UVU MGMT 4860 Test 1

Which of the following are characteristics of an effectively worded strategic vision statement? A. Graphic, directional, and focused B. Challenging, competitive, and set in concrete C. Balanced, responsible, and rational D. Realistic, customer-focused, and market-driven E. Achievable, profitable, and ethical

A. Graphic, directional, and focused From Table 2.2, it is evident that an effectively worded vision statement is graphic, directional, focused, flexible, feasible, desirable, and easy to communicate. A surprising number of the vision statements found on company websites and in annual reports are vague and unrevealing, saying very little about the company's future product-market-customer-technology focus.

Which of the following is not a good example of a marketing-related key success factor (KSF)? A. High utilization of fixed assets B. A well-known and well-respected brand name C. Breadth of product line and product selection D. Clever advertising E. Courteous, personalized customer service

A. High utilization of fixed assets Among the marketing KSFs are: (1) breadth of product line and product selection; (2) a well-known and well-respected brand name; (3) fast, accurate technical assistance; (4) courteous, personalized customer service; (5) accurate filling of buyer orders (few back orders or mistakes); (6) customer guarantees and warranties (important in mail-order and online retailing, big-ticket purchases, and new-product introductions); and (7) clever advertising.

Which one of the following is not among the chief duties or responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? A. Hire and fire senior-level executives and work with the company's chief strategic planning officer to improve the company's performance. B. Inquire about and exercise strong oversight over the company's direction, strategy, and business approaches. C. Evaluate the caliber of senior executives' strategy-making, strategy-executing skills. D. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests and most especially those of shareholders. E. Oversee the company's financial accounting and financial reporting practices.

A. Hire and fire senior-level executives and work with the company's chief strategic planning officer to improve the company's performance. Hiring and firing senior level executives and working with the chief strategic planning officer is not among the primary duties of a company's board of directors. Those primary duties do include: (1) monitoring the company's performance, including financial and accounting reporting practices, (2) guiding and judging the CEO and other top executives, (3) curbing management actions it believes are inappropriate or unduly risky, (4) certifying to shareholders that the CEO is doing what the board expects, (5) providing insight and advice to management, and (6) remaining intensely involved in debating the pros and cons of key decisions and actions.

Which one of the following is not among the chief duties or responsibilities of a company's board of directors insofar as the strategy-making, strategy-executing process is concerned? A. Hire and fire senior-level executives and work with the company's chief strategic planning officer to improve the company's performance. B. Inquire about and exercise strong oversight over the company's direction, strategy, and business approaches. C. Evaluate the caliber of senior executives' strategy-making, strategy-executing skills. D. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests and most especially those of shareholders. E. Oversee the company's financial accounting and financial reporting practices.

A. Hire and fire senior-level executives and work with the company's chief strategic planning officer to improve the company's performance. Hiring and firing senior level executives and working with the chief strategic planning officer is not among the primary duties of a company's board of directors. Those primary duties do include: (1) monitoring the company's performance, including financial and accounting reporting practices, (2) guiding and judging the CEO and other top executives, (3) curbing management actions it believes are inappropriate or unduly risky, (4) certifying to shareholders that the CEO is doing what the board expects, (5) providing insight and advice to management, and (6) remaining intensely involved in debating the pros and cons of key decisions and actions.

Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry? A. How many companies in the industry have good track records for revenue growth and profitability? B. What strategic moves are rivals likely to make next? C. What are the key factors for future competitive success? D. Does the outlook for the industry offer good prospects for profitability? E. What forces are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?

A. How many companies in the industry have good track records for revenue growth and profitability? The correct answer refers to actions in a company's economic environment, whereas all of the other responses refer to characteristics of a company's industry and competitive environment, as shown in Figure 3.1.

Which one of the following is not a reason industry members are often motivated to enter into collaborative partnerships with key suppliers? A. To reduce the costs of switching suppliers B. To speed the availability of next-generation components C. To enhance the quality of parts and components being supplied and reduce defect rates D. To squeeze out important cost savings for both themselves and their suppliers E. To reduce inventory and logistics costs

A. To reduce the costs of switching suppliers See Figure 3.5. Suppliers with strong bargaining power can erode industry profitability by charging industry members higher prices, passing costs on to them, and limiting their opportunities to find better deals via switching. That said, as a rule, suppliers have less bargaining leverage when their sales to a strategic partner constitute a big percentage of their total sales. In such cases, the well-being of suppliers is closely tied to the well-being of that major customer/partner.

The key success factors in an industry A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace. B. are determined by the industry's driving forces. C. hinge on how many different strategic groups the industry has. D. depend on how many rivals are trying to move from one strategic group to another. E. are a function of such considerations as how many firms are in the industry, how many have market shares above five percent, and whether the business models being used are similar or diverse.

A. are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace. Key success factors are the strategy elements, product attributes, competitive capabilities, or intangible assets with the greatest impact on future success in the marketplace.

Crafting a strategy involves A. blending deliberate, planned initiatives with emergent, unplanned reactive responses to changing circumstances, while abandoning planned strategy elements that have failed in the marketplace. B. developing a five-year strategic plan and then fine-tuning it during the remainder of the plan period. C. trying to imitate as much of the market leader's strategy as possible so as not to end up at a competitive disadvantage. D. doing everything possible (in the way of price, quality, service, warranties, advertising, and so on) to make sure the company's product and/or service is very clearly differentiated from the product and or service offerings of its rivals. E. All of these accurately characterize the managerial process of crafting a company's strategy.

A. blending deliberate, planned initiatives with emergent, unplanned reactive responses to changing circumstances, while abandoning planned strategy elements that have failed in the marketplace. A company's realized strategy is a combination of both deliberate planned elements and unplanned emergent elements. Some components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements.

The competitive pressures from substitute products tend to be stronger when A. buyers are relatively comfortable with the quality and performance of substitutes, and the costs to buyers of switching over to the substitutes are low. B. there are more than 10 sellers of substitute products. C. substitutes exhibit the latest in technological innovation. D. buyers have high psychic costs in severing existing brand relationships and establishing new ones. E. demand for the industry's product is not very price sensitive.

A. buyers are relatively comfortable with the quality and performance of substitutes, and the costs to buyers of switching over to the substitutes are low. See Figure 3.4. Generally speaking, when end users are comfortable with purchasing substitutes, when the quality and performance of substitutes is comparable, and when user's switching costs are low, the more intense are the competitive pressures posed by substitute products.

Rivalry among competing firms tends to be more intense when A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share. B. the products/services of rival sellers are strongly differentiated and buyer demand is strong. C. rivals are relatively content with their market position. D. there are so many industry rivals that the impact of any one company's actions is spread thinly across all industry members. E. there are fewer firms in the industry that have unequal market shares.

A. demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position, buyers have low switching costs, and strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share. See Figure 3.7. Rivalry is stronger in industries where there is slow growth in demand, one or more rivals is dissatisfied with its market position, buyers have low switching costs, and the number of players is diminishing due to acquisition by firms outside the industry.

The essence of strategy is A. developing lasting success that can support growth and secure the company's future over the long term. B. recreating a business model with regularity. C. matching rival businesses' products and quality dimensions in the marketplace. D. building profits for short-term success. E. realigning the market to provoke change in rival companies.

A. developing lasting success that can support growth and secure the company's future over the long term. Strategy at its essence is about setting a company apart from its rivals and staking out a market position that is not crowded with strong competitors. A company aims at doing what rivals cannot or do not do.

The competitive threat that outsiders will enter a market is weaker when A. financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers. B. the pool of entry candidates is large, and some have resources that would make them formidable market contenders. C. the industry's market growth is rapid. D. newcomers can be expected to earn attractive profits. E. buyers have little loyalty to the brands and product offerings of existing industry members.

A. financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers. See Figure 3.6. All of the answer choices indicate an attractive industry to enter except the signaling by financially strong incumbents that they will try to deter new entrants.

Managers of every company should be willing and ready to modify their strategy because A. market conditions and circumstances are changing over time or the current strategy is clearly failing. B. the task of crafting strategy is a one-time event. C. the strategic vision necessitates periodic updating. D. frequent changes in strategy make it very more difficult for rivals to imitate. E. all strategies are reactive.

A. market conditions and circumstances are changing over time or the current strategy is clearly failing. A company's strategy evolves incrementally as management fine-tunes various pieces of the strategy and adjusts the strategy in response to unfolding events. Inevitably there will be occasions when changing market and competitive conditions call for some kind of strategic reaction or abandonment of a current strategy, but a company's strategy also consists of deliberate and proactive (or planned) elements.

Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of A. not only explaining "where we are going and why" but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction. B. helping company personnel understand why making a profit is so important. C. making it easier for top executives to set strategic objectives. D. helping lower-level managers and employees better understand the company's business model. E. All of these choices are correct.

