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Chapter11 CORRECT Which of the following statements about a company's strategy is true? A) Crafting an excellent strategy is more important than executing it well. Managers at all companies face three central questions in thinking strategically about th B) company's present circumstances and prospects: Where are we now? Where do we wan How are we going to get there? A company's strategy deals with whether the revenue-cost-profit economics of its busin C) demonstrate the viability of the business enterprise as a whole. Masterful strategies come partly (maybe mostly) by doing things in much the same way D) industry leader but then being better than the leader in one particular area that counts he buyers. Whether a company's strategy is ethical or not does not matter a lot because most custo E) most suppliers are relatively unconcerned whether a company they do business with eng sleazy practices or turns a blind eye to below-board behavior on the part of its employee 2 CORRECT The competitive moves and business approaches a company's management are using grow the b attract and please customers, compete successfully, conduct operations, and achieve the targeted organizational performance is referred to as its A) strategic offensive for becoming a market leader. B) business model. C) long-term strategic direction. D) mission statement. E) strategy. 3 CORRECT Which one of the following is not related to actions and approaches that comprise a company's s A) How to take advantage of growth opportunities B) How to prove to shareholders that the company's business model is viable C) How to outcompete rivals D) How to achieve financial and strategic objectives E) How each functional piece of the business (R&D, supply chain activities, production, sa marketing, distribution, finance, and human resources) will be operated 4 CORRECT In answering the question, "How are we going to get there?" management must have deliberate addressing such issues as A) developing a sound business model and customer base. changing market conditions, development of internal capabilities and competencies, and B) of financial resources. C) emergent strategy elements, deliberate strategy elements, and abandoned strategy eleme D) "Where are we now?" and "Where do we want to go?" how well the strategy fit the situation, has the strategy yielded competitive advantage, a E) strategy produced good financial performance. 5 CORRECT 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 partnersh C) Management actions to revise the company's financial and strategic performance targets Actions to capture emerging market opportunities and defend against external threats to D) company's business prospects E) Actions to enter new geographic or product markets 6 CORRECT Which of the following is not one of the most frequently used strategic approaches to building c advantage? A) Striving for a competitive edge based on bigger profit margins B) Developing unmatched resource strengths and competitive capabilities Striving to be the industry's low-cost provider, thereby aiming for a cost-based competi C) advantage over rivals Focusing on a narrow market niche and winning a competitive edge by doing a better jo D) rivals of serving