsuitable. C. In evaluating the attractiveness of a company's market opportunities, managers have to guard against viewing every industry opportunity as a suitable opportunity. D. Two answers are correct: Market opportunity is a big factor in shaping a company's strategy; and in evaluating the attractiveness of a company's market opportunities, managers have to guard against viewing every industry opportunity as a suitable opportunity. E. All of these choices are correct.

E. Two of the answers are correct: Existing strategies should never be scrutinized if they are working well; and new initiatives that don't seem to match a company's internal and external situation should always be retained as a contingency

Which of the following statements concerning producing good company performance is incorrect? A. Existing strategies should never be scrutinized if they are working well. B. New initiatives that don't seem to match a company's internal and external situation should always be retained as a contingency. C. The bigger and more durable the competitive edge that a strategy helps to build, the more powerful it is. D. It's unwise to build a strategy upon the company's weaknesses or pursue a strategic approach that requires resources that are deficient within the company. E. Two of the answers are correct: Existing strategies should never be scrutinized if they are working well; and new initiatives that don't seem to match a company's internal and external situation should always be retained as a contingency.

E. None of these.

Which of the following statements is false? A. A dynamic capability is the ability to modify, deepen, or reconfigure the company's existing resources and capabilities in response to changes in the environment or market. B. A company's internal strengths should always serve as the basis for its strategy. C. Managers must look toward correcting competitive weaknesses that make the company vulnerable, dampen profitability, or disqualify it from pursuing an attractive opportunity. D. Managers need to keep close track of how cost effectively the company can deliver value to customers relative to its competitors. E. None of these.

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.

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. E. Top executives retain authority for most strategic and operating decisions.

B. larger workforce, longer time in business, lower profit margins, and smaller capital investment spend than rivals

Which one of the following groups of characteristics is least likely to represent valuable company resources or competitive capabilities? A. state-of-the-art manufacturing plants and equipment, efficient distribution facilities, attractive real estate locations, or ownership of valuable natural resource deposits B. larger workforce, longer time in business, lower profit margins, and smaller capital investment spend than rivals C. a well-known brand name D. information and communication systems (servers, workstations, etc.), proven quality control systems, and a strong network of distributors or retail dealers E. company culture-norms of behavior, business principles, and ingrained beliefs within the company

A. helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma

Which one of the following is not a benefit of prescribing policies and operating procedures to aid management's task of implementing strategy? A. helping build employee commitment to adopting best practices and using the tools of TQM and Six Sigma B. providing top-down guidance to operating managers, supervisory personnel, and employees regarding how to alter past practice and how things need to be done now C. promoting the creation of a can-do work climate that facilitates good strategy execution D. enforcing needed consistency in how particular strategy-critical activities are performed E. Two answers are correct: promoting the creation of a can-do work climate that facilitates good strategy execution; and enforcing needed consistency in how particular strategy-critical activities are performed.

B. concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders)

Which one of the following is not a characteristic of an effectively worded strategic vision statement (see Table 2.2)? A. directional (is forward-looking; describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future) B. concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders) C. graphic (paints a clear picture) D. easy to communicate (ideally, explainable in 10 minutes) E. focused and flexible (specific enough to provide managers with guidance in making decisions and allocating resources but stops short of a once-and-for-all-time statement because the strategic path may need to be changed as market-customer-technology circumstances change)

E. a need to convince shippers to keep transportation costs low

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

D. whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities

Which one of the following is not a good indicator of how well a company's present strategy is working? A. whether it is achieving its stated financial and strategic objectives B. whether it is an above-average industry performer C. whether the firm's sales and earnings are increasing or decreasing D. whether the company's resource strengths and competitive capabilities outnumber its resource weaknesses and competitive vulnerabilities E. the rate at which new customers are acquired and whether the company's overall financial strength is improving or on the decline

D. other offensive-minded companies with a sizable war chest of cash and marketable securities

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 E. struggling enterprises that are on the verge of going under

C. shifting from decentralized to centralized decision making so as to give senior executives more authority and control in driving cultural change

Which one of the following is not a means of building and strengthening competitively valuable resources and capabilities? A. engaging in experience-building activities such as collaborative efforts in R&D engineering and design B. acquiring capabilities through mergers and acquisitions C. shifting from decentralized to centralized decision making so as to give senior executives more authority and control in driving cultural change D. entering into collaborative partnerships with suppliers, competitors or other companies that possess needed expertise E. None of these are correct.