A. not only explaining "where we are going and why" but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction. The defining characteristic of a well-conceived strategic vision is what it says about the company's future strategic course—"where we are headed and what our future product-customer-market-technology focus will be." Vision statements galvanize action among company personnel. Alternatively, mission statements of most companies say much more about the enterprise's present business scope and purpose—"why we exist."

The bargaining leverage of suppliers is greater when A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes. B. industry members incur low costs in switching their purchases from one supplier to another. C. industry members purchase in large quantities and thus are important customers of the suppliers. D. it makes good economic sense for industry members to vertically integrate backward. E. the supplier industry is composed of a large number of relatively small suppliers.

A. only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes. See Figure 3.5. When the number of suppliers of inputs is limited, suppliers tend to have stronger bargaining power and can charge industry members higher prices (passing costs on to them) and limit opportunities to find better deals via switching.

The payoff of good scouting reports on rivals is improved ability to A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps. B. determine which rivals are in the best strategic group. C. figure out how many key success factors a rival has. D. determine whether a rival is gaining or losing market share, whether rivals are increasing or decreasing R&D spending, and what new marketing promotions are in the works. E. determine whether a rival has the best strategy and is the industry leader.

A. predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps. Unless a company pays attention to the strategies and situations of competitors and has some inkling of what moves they will be making, it ends up flying blind into competitive battle. As in sports, scouting the business opposition is an essential part of game plan development.

The competitive moves and business approaches a company's management is using to grow the business, compete successfully, attract and please customers, conduct operations, respond to changing economic and market conditions, and achieve organizational objectives is referred to as its A. strategy. B. moves to imitate key rivals. C. strategic mission. D. business model. E. strategic vision.

A. strategy. A strategy is predicated on actions, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from rivals. Simply trying to mimic the strategies of the industry's successful companies never works.

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

Adhering to abandoned strategy elements A company's realized strategy is a combination of deliberate planned elements and unplanned emergent elements. Some components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements.

Which one of the following is not one of the five stages of an ongoing, continuous strategic management process? A. Developing a strategic vision of what the company's future direction and focus needs to be B. Developing a sustainable business model C. Crafting a strategy to advance the company along the path that management has charted and achieve its performance objectives D. Setting objectives to measure progress toward achieving the strategic vision E. Executing the chosen strategy efficiently and effectively

B. Developing a sustainable business model As shown in Figure 2.1, the process of crafting and executing a company's strategy is an ongoing, continuous process consisting of five interrelated stages: (1) developing a strategic vision that charts the company's long-term direction; (2) setting objectives for measuring the company's performance and tracking its progress in moving in the intended long-term direction; (3) crafting a strategy for advancing the company along the path management has charted and achieving its performance objectives; (4) executing the chosen strategy efficiently and effectively; and (5) monitoring developments, evaluating performance, and initiating corrective adjustments in the company's vision and mission statement, objectives, strategy, or approach to strategy execution in light of actual experience, changing conditions, new ideas, and new opportunities.

Which of the following is not a common shortcoming of company vision statements? A. Vague or incomplete—short on specifics B. Focused and narrow—exclusive to a specific direction C. Bland or uninspiring D. Not distinctive—could apply to almost any company (or at least several others in the same industry) E. Too reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers)

B. Focused and narrow—exclusive to a specific direction From Table 2.3, it is evident that an ineffectively worded vision statement is not forward-looking, too broad, bland or uninspiring, not distinctive, and overly reliant on superlatives.

Which of the following is not something a company's strategy is concerned with? A. Management's choices about how to attract and please customers B. Management's choices about how quickly and closely to copy the strategies being used by successful rival companies C. Management's choices about how to grow the business D. Management's choices about how to outcompete rivals E. Management's action plan for conducting operations and improving the company's strategic and financial performance

B. Management's choices about how quickly and closely to copy the strategies being used by successful rival companies Simply trying to mimic the strategies of the industry's successful companies never works. Rather, every company's strategy needs to have some distinctive element that draws in customers and produces a competitive edge.

Which of the following is an integral part of the managerial process of crafting and executing strategy? A. Developing a proven business model B. Setting objectives and using them as yardsticks for measuring the company's performance and progress C. Deciding how much of the company's resources to employ in the pursuit of sustainable competitive advantage D. Communicating the company's mission and purpose to all employees E. Deciding on the composition of the company's board of directors

B. Setting objectives and using them as yardsticks for measuring the company's performance and progress Figure 2.1 displays the five-stage process: (1) developing a strategic vision, (2) setting objectives, (3) crafting strategy, (4) implementing and executing the chosen strategy, and (5) evaluating and analyzing the external environment and the company's internal situation and performance.

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

B. a sufficiently large number of buyers have a lasting preference for its products or services as compared to the offerings of competitors. A company achieves sustainable competitive advantage when 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's strategy has a chance of succeeding only when it is predicated on A. building revenues, controlling costs, and generating an attractive profit. B. actions, business approaches, and competitive moves aimed at appealing to buyers and setting the company apart from rivals. C. management's concepts of "where we have been," "where we are headed," and "where we need to go." D. the approval of a business model by a company's board of directors that spells out how to outcompete its rivals and make the company profitable. E. educated choices that management has made regarding which financial and operating plans to pursue.

B. actions, business approaches, and competitive moves aimed at appealing to buyers and setting the company apart from rivals. Strategy spells out why the company matters in the marketplace by defining its approach to creating superior value for customers and how capabilities and resources will be employed to deliver the desired value to customers. In effect, the crafting of a strategy represents a managerial commitment to pursuing an array of choices about how to compete.

Management is obligated to monitor new external developments, evaluate the company's progress, and make corrective adjustments in order to A. determine whether the company has a balanced scorecard for judging its performance. B. decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. C. determine what changes should be made to its customer value proposition. 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.

B. decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. A company's direction, objectives, and strategy have to be revisited any time external or internal conditions warrant. A company's vision, objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process, not an every-now-and-then task.

Having good competitive intelligence about rivals' strategies, latest actions and announcements, resource strengths and weaknesses, and moves to improve their situation is important because it A. identifies who the industry's current market share leaders are. B. helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves. C. helps identify which rival is in which strategic group. D. enables company managers to determine which rival has the worst strategy and how to avoid making the same strategy mistakes. E. enables more accurate predictions about how long it will take a particular rival to copy most of what the strategy leader is doing.

B. helps a company to anticipate what moves rivals are likely to make next and to craft its own strategic moves. Studying competitors' past behavior and preferences provides a valuable assist in anticipating what moves rivals are likely to make next and outmaneuvering them in the marketplace.

A creative, distinctive strategy that sets a company apart from its rivals and that gives it a sustainable competitive advantage A. is a reliable indicator that the company has a profitable business model. B. is a company's most reliable ticket to above-average profitability. C. signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives. D. is the best indicator that the company's strategy and business model are well matched and properly synchronized. E. allows a company's managers to ignore competitors' responses to any moves that the company might make.

B. is a company's most reliable ticket to above-average profitability. A creative, distinctive strategy that sets a company apart from its rivals and that gives it a sustainable competitive advantage is a company's most reliable ticket for earning above-average profits.

Company objectives A. are needed only on a companywide basis related to a company's short-term and long-term profitability. B. need to be broken down into performance targets for each of its separate businesses, product lines, functional departments, and individual work units. C. play the important role of establishing the direction in which the company needs to be headed. D. are important because they help guide managers in deciding what the company's strategy map should look like. E. should be set in a manner that does not conflict with the performance targets of lower-level organizational units.

B. need to be broken down into performance targets for each of its separate businesses, product lines, functional departments, and individual work units. Objective setting does not stop with the establishment of companywide performance targets but needs to be broken into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. This is necessary to guide employees within various functional areas and operating levels via narrow objectives relating directly to their departmental activities, rather than broad organizational-level goals.

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

B. scrutinize the company's existing strategies on a regular basis to ensure they offer a good strategic fit, create a competitive advantage, and result in above-average performance. New initiatives that do not seem to match the company's internal and external situation should be scrapped before they come to fruition, while existing strategies must be scrutinized on a regular basis to ensure they offer a good strategic fit with the company's internal and external situation, create a competitive advantage, and contribute to above-average performance or performance improvements.

Which of the following is not a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? Multiple Choice A. Aiming for a cost-based competitive advantage B. Outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, or more attractive styling C. Simply trying to mimic the successful strategies of rivals D. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche E. Developing expertise and resources that give the company competitive capabilities that rivals cannot easily imitate or trump with capabilities of their own

C. Simply trying to mimic the successful strategies of rivals Simply trying to mimic the strategies of the industry's successful companies never works. Rather, every company's strategy needs to have some distinctive element that draws in customers and produces a competitive edge.

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.

C. Strategy at its essence is about competing differently—doing what rival firms do not do or cannot do A strategy stands a chance of succeeding only when it is predicated on actions, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from its rivals.

Which of the following is not one of the basic reasons that a company's strategy evolves over time? A. An ongoing need to abandon those strategy features that are no longer working well B. The proactive efforts of company managers to improve the company's financial performance and secure a competitive advantage C. The need on the part of company managers to make no adjustments to the company's business model D. The need to respond to the actions and competitive moves of rival firms E. The need to keep strategy in step with changing industry and competitive conditions

C. The need on the part of company managers to make no adjustments to the company's business model Regardless of whether a company's strategy changes gradually or swiftly, the important point is that the task of crafting strategy is not a one-time event but is always a work in progress.

Which of the following is not an appropriate guideline for developing a strategic group map for a given industry? A. Variables chosen as axes for the map should indicate big differences in how rivals have positioned themselves to compete in the marketplace. B. Variables chosen as axes for the map can be quantitative, qualitative, or discrete and defined in terms of distinct classes and combinations. C. Variables selected as axes for the map should be highly correlated. D. Several maps should be drawn if more than one pair of variables can help illuminate differences in the competitive positioning of industry members. E. Sizes of the circles on the map should be drawn proportional to the combined sales of the firms in each strategic group.

C. Variables selected as axes for the map should be highly correlated. Observing the guidelines for creating a strategic group map, the two variables selected as axes for the map should not be highly correlated; if they are, the circles on the map will fall along a diagonal, and strategy makers will learn nothing more about the relative positions of competitors than they would by considering just one of the variables.

A company's broad macroenvironment refers to A. the industry and competitive arena in which the company operates. B. general economic conditions plus the factors driving change in the markets being served. C. all the strategically significant forces and factors outside a company's boundaries—general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. D. the competitive market environment that exists between a company and its competitors. E. the dominant economic features of a company's industry.

C. all the strategically significant forces and factors outside a company's boundaries—general economic conditions, population demographics, societal values and lifestyles, technological factors, and governmental legislation and regulation. Strictly speaking, the macroenvironment excludes a company's competitively valuable resources and capabilities and instead encompasses all of the relevant factors—political factors, economic conditions in the firm's general environment, sociocultural forces, technological factors, environmental forces, and legal/regulatory factors—making up the broad environmental context in which a company operates. See Figure 3.1, The Components of a Company's External Environment.

The strategic management process is shaped by A. management's strategic vision, strategic and financial objectives, and strategy. B. the decisions made by the compensation and audit committees of the board of directors. C. external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities. D. a company's customer value proposition and profit formula. E. actions to strengthen competitive capabilities and correct weaknesses, actions to strengthen market standing and competitiveness by acquiring or merging with other companies, and actions to enter new geographic or product markets.

C. external factors such as the industry's economic and competitive conditions and internal factors such as the company's collection of resources and capabilities. Figure 2.1 displays the five-stage process and Table 2.1 describes one in detail. Management's decisions that are made in the strategic management process are shaped by the prevailing economic conditions and competitive environment and the company's own internal resources and competitive capabilities.

Rivalry among competing sellers tends to be less intense when A. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit sales. B. buyer demand is weak and many sellers have excess capacity and/or inventory. C. industry rivals are not particularly aggressive in drawing sales and market share away from rivals. D. rivals have diverse strategies and objectives, and are located in different countries. E. rival sellers have weakly differentiated products.

C. industry rivals are not particularly aggressive in drawing sales and market share away from rivals. See Figure 3.7. Rivalry is less in industries where there is growth in demand and rivals are more or less satisfied with their competitive and market share positions.

The primary roles/obligations of a company's board of directors in the strategy-making, strategy-executing process include A. playing the lead role in forming the company's strategy and then directly supervising the efforts and actions of senior executives in implementing and executing the strategy. B. providing guidance and counsel to the CEO in carrying out his or her duties as chief strategist and chief strategy implementer. C. overseeing the company's financial accounting and reporting practices, evaluating the caliber of senior executives' strategy-making and strategy-executing skills, and instituting a compensation plan that rewards top executives for results that serve shareholder interests. D. working closely with the CEO, senior executives, and the strategic planning staff to develop a strategic plan for the company. E. reviewing and approving the company's business model, and reviewing and approving the proposals and recommendations of the CEO as to how to execute the business model.

C. overseeing the company's financial accounting and reporting practices, evaluating the caliber of senior executives' strategy-making and strategy-executing skills, and instituting a compensation plan that rewards top executives for results that serve shareholder interests. The role of the board involves: (1) oversight over the company's financial accounting and financial reporting practices; (2) oversight over and critique of the company's direction, strategy, and business approaches; (3) evaluation of the caliber of senior executives' strategy formulation and strategy execution skills; and (4) instituting a compensation plan for top executives that rewards them for actions and results that serve shareholder interests.

Operating strategies concern A. what the firm's operating departments are doing to unify the company's functional and business strategies. B. the specific plans for building competitive advantage in each major department and operating unit. C. the relatively narrow strategic initiatives and approaches for managing key operating units within a business and for performing strategically significant operating tasks. D. how best to carry out the company's corporate strategy. E. how best to implement and execute the company's different business-level strategies.

C. the relatively narrow strategic initiatives and approaches for managing key operating units within a business and for performing strategically significant operating tasks. Operating strategies concern the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities, such as materials purchasing or Internet sales.

Different companies across different industries adopt any one of the five generic strategies to gain competitive advantage. Which of the following businesses is most likely to use a low-cost provider strategy? A. A fashion clothing line uses sought-after designers and natural fabrics B. A mortgage company specializes in lending money for second homes C. An online retailer delivers organic groceries overnight D. A baby products retailer sells unassembled baby furniture produced in China E. A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy products

D. A baby products retailer sells unassembled baby furniture produced in China The baby products retailer selling unassembled parts made in China is most likely to have the lowest costs and to pursue a low-cost provider strategy. The other companies are more likely to pursue focused differentiation or best-cost strategies.

Which one of the following is not a characteristic of an effectively worded strategic vision statement? 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. Easy to communicate (is explainable in 10 to 15 minutes, can be reduced to a memorable slogan) C. Graphic (paints a picture of the kind of company management is trying to create and the market position or positions the company is striving to stake out) D. Consensus-driven (commits the company to a "mainstream" directional path that most stakeholders will enthusiastically support) E. Focused (is specific enough to provide guidance to managers in making decisions and allocating resources)

D. Consensus-driven (commits the company to a "mainstream" directional path that most stakeholders will enthusiastically support) From Table 2.2, it is evident that an effectively worded vision statement is graphic, directional, focused, flexible, feasible, desirable, and easy to communicate. While consensus among stakeholders is helpful to adopting a vision statement, crafting that statement is within the purview of top managers.

Which one of the following is not a common type of driving force? A. Entry or exit of major firms B. Changing societal concerns, attitudes, and lifestyles C. Diffusion of technical know-how across more companies and more countries D. Increasing efforts on the part of industry members to collaborate closely with their suppliers E. Technological change and manufacturing process innovation

D. Increasing efforts on the part of industry members to collaborate closely with their suppliers Most drivers of industry and competitive change fall into one of the above categories (see Table 3.2) but not collaborative alliances.

Which of the following are most unlikely to qualify as driving forces? A. Changes in the long-term industry growth rate, the entry or exit of major firms, and changes in cost and efficiency B. Increasing globalization of the industry and product innovation C. New Internet technology applications, new government regulations, and significant changes in government policy toward the industry D. Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances E. Changes in who buys the industry's product and how they use it

D. Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances Most drivers of industry and competitive change fall into one of the above categories (see Table 3.2) but not competition from substitutes or collaborative alliances.

Which of the following is not a factor to consider in identifying an industry's dominant economic features? A. Market size, growth rate, and prospects B. Scope of competitive rivalry including geographic area C. Market demand-supply conditions D. Strength of both driving forces and competitive forces E. Role and pace of technological change

D. Strength of both driving forces and competitive forces The strength of both driving forces and competitive forces are actions in a company's industry and competitive environment, whereas all of the other responses refer to characteristics of a company's economic environment, as shown in Figure 3.1.

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

D. a blend of deliberate planned actions to improve the company's competitiveness and financial performance and as-needed unplanned reactions to unanticipated developments and fresh market conditions. The biggest portion of a company's current strategy flows from ongoing actions that have proven themselves in the marketplace and newly launched initiatives aimed at building a larger lead over rivals and further boosting financial performance. This part of management's action plan for running the company is its proactive, deliberate strategy.

Industry conditions change A. because of such powerful driving forces as swings in buyer demand, changing interest rates, ups and downs in the economy, and higher/lower entry barriers. B. because of newly emerging industry threats and industry opportunities that alter the composition of the industry's strategic groups. C. because new industry key success factors emerge. D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways. E. chiefly because of changes in the barriers to entry and the degree of competition from substitute products.

D. because forces create pressures or incentives for industry participants (competitors, customers, suppliers) to alter their actions in important ways. Industry and competitive conditions change because forces are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways. The most powerful of the change agents are called "driving forces" because they have the biggest influences in reshaping the industry landscape and altering competitive conditions.

A company's strategy consists of A. actions to develop a more appealing business model than rivals. B. plans involving alignment of organizational activities and strategic objectives. C. offensive and defensive moves to generate revenues and increase profit margins. D. competitive moves and approaches that managers have developed to grow the business, attract and please customers, conduct operations, and achieve targeted objectives. E. its strategic vision, its strategic objectives, and its strategic intent.

D. competitive moves and approaches that managers have developed to grow the business, attract and please customers, conduct operations, and achieve targeted objectives. A strategy stands a chance of succeeding only when it is predicated on actions, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from rivals.

Functional area strategies A. are concerned with how to unify the firm's several different operating strategies into a cohesive whole. B. specify how to build and strengthen the skills, expertise, and competencies needed to execute operating-level strategies successfully. C. support and add power to the corporate-level strategy. D. concern the actions, approaches, and practices to be employed in managing particular functions within a business. E. are normally crafted by operating-level managers.

D. concern the actions, approaches, and practices to be employed in managing particular functions within a business. Functional-area strategies (as shown in Figure 2.2, A Company Strategy-Making Hierarchy) concern the detailed actions and game plan(s) related to particular functions or processes within a business. Particular functions or processes within a business may include research and development (R&D), production, procurement of inputs, sales and marketing, distribution, customer service, and finance.

Rivalry among competing sellers is generally more intense when A. buyer demand is growing rapidly. B. the industry's driving forces are strong and rivals have strongly differentiated products. C. barriers to entry are moderately high and the pool of likely entry candidates is small. D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume. E. barriers to entry are high and buyer switching costs are high.

D. industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume. See Figure 3.7. Rivalry is fierce in industries where there is slow growth in demand and one or more rivals is using price cuts or other tactics to undercut the competition.

A company's business model A. specifies the goals of above-average profitability and outstanding financial performance. B. is unrelated to its customer value proposition and profit formula. C. has nothing to do with whether it can execute its customer value proposition profitably. D. is management's blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. E. specifies exactly how it intends to outcompete its rivals to achieve its strategic vision.

D. is management's blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. A company's business model is management's blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. A business model consists of two elements: (1) its customer value proposition and (2) its profit formula.

A company's values concern A. whether and to what extent it intends to operate in an ethical and socially responsible manner. B. how aggressively it will seek to maximize profits and enforce high ethical standards. C. the beliefs and operating principles built into the company's "balanced scorecard" for measuring performance. D. the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. E. the beliefs, principles, and ethical standards that are incorporated into the company's strategic intent and business model.

D. the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission. A company's values are the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.

The marketplace being a competitive battlefield is primarily due to A. the ongoing race among rivals to achieve the fastest rate of growth in revenues and profits. B. the ongoing efforts of industry members to introduce innovative products/services as fast followers into the marketplace. C. the ability of industry rivals to build strong defenses against the industry's driving forces. D. the constant rivalry of firms to strengthen buyer patronage among competing sellers of a product or service, in order to win a competitive edge over rivals. E. the efforts of industry incumbents to lower cost products/services at a faster rate than their rivals.

D. the constant rivalry of firms to strengthen buyer patronage among competing sellers of a product or service, in order to win a competitive edge over rivals. The strongest of the five competitive forces is often the rivalry for buyer patronage among competing sellers of a product or service.

Amy's Drive-Thru, a fast food facility near a college campus, offers healthy, sustainably grown vegetarian and vegan fast-food at higher prices than its competitors in the market and has a drive-through and indoor-seated, casual-dining operation. What strategy is Amy's Drive-Thru using to gain a competitive advantage? A. A best-cost provider strategy B. A low-cost provider strategy C. A focused low-cost provider strategy D. A broad differentiation strategy E. A focused differentiation strategy

E. A focused differentiation strategy Amy's Drive-Thru focuses on healthy fast food for nonmeat eaters. It caters to drive-through and casual-dining customers seeking healthy alternatives and generates profits by offering products and services that rivals do not or cannot provide, and by focusing on a narrow customer base.

Which of the following firms uses an emergent strategy? A. A local hardware store offers a ten-percent discount for seniors on the first Wednesday of every month. B. An online book reseller diversifies into custom book publishing. C. An oil-change franchisor continues geographical expansion despite a recession. D. A health food manufacturer integrates forward into drive-through health food restaurants. E. A microbrewer invests in building community water wells during a drought.

E. A microbrewer invests in building community water wells during a drought. The microbrewer deliberately diversifies its offerings to gain more profits and strengthen its market position—it is not a result of changing internal and external environmental factors, whereas the other examples are a result of changes to the market, changes in customer preferences, or changes in the economic climate.

Which of the following is not an element of a company's business strategy? A. Actions to respond to changing market conditions or other external factors B. Actions to strengthen competitiveness via strategic alliances and collaborative partnerships C. Actions to strengthen internal capabilities and competitively valuable resources D. Actions to manage the functional areas of the business E. Actions to revise the company's financial and strategic performance targets

E. Actions to revise the company's financial and strategic performance targets A company's strategy focuses on how to achieve (not raise) the company's performance targets.

__________ is the most powerful and widely known tool used to assess the state of competition in an industry. A. PESTEL analysis B. SWOT analysis C. Financial ratio analysis D. Strategic group mapping E. Porter's five-force model

E. Porter's five-force model See Figure 3.2, The Five-Forces Model of Competition. The character and strength of the competitive forces operating in an industry are never the same from one industry to another. The most powerful and widely used conceptual tool for diagnosing the principal competitive pressures in a market is the five-forces framework.

Which one of the following is not an accurate attribute of an organization's strategic vision? A. Providing a clearly articulated view of "where we are going" B. Describing the company's future product-customer-market-technology focus C. Pointing an organization in a particular direction and charting a strategic path for it to follow D. Providing managers with a reference point for making strategic decisions E. Specifying how the company intends to implement and execute its business model

E. Specifying how the company intends to implement and execute its business model Top management's views about the company's direction and future product-customer-market-technology focus constitute a strategic vision for the company. A clearly articulated strategic vision communicates management's aspirations to stakeholders about "where we are going" and helps steer the energies of company personnel in a common direction.

Which of the following is not typically a trigger to an evolving strategy? A. The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations B. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy C. The need to abandon some strategy features that are no longer working well D. The need to respond to the newly initiated actions and competitive moves of rival firms E. The need to respond to short-term swings in the stock market

E. The need to respond to short-term swings in the stock market Adapting to new conditions and constantly evaluating what is working well enough to continue and what needs to be improved are normal parts of the strategy-making process, resulting in an evolving strategy. Strategy features that work with evolving markets would not trigger evolution as long as the firm's fundamentals are sound.

A well-conceived strategy builds a company's A. profitability and financial strength. B. competitive strength and market standing. C. distinctive competencies and sustainability. D. competitive edge. E. ethical worthiness and corporate social responsibility.

E. ethical worthiness and corporate social responsibility. The mark of a winning strategy is strong company performance. Two kinds of performance improvements tell the most about the caliber of a company's strategy: (1) gains in profitability and financial strength, and (2) advances in the company's competitive strength and market standing.

Not all positions on a strategic group map are equally attractive because A. entry and exit barriers are different for each strategic group. B. key success factors are usually quite different for differently positioned industry participants. C. small strategic groups are always less profitable than large strategic groups. D. across-group rivalry is strongest at the outer edges of the strategic group map. E. industry driving forces and competitive pressures favor some companies or groups and hurt others, and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position.

E. industry driving forces and competitive pressures favor some companies or groups and hurt others, and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position. Some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces.

Proficient strategy execution A. directly involves only the CEO and board of directors of the firm. B. is achieved unevenly, coming quickly in some areas and more slowly in others. C. entails accomplishing desired outcomes and then examining what went right and what went wrong. D. is an every-now-and-then task. E. is always the product of much organizational learning.

E. is always the product of much organizational learning. Good strategy execution requires managers to pay careful attention to how key internal business processes are performed and see to it that employees' efforts are directed toward the accomplishment of desired operational outcomes. The task of implementing and executing the strategy also necessitates an ongoing analysis of the efficiency and effectiveness of a company's internal activities and a managerial awareness of new developments that might improve business processes.

A benefit of a vivid, engaging, and convincing strategic vision is A. avoiding the need for consensus in support of top management's own view about the company's long-term direction. B. increasing risk of rudderless decision making by managers at all levels of the organization. C. creating debate among company personnel behind managerial efforts to get the company moving in the intended direction. D. helping an organization prepare for to make short-term moves in the marketplace. E. providing a beacon for lower-level managers in forming departmental missions.

E. providing a beacon for lower-level managers in forming departmental missions. A well-thought-out, forcefully communicated strategic vision pays off in several respects: (1) It crystallizes senior executives' own views about the firm's long-term direction; (2) It reduces the risk of rudderless decision-making by management at all levels; (3) It is a tool for winning the support of employees to help make the vision a reality; (4) It provides a beacon for lower-level managers in forming departmental missions; and (5) It helps an organization prepare for the future.

Well-stated objectives are A. succinct and concise so as to identify the company's risk and return options. B. representative of customers' aspirations for company performance. C. directly related to the dividend payout ratio for stockholder returns. D. broad and take into account views of all the stakeholders. E. specific, quantifiable or measurable, and challenging, and contain deadlines for achievement.

E. specific, quantifiable or measurable, and challenging, and contain deadlines for achievement. Well-stated objectives must be specific, quantifiable or measurable, and challenging, and must contain a deadline for achievement.

Whether buyers' bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on A. whether most buyers possess roughly equal or varying degrees of bargaining power. B. how many buyers are engaged in collaborative partnerships with sellers. C. whether entry barriers are high or low. D. whether the overall quality of the items being furnished by industry members is rising or falling. E. whether buyer demand is strong or declining.

E. whether buyer demand is strong or declining. See Figure 3-3. Rapid growth in buyer demand tends to weaken the bargaining power of buyers, and slower growth in buyer demand tends to strengthen the bargaining power of buyers. All of the other responses have no direct impact on buyers' bargaining power.

Which of the following scenarios does not exemplify the impact of the macro-environment on a company's strategic opportunities? Multiple Choice • After Whole Foods introduces stores that are comprised solely of generic products, traffic increases. • FitBit introduces a new feature that monitors users' blood pressure and their sales surge. • Because of Volkswagen's falsified emissions data, consumer confidence in Volkswagen drops precipitously. • Sales of Stolichnaya Vodka in the United States dwindle as a result of a boycott of Russian products. Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry.

Netflix squares off with Amazon Prime as its most potent rival in the streaming television and film industry. As shown in Figure 3.1, a company's broad macro-environment encompasses all of the relevant factors—political factors, economic conditions in the firm's general environment, sociocultural forces, technological factors, environmental forces, and legal/regulatory factors—whereas its industry and competitive environment represent the "inner ring" or narrower part of that operating environment. Rival firms are part of the immediate industry and competitive environment.

Buyer bargaining power is moderate-to-weak in which of the following scenarios? Multiple Choice • Apple designs and manufactures its own microprocessors for mobile devices rather than buying them from Intel or Qualcomm. • Yoghurt and products made from yogurt are highly differentiated by origin and by price. • Buyers tend to delay purchases of luxury goods, such as OLED and 4K television sets, until they are on sale. • Consumers can easily compare different fitness clubs and gyms over the Internet before signing up for memberships. The supply of soccer balls increases during the World Cup season.

The supply of soccer balls increases during the World Cup season. Buyer bargaining power is stronger when buyer demand is weak in relation to industry supply; the industry's products are standardized or undifferentiated; buyers' costs of switching to competing products are low; buyers are large and few in number relative to the number of industry sellers; buyers pose a credible threat of integrating backward into the business of sellers; buyers are well informed about the quality, prices, and costs of sellers; buyers have the ability to postpone purchases.

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

There is a surge in buyer demand that creates a "seller's market." According to the text and Figure 3.3, when there is a surge in buyer demand that creates a "seller's market," then buyer bargaining power weakens. All the other conditions mentioned increase a buyer's bargaining leverage.

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

blending deliberate actions to improve the company's competitiveness and financial performance and unplanned reactions to changing circumstances and fresh market conditions. A company's realized strategy tends to be a combination of deliberate planned elements and unplanned, emergent elements. Inevitably, there will be occasions when market and competitive conditions take unexpected turns that call for some kind of strategic reaction.

The task of driving forces analysis is to Multiple Choice • identify all the underlying factors that can cause industry profitability to rise or fall in the years ahead. • predict what new forces of competitive and market change will emerge next. • determine which of the five competitive forces is the biggest driver of industry change. • identify which companies are being driven to move from one strategic group to another strategic group. 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.

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. Driving forces analysis consists of three steps: (1) identifying what the driving forces are; (2) assessing whether the drivers of change are, individually or collectively, acting to make the industry more or less attractive; and (3) determining what strategy changes are needed to prepare for the impact of the driving forces.

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

ensures consistency in strategic approach among businesses of a diversified, multibusiness corporation. As shown in Figure 2.2, corporate strategy is orchestrated by the CEO and other senior executives, and establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company. Corporate strategy addresses the questions of how to capture cross-business synergies, what businesses to hold or divest, which new markets to enter, and how to best enter new markets—by acquisition, by creation of a strategic alliance, or through internal development.

Trying to determine what strategic moves rivals are likely to make next Multiple Choice • usually has little bearing on a company's own best strategic moves. • requires evaluating the industry's key success factors as well as determining how many driving forces are present. • 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. • cannot be done effectively without first drawing a strategic group map. entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options.

entails determining each rival's situation, understanding the thinking of their managers, and evaluating the relative merits of their strategic options. Michael E. Porter's four indicators of a rival's likely strategic moves include a rival's current strategy, objectives, capabilities, and assumptions about itself and the industry. A strategic profile of a rival that provides good clues to its behavioral proclivities can be constructed by characterizing the rival along these four dimensions.

The procedure for creating a strategic group map involves identifying Multiple Choice • how many rivals are pursuing each type of strategy and determining competitive "gray spaces" where rivals can collaborate or form strategic partnerships or alliances. • which companies have the biggest market share and which rival is the industry leader. • which companies have the highest levels of capital expenditures and which rival has the best or worst financial health. • which companies have the highest degrees of brand loyalty and which rival has the best or worst advertising and promotion to support that position. which different market or competitive positions rival firms occupy in an industry and each rival's closest competitors in that industry.

which different market or competitive positions rival firms occupy in an industry and each rival's closest competitors in that industry. Evaluating strategy options entails examining what strategic groups exist, identifying the companies within each group, and determining if a competitive "white space" exists where industry competitors are able to create and capture altogether new demand. A strategic group is a cluster of industry rivals that have similar competitive approaches and market positions. The procedure for creating a strategic group map involves identifying the key competitive characteristics that differentiate firms' market positions, plotting firms on a two-variable map based on their competitive approaches, assigning firms occupying the same map location to a common strategic group, and drawing circles around each strategic group, making the circles proportional to the group's share of total industry sales.

Which of the following statements about a company's realized strategy is true? Multiple Choice • A company's realized strategy is usually kept secret. • A company's realized strategy is typically planned well in advance and usually deviates little from the planned set of actions. • A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. • 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. • 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.

• A company's realized strategy is typically a blend of deliberate and planned initiatives, and emergent and unplanned reactive strategy elements. A company's realized strategy tends to be a combination of deliberate planned elements and unplanned, emergent elements.

Which of the following is not among the most common types of driving forces? Multiple Choice • Product innovation, marketing innovation, and increasing globalization of the industry • 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 • Changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability • Emerging new Internet applications and capabilities, technological change, and the diffusion of technical know-how across more companies and more countries Changes in cost and efficiency, the entry or exit of major firms, and changing societal concerns, attitudes, and lifestyles

• Changes in interest rates, changes in the number of seller-supplier collaborative alliances, and changes in overall industry profitability Most drivers of industry and competitive change fall into one of the above categories (see Table 3.2) but not changes in interest rates, collaborative alliances, and industry profitability.

Which one of the following is not an integral part of the managerial process of crafting and executing strategy? Multiple Choice • Developing a strategic vision • Choosing a strategic intent • Setting objectives and crafting a strategy to achieve them • 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 Implementing and executing the chosen strategy efficiently and effectively

• Choosing a strategic intent The managerial process of crafting and executing a company's strategy is an ongoing, continuous process consisting of five integrated stages: (1) developing a strategic vision; (2) setting objectives; (3) crafting strategy; (4) implementing and executing the chosen strategy; and (5) evaluating and analyzing the external environment and the company's internal situation and performance.

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures? Multiple Choice • Coca-Cola as a substitute for Pepsi. • Video-on-demand services from Amazon Prime as a substitute for going to a movie theatre. • Smartphones as a substitute for digital cameras. • A salad as a substitute for French fries. Healthy vegan fast-food quick-service restaurants as a substitute for burger chains.

• Coca-Cola as a substitute for Pepsi. Competitive pressures are stronger when good substitutes are readily available and attractively priced; buyers view the substitutes as comparable or better in terms of quality, performance, and other relevant attributes; and the costs that buyers incur in switching to the substitutes are low. Brands of the same basic product—in this instance, soft drinks—constitute rival products and not substitutes.

Which one of the following is not a characteristic of an effectively worded strategic vision statement (see Table 2.2)? Multiple Choice • 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) • Concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders) • Graphic (paints a clear picture) • Easy to communicate (ideally, explainable in 10 minutes) 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)

• Concrete and unambiguous (leaves no doubt as to what the company is trying to accomplish for shareholders) From Table 2.2, it is evident that an effectively worded vision statement is graphic, directional, focused, flexible, feasible, desirable, and easy to communicate. A surprising number of the vision statements found on company websites and in annual reports are vague and unrevealing, saying very little about the company's future product-market-customer-technology focus.

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? Multiple Choice • 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 • Overseeing the company's financial accounting and financial reporting practices • Evaluating the caliber of senior executives' strategy-making/strategy-executing skills • Being inquiring critics and exercising strong oversight over the company's direction, strategy, and business approaches Instituting a compensation plan for top executives that rewards them for actions and results that serve stakeholders' interests, most especially those of shareholders

• 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 Although senior managers have lead responsibility for crafting and executing a company's strategy (vision, mission, objectives) and business model, it is the duty of the board of directors to exercise strong oversight to: (1) monitor the company's performance, (2) guide and judge the CEO and other top executives, (3) curb management actions it believes are inappropriate or unduly risky, (4) certify to shareholders that the CEO is doing what the board expects, (5) provide insight and advice to management, and (6) remain intensely involved in debating the pros and cons of key decisions and actions.

Which of the following is not among the principal managerial tasks associated with managing the strategy execution process? Multiple Choice • Ensuring that policies and procedures facilitate rather than impede effective execution • Installing information and operating systems that enable company personnel to perform essential activities • Exerting the internal leadership needed to drive implementation forward • Engaging the services of staffing firms to maintain the company's personnel data Tying rewards and incentives directly to the achievement of performance objectives

• Engaging the services of staffing firms to maintain the company's personnel data Good strategy execution entails managers paying careful attention to how key internal business processes are performed and seeing to it that employees' efforts are directed toward the accomplishment of desired operational outcomes. Use of external staffing firms is not among the list of activities for managing the strategy execution process.

Which of the following conditions generally raise the barriers to entering an industry? Multiple Choice • Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry • Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty • Product offerings that are pretty much standardized from rival to rival • 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 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

• 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 High capital requirements mean a larger total dollar investment is needed to enter the market successfully, which limits the pool of potential entrants. The most obvious capital requirements for new entrants relate to manufacturing facilities and equipment, introductory advertising and sales promotion campaigns, working capital to finance inventories and customer credit, and sufficient cash to cover start-up costs. All of the other responses indicate an industry with lower entry barriers, that is, a more attractive industry to enter.

Which of the following is not a relevant factor in conducting a PESTEL analysis? Multiple Choice • 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 • Interest rates, exchange rates, unemployment rates, inflation rates, and economic growth • Cultural, lifestyle, and demographic changes • The birth of new industries, new knowledge, and disruptive technologies Weather, climate change, and water shortages

• 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 PESTEL analysis encompasses only the six principal components of the broader macro-environment (political factors, economic conditions in the firm's general environment, sociocultural forces, technological factors, environmental forces, and legal/regulatory factors), whereas the incorrect answers refer to actions in a company's industry and competitive environment.

Which of the following is not an important factor for company managers to consider in drawing conclusions about whether the industry presents an attractive opportunity? Multiple Choice • Whether powerful competitive forces are squeezing industry profitability to subpar levels and whether competition appears destined to grow stronger or weaker • The industry's growth potential • Whether industry profitability will be affected favorably or unfavorably by the prevailing driving forces • How many of the industry's key success factors do companies in the industry typically incorporate into their strategies The company's competitive position in the industry relative to rivals

• How many of the industry's key success factors do companies in the industry typically incorporate into their strategies The final step in evaluating the industry and competitive environment is for company managers to determine if the industry offers a company strong prospects for attractive profits, based on the following factors: industry growth potential, the power of competitive forces to squeeze industry profitability, the degree to which prevailing driving forces will impact profitability favorably or unfavorably, how competitively the company performs the industry key success factors, and the company's relative (to its rivals) competitive position.

Which of the following questions ought to be used to distinguish a winning strategy from a so-so or flawed strategy? • Does the strategy strike a good balance between maximizing shareholder wealth and maximizing customer satisfaction? • Do a sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability? • Is the company putting too little emphasis on growth and profitability and too much emphasis on behaving in an ethical and socially responsible manner? • Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance? Does the strategy contain a sufficient number of emergent and/or reactive elements?

• Is the strategy well matched to the company's situation, helping the company achieve a sustainable competitive advantage and resulting in better company performance? It is unwise to build a strategy upon the company's weaknesses or pursue a strategic approach that requires resources that are deficient in the company. Unless a strategy exhibits a tight fit with both the external and internal aspects of a company's overall situation, it is unlikely to produce respectable first-rate business results. Winning strategies enable a company to achieve a competitive advantage over key rivals that is long lasting. The bigger and more durable the competitive edge, the more powerful it is.

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? Multiple Choice • Incomplete or vague—short on specifics • Overly reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of buyers) • 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 • Lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable 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)

• Lacking in analysis—based more on managerial emotion and excessive ambition than on what is realistically achievable From Table 2.3, it is evident that an ineffectively worded vision statement is not forward-looking, too broad, bland or uninspiring, not distinctive, and overly reliant on superlatives.

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? Multiple Choice • Overseeing the company's financial accounting and financial reporting practices • Instituting a compensation plan for top executives that rewards them for actions that serve stakeholder interests • Critically appraising the company's direction, strategy, and business approaches • Creating meeting agendas to deal with regulatory compliance issues Hiring and firing senior-level executives and working with the company's chief strategic planning officer to improve the company's strategy when performance came up short of expectations

• Overseeing the company's financial accounting and financial reporting practices A company's board of directors has the following four important obligations to fulfill: (1) oversee the company's financial accounting and financial reporting practices; (2) critically appraise the company's direction, strategy, and business approaches; (3) evaluate the caliber of senior executives' strategic leadership skills; and (4) institute a compensation plan for top executives that rewards them for actions and results that serve shareholder interests. Faulty oversight of corporate accounting and financial reporting practices by audit committees and corporate boards during the early 2000s resulted in the federal investigation of more than 20 major corporations between 2000 and 2002, and the passage of the Sarbanes-Oxley Act of 2002.

Based on an analysis of the five competitive forces, in which of the following industries is profitability likely to be lowest? Multiple Choice • Delivery services using drones • Wireless lighting systems • Pizza restaurants • Patented pharmaceuticals Wearable fitness and health monitors

• Pizza restaurants All other things being equal, the stronger the collective impact of the five competitive forces, the lower the combined profitability of industry participants—and this is particularly true of the saturated, mature pizza restaurant industry in comparison with the others listed, each of which have mitigated the power of some competitive forces to achieve above-average returns.

Which of the following is not a good example of a marketing-related key success factor? Multiple Choice • A well-known and well-respected brand name • Breadth of product line and product selection • Proven ability to improve production processes • Clever advertising Courteous, personalized customer service

• Proven ability to improve production processes Among the marketing KSFs are: (1) breadth of product line and product selection; (2) a well-known and well-respected brand name; (3) fast, accurate technical assistance; (4) courteous, personalized customer service; (5) accurate filling of buyer orders (few back orders or mistakes); (6) customer guarantees and warranties (important in mail-order and online retailing, big-ticket purchases, and new-product introductions); and (7) clever advertising.

Which one of the following is not related to actions and approaches that comprise a company's strategy? • Proving to shareholders that the company's business model is viable • Achieving a low-cost provider strategy • Seeking a broad differentiation strategy • Concentrating on a focused low-cost strategy Pursuing a best-cost provider strategy

• Proving to shareholders that the company's business model is viable Five of the most frequently used and dependable strategic approaches to setting a company apart from rivals and winning a sustainable competitive advantage are: (1) a low-cost provider strategy, (2) a broad differentiation strategy, (3) a focused low-cost strategy, (4) a focused differentiation strategy, and (5) a best-cost provider strategy.

Which of the following is not one of the most frequently used strategic approaches to building a sustainable competitive advantage? • Sticking with an outdated business model • Focusing on a narrow market niche within an industry • Striving to be the industry's low-cost provider, thereby aiming for a cost-based competitive advantage over rivals • Developing an advantage based on offering more value for the money Creating a differentiation-based advantage over rivals

• Sticking with an outdated business model At times, certain components of a company's deliberate strategy will fail in the marketplace and become abandoned strategy elements. If the business model is outdated, managers must always be willing to supplement or modify planned, deliberate strategy elements with as-needed reactions to unanticipated developments.

Which of the following is not typically a trigger to an evolving strategy? • The need to respond to the newly initiated actions and competitive moves of rival firms • The need to abandon some strategy features that are no longer working well • The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy as conditions warrant • The need to respond to short-term swings in the stock market The need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations

• The need to respond to short-term swings in the stock market Most of the time, a company's strategy evolves incrementally as management fine-tunes various pieces of the strategy and adjusts the strategy to respond to unfolding events. Adapting to new conditions and constantly evaluating what is working well enough to continue and what needs to be improved are normal parts of the strategy-making process, resulting in an evolving strategy. Strategy features that work with evolving markets would not trigger evolution as long as the firm's fundamentals are sound.