B. The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society?s social responsibility expectations.

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. E. Socially responsible actions can lead to increased buyer patronage.

C. whether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategy

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 E. whether to enter into strategic alliances or collaborative partnerships

A. directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy

Which one of the following is not among the chief duties/responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? A. directing senior executives as to what the company's long-term direction, objectives, business model, and strategy should be, and, further, closely supervising senior executives in their efforts to implement and execute the strategy B. overseeing the company's financial accounting and financial reporting practices C. evaluating the caliber of senior executives' strategy-making/strategy-executing skills D. being inquiring critics and exercising strong oversight over the company's direction, strategy, and business approaches E. instituting a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests, most especially those of shareholders

B. choosing a strategic intent

Which one of the following is not an integral part of the managerial process of crafting and executing strategy? A. developing a strategic vision B. choosing a strategic intent C. setting objectives and crafting a strategy to achieve them D. evaluating performance and initiating corrective adjustments in the company's long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities E. implementing and executing the chosen strategy efficiently and effectively

A. checking whether each business a company has diversified into can pass the profitability test, the capital gains test, the growth rate test, and the resources test

Which one of the following is not part of the task of critiquing a diversified company's strategy, assessing its business makeup, and deciding how to improve overall company performance? A. checking whether each business a company has diversified into can pass the profitability test, the capital gains test, the growth rate test, and the resources test B. checking for strategic fit and resource fit C. ranking the performance prospects of the businesses from best to worst and determining what the corporate parent's priority should be in allocating resources to its various businesses D. assessing the attractiveness of the industries the company has diversified into, both individually and as a group E. assessing the competitive strength of the company's business units and determining how many are strong contenders in their respective industries

A. providing to shareholders that the company's business model is viable

Which one of the following is not related to actions and approaches that comprise a company's strategy? A. proving to shareholders that the company's business model is viable B. achieving a low-cost provider strategy C. seeking a broad differentiation strategy D. concentrating on a focused low-cost strategy E. pursuing a best-cost provider strategy

B. the extent to which a company's customer value proposition is superior to its rivals'

Which one of the following is not something that can be learned from doing a competitive strength assessment? A. identifying the competitive factors where a company is strongest and weakest vis-à-vis key rivals and the kinds of offensive/defensive actions the company can use to exploit its competitive strengths and reduce its competitive vulnerabilities B. the extent to which a company's customer value proposition is superior to its rivals' C. which of the rated companies is competitively strongest and what magnitude competitive advantage it enjoys D. whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (as indicated by the differences among the companies' competitive strength scores) E. which rival company is competitively weakest and the areas where it is most vulnerable to competitive attack

D. the strategy and business model that the company has adopted

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 E. the "chemistry" that permeates its work environment

C. Mergers and acquisitions do not always produce the hoped-for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may take substantially longer to realize or may never materialize. Efforts to mesh the corporate cultures can stall due to formidable resistance from organization members.

Which one of the following statements about merger and acquisition strategies is true? A. Merger and acquisition strategies are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. B. Merger and acquisition strategies tend to be far more successful than forming strategic alliances and cooperative partnerships with other companies. C. Mergers and acquisitions do not always produce the hoped-for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may take substantially longer to realize or may never materialize. Efforts to mesh the corporate cultures can stall due to formidable resistance from organization members. D. Mergers and acquisition strategies are very high risk because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. Merger and acquisition strategies are one of the best ways for helping a company strengthen its brand image.

C. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Which one of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true? A. Domestic companies trying to combat competition from foreign 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. B. Fluctuating foreign exchange rates greatly reduce the risks of competing in foreign markets; the big problem occurs when exchange rates are fixed at unreasonably low levels. C. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made. D. Manufacturers that are exporting much of what they produce are benefited when their country's currency grows stronger relative to the currencies of the countries to which the goods are being exported. E. If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25 per euro, then it is correct to say that the U.S. dollar has grown stronger.