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

• To reduce the bargaining power they face from buyers of their products Suppliers with strong bargaining power can erode industry profitability by charging industry members higher prices, passing costs on to them and limiting their opportunities to find better deals. That said, as a rule, suppliers have less bargaining leverage when their sales to a strategic partner constitute a big percentage of their total sales. In such cases, the well-being of suppliers is closely tied to the well-being of that major customer/partner.

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

• What are the company's competitively valuable resources and capabilities that can be used to form the foundation of its competitive approach? Strictly speaking, the macro-environment excludes a company's competitively valuable resources and capabilities and instead encompasses all of the relevant factors—political factors, economic conditions in the firm's general environment, sociocultural forces, technological factors, environmental forces, and legal/regulatory factors—making up the broad environmental context in which a company operates; by relevant, we mean the factors are important enough that they should shape management's decisions regarding the company's long-term direction, objectives, strategy, and business model.

When can a company achieve sustainable competitive advantage? • Whenever it possesses the most profitable business model in the industry and can satisfy shareholder expectations better than its competitors • When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors • When it is able to produce better products for lower costs than its rivals • When it consistently achieves both its long-term and short-term strategic and financial objectives If it can translate its vision, mission, and values into a well-crafted strategy

• When elements of the strategy give buyers lasting reasons to prefer a company's products or services over those of competitors A company achieves sustainable competitive advantage when it gives its buyers lasting reasons to prefer its products or services over those provided by competitors—reasons that competitors are unable to nullify or overcome despite their best efforts.

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? Multiple Choice • Whether certain needed inputs are in short supply • 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 • Whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price • 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 Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product

• 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 Figure 3.5 makes no mention of the impact of scope of an industry supply chain. Competitive pressures coming from suppliers are primarily derived from availability, switching costs, commoditization, differentiation, or threats of backward integration by industry members.

The task of crafting a strategy is Multiple Choice • the function and responsibility of a few high-level executives. • 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. • the function and responsibility of a company's strategic planning staff. • 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). first and foremost the function and responsibility of a company's board of directors.

• 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). Strategic initiatives taken at various organizational levels must be tightly coordinated to achieve companywide performance targets. In most companies, crafting a strategy is a collaborative team effort that includes managers in various positions and at various organizational levels. Crafting a strategy is rarely something only high-level executives do.

The difference between a company's mission statement and the concept of a strategic vision is that Multiple Choice • 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. • a mission statement deals with "where we are headed," whereas a strategic vision provides the critical answer to "how will we get there." • a mission statement deals with what a company is trying to do, and a vision concerns what a company ought to do. • 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. a mission statement is about what to accomplish for shareholders, whereas a strategic vision concerns what to accomplish for customers.

• 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 defining characteristic of a well-conceived strategic vision is what it says about the company's future strategic course—"where we are headed and what our future product-customer-market-technology focus will be." The mission statements of most companies say much more about the enterprise's present business scope and purpose—"why we exist."

Corporate governance failures at Volkswagen included all of the following except Multiple Choice • a lack of understanding regarding the risks of installing "defeat devices" during emissions testing of at least 11 million VW vehicles equipped with diesel engines. • fraudulent executive compensation systems at Volkswagen. • a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions. • inadequate monitoring of VW's Chairman, Ferdinand Piëch, its CEO, Martin Winterkorn, and other senior executives. incomplete understanding and ineffective oversight of the technologies employed to accurately determine automobile emissions.

• a strong independent board of directors that was responsible for making independent judgments about the validity and wisdom of management's proposed strategic actions. According to the illustration capsule in Concepts & Connections 2.4, Volkswagen did not have a strong independent board of directors that (1) was well informed about the company's performance, (2) provided independent oversight of the CEO and other top executives, (3) lacked the courage to curb management actions that were fraudulent and/or inappropriate and/or unduly risky, (4) kept regulatory agencies such as the EPA informed on a timely basis, and (5) prevented elevation of new board members from among the ranks of managers who had presided over past scandals.

The rivalry among competing sellers in an industry intensifies Multiple Choice • when buyer demand for the product is growing rapidly. • when customers are brand loyal and their costs of switching to competing brands or substitute products are relatively high. • when buyer demand is strong and sellers have little or no excess capacity and only minimal inventories. • as the number of rivals increases and as they become more equal in size and competitive capability. 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 its rivals' business.

• as the number of rivals increases and as they become more equal in size and competitive capability. Rivalry is stronger in industries where the number of players is rising and competitors are becoming more equal in size and capability, as shown in Figure 3.7.

Every corporation should have a strong, independent board of directors that does all of the following except Multiple Choice • be intensely involved with and responsible for leading the strategy-making, strategy-executing process. • guide and judge the CEO and other top executives. • certify to shareholders that the CEO is doing what the board expects. • be intensely involved in debating the pros and cons of key decisions and actions. be well informed about the company's performance.

• be intensely involved with and responsible for leading the strategy-making, strategy-executing process. Every corporation should have a strong independent board of directors that (1) is well informed about the company's performance, (2) guides and judges the CEO and other top executives, (3) has the courage to curb management actions the board believes are inappropriate or unduly risky, (4) certifies to shareholders that the CEO is doing what the board expects, (5) provides insight and advice to management, and (6) is intensely involved in debating the pros and cons of key decisions and actions.

As Figure 2.2 shows, the strategy-making hierarchy in a single business company consists of Multiple Choice • business strategy, divisional strategies, and departmental strategies. • business strategy, functional area strategies, and operating strategies. • business strategy and operating strategy. • managerial strategy, business strategy, and divisional strategies. corporate strategy, divisional strategies, and departmental strategies.

• business strategy, functional area strategies, and operating strategies. In single-business companies, the corporate and business levels of the strategy-making hierarchy merge into a single level—business strategy—because the strategy for the entire enterprise involves only one distinct business. So, a single-business company has three levels of strategy: business strategy, functional-area strategies, and operating strategies.

.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 • developing a sound business model and customer base. • emergent strategy elements, deliberate strategy elements, and abandoned strategy elements. • changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. • determining where the company is now and where does the company want to go. how to develop copy-cat strategies.

• changing market conditions, development of internal capabilities and competencies, and allocation of financial resources. Managers of every company must be willing and ready to modify the strategy in response to the unexpected moves of competitors, shifting buyer needs and preferences, emerging market opportunities, new ideas for improving the strategy, and mounting evidence that the strategy is not working well.

An industry's key success factors Multiple Choice • are best determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. • concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry. • are mainly a function of an industry's macro-environment and dominant economic features. • 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. usually relate to technology and manufacturing-related capabilities and rarely to distribution or marketing capabilities.

• concern the particular product attributes, competencies, competitive capabilities, and intangible assets with the greatest impact on future success in the industry. Key success factors are the strategy elements, product attributes, competitive capabilities, or intangible assets with the greatest impact on future success in the marketplace.

The strength or weakness of the potential entry of rivals as a competitive force is Multiple Choice • strongly correlated with the level of supplier power and with the number of suppliers that may seek to integrate forwards into the industry. • contingent upon the strength of buyer loyalty to existing brands. • contingent upon whether the industry's growth and profit prospects are strongly attractive to potential entry candidates. • contingent upon whether the strategies of industry members are well matched to the industry's key success factors. strongly correlated with the degree to which the industry's driving forces make it harder or easier for new entrants to be successful.

• contingent upon whether the industry's growth and profit prospects are strongly attractive to potential entry candidates. As a rule, the strongest competitive forces determine the extent of the competitive pressure on industry profitability. The threat of entry is low when incumbent firms are likely to retaliate against new entrants with sharp price discounting and other moves designed to make entry unprofitable.

A creative, distinctive strategy that delivers a sustainable competitive advantage is important because • how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company. • crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. • a competitive advantage is what enables a company to achieve its strategic objectives. • without a competitive advantage a company cannot become the industry leader. without a competitive advantage a company is likely to fall into bankruptcy.

• crafting a strategy that yields a competitive advantage over rivals is a company's most reliable means of achieving above-average profitability and financial performance. A company might tailor a strategy to compete profitably in a new market that has few rivals for its business. But when rivals are already entrenched in a market, sustainable competitive advantage provides buyers with lasting reasons to prefer a company's products or services over its rivals' offerings—reasons that competitors are unable to nullify or overcome despite their best efforts.

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

• decide whether to continue or change the company's strategic vision, objectives, strategy and/or strategy execution methods. A company's direction, objectives, and strategy have to be revisited any time external or internal conditions warrant. A company's vision, objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process, not an every-now-and-then task.

The primary role of a functional strategy is to Multiple Choice • describe the mission and strategic intent of each key functional piece of the business. • create compatible degrees of strategic intent among a company's different business functions. • unify the company's various operating-level strategies. • determine how to support particular activities in ways that support the overall business strategy and competitive approach. assess 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.

• determine how to support particular activities in ways that support the overall business strategy and competitive approach. Functional-area strategies are concerned with the actions related to particular functions or processes within a business—like research and development (R&D), production, procurement of inputs, sales and marketing, distribution, customer service, and finance.

A strategic group map is a helpful analytical tool for Multiple Choice • assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. • determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares. • determining which company is the most profitable in the industry and why it is doing so well. • 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. pinpointing which of the five competitive forces is the strongest and which is the weakest.

• 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. The most important facet of strategic group mapping is identifying which rivals are similarly positioned and are thus close rivals and which are distant rivals. Generally, the closer strategic groups are to each other on the map, the stronger the cross-group competitive rivalry tends to be.

Managers must chart a company's strategic course by Multiple Choice • ensuring excess production capacity and/or inventory. • building a bigger dealer network. • ensuring that marketing and promotion programs are state-of-the-art. • developing a thorough understanding of the company's external and internal environments. competing fiercely for a share in the market.

• developing a thorough understanding of the company's external and internal environments. In order to chart a company's strategic course wisely, managers must first develop a deep understanding of the company's present situation. Two facets of a company's situation are especially pertinent: (1) its external environment, most notably, the competitive conditions of the industry in which the company operates, and (2) its internal environment, particularly the company's resources and organizational capabilities.

A balanced scorecard for measuring company performance Multiple Choice • 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). • involves putting equal emphasis on the achievement of financial objectives, strategic objectives, and social responsibility objectives. • entails setting both financial and strategic objectives and putting a balanced emphasis on their achievement. • helps prevent the pursuit of strategic objectives from dominating the pursuit of financial objectives. is necessary to prevent the drive for achieving financial objectives from weakening the attention paid to social responsibility, community citizenship, and other worthy goals.

• entails setting both financial and strategic objectives and putting a balanced emphasis on their achievement. The balanced scorecard is a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.

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

• fits the company's internal and external situation, builds sustainable competitive advantage, and boosts company performance. A winning strategy must fit the company's external and internal situation, build sustainable competitive advantage, and improve company performance.

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

• how well its management team charts direction, develops effective strategic moves, and pursues daily operating excellence. A company that lacks clear-cut direction, has a flawed strategy, or cannot execute its strategy competently is a company whose financial performance is probably suffering, whose business is at long-term risk, and whose management is sorely lacking.

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

• is a company's most reliable ticket to above-average profitability. Two kinds of performance improvements tell the most about the caliber of a company's strategy: (1) above-average profitability and financial strength, and (2) advances in the company's competitive strength and market standing.

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

• is the actions and moves to gain a competitive edge over rivals in the marketplace. The heart and soul of any strategy is the actions and moves in the marketplace that managers are taking to gain a competitive edge over rivals.

When trade-offs have to be made between achieving long-term and achieving short-term objectives, Multiple Choice • long-term objectives should take precedence unless the short-term performance targets have unique importance. • long-term objectives should never take precedence until the short-term objective is achieved. • short-term objectives should take precedence unless the long-term performance targets are not achievable. • short-term objectives should take precedence because they focus attention on delivering performance improvement. long-term objectives should never take precedence until the short-term objective is achieved.

• long-term objectives should take precedence unless the short-term performance targets have unique importance. When trade-offs have to be made between achieving long-term objectives and achieving short-term objectives, long-term objectives should take precedence (unless the achievement of one or more short-term performance targets has unique importance).

A company's strategic plan consists of Multiple Choice • actions and market maneuvers the company plans to use to achieve a sustainable competitive advantage. • 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 vision, strategic objectives, strategic intent, and strategy. • an organization's strategy and management's specific, detailed plans for implementing it. the specific actions management intends to take in detouring strategic inflection points and executing its overall strategy.

• 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. Developing a strategic vision charts a company's long-term direction, while setting objectives helps measure the company's performance and track its progress in moving toward that intended long-term direction. These are two of the three stages involved in crafting a strategic plan. A strategic plan maps out where a company is headed, establishes strategic and financial targets, and outlines the competitive moves and approaches to be used in achieving the desired business results.

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

• need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. Objective setting does not stop with the establishment of companywide performance targets but needs to be broken into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units. This is necessary to guide employees within various functional areas and operating levels via narrow objectives relating directly to their departmental activities, rather than to broad organizational-level goals.

Factors that weaken rivalry among competing sellers include Multiple Choice • low buyer switching costs. • slow growth in buyer demand. • 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. • standardized or else weakly differentiated products among rival sellers. the presence of one or more rivals that are dissatisfied with their current position and market share.

• 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. Rivalry decreases when buyer demand accelerates, switch costs are high, and buyers have a proliferation of choices. In this case, sellers may find themselves with capacity shortages and/or inventory stock-outs. Excess demand conditions create a "sellers' market," decreasing competitive pressure on industry rivals, as shown in Figure 3.7.

When evaluating proposed or existing strategies, managers should Multiple Choice • evaluate the firm's business model at least every three years. • scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. • ensure that core capabilities are incorporated synergistically for establishing a competitive advantage. • align existing strategies with new strategies to emphasize incremental gains. initiate new strategies even though they do not seem to match the company's internal and external situation.

• scrutinize their company's existing strategies on a regular basis to ensure that they offer a good strategic fit, create a competitive advantage, and result in above-average performance. New initiatives that don't seem to match the company's internal and external situation should be scrapped before they come to fruition, while existing strategies must be scrutinized on a regular basis to ensure they offer a good strategic fit with the company's internal and external situation, create a competitive advantage, and contribute to above-average performance or performance improvements.

A viable business model • 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. • lays out a compelling case for how the strategy will yield competitive advantage. • explains how high profit margins will be achieved despite charging relatively low prices to customers. • is always closely linked to the company's business strategy. is part and parcel of a company's strategic vision.

• 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 is established by the company's overall strategy and lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value, i.e., the customer value proposition. The greater the value provided and the lower the price, the more attractive the value proposition is to customers. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a moneymaker.

An engaging and convincing strategic vision for a company Multiple Choice • concerns management's view of how to transition the company's business model from where it is now to where it needs to be. • should be explained after the company's strategic intent, strategy, and business model have been conveyed to company personnel. • should be crafted in language that inspires and motivates company personnel to unite behind executive efforts to get the company moving in the intended direction. • ought to put "who we were and what we are doing" in writing rather than orally so as to leave no room for company personnel to misinterpret what the strategic vision really is. involves how fast to pursue the chosen strategy and reach the targeted levels of performance.

• should be explained after the company's strategic intent, strategy, and business model have been conveyed to company personnel. Developing a strategic vision charts a company's long-term direction. It is particularly important for executives to provide a compelling rationale for a dramatically new strategic vision and company direction. When company personnel do not understand or accept the need for redirecting organizational efforts, they are prone to resist change. Hence, explaining the basis for the new direction, addressing employee concerns head-on, calming fears, lifting spirits, and providing updates and progress reports as events unfold all become part of the task in mobilizing support for the vision and winning commitment to needed actions.

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

• specifies a customer value proposition and develops a profit formula. The two elements of a company's business model are (1) its customer value proposition and (2) its profit formula.

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

• strategic outcomes are leading indicators of a company's future financial performance and business prospects. In contrast to strategic objectives, which are leading indicators of a company's market standing and competitive vitality, a company's financial objectives are really lagging indicators that reflect the results of past decisions and organizational activities.

Excellent execution of a successful strategy is Multiple Choice • the best test of whether a company is a "true" industry leader. • the best evidence that the company has a sustainable competitive advantage. • the best evidence that managers have an emerging business model. • a solid indication that managers are maximizing profits and looking out for the best interests of shareholders. • the best test of managerial excellence and the best recipe for making a company a standout performer.

• the best test of managerial excellence and the best recipe for making a company a standout performer. The formulation of a truly successful strategy requires managers to consider not only these primary factors involved in crafting a strategy but also an organization's ability to execute whatever strategy it chooses.

Operating strategies consist of Multiple Choice • what a company's various operating departments plan to do to help execute the company's overall strategy. • the strategic intent of each operating unit. • 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). • the specific actions a company's various operating departments plan to take to unify efforts to achieve a sustainable competitive. what a company will do once its strategic plan is adopted and approved by the company's board of directors.

• 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 concern the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales.

Strategies that yield sustainable competitive advantage are important because • a competitive advantage is what enables a company to achieve its strategic objectives. • 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. • competitive advantage forms the underpinnings of a company's strategic vision. • increases in shareholder value are contingent on a sustainable competitive advantage. None of these choices are correct.

• 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. The customer value proposition is established by the company's overall strategy and lays out the company's approach to satisfying buyer wants and needs at a price customers will consider a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to customers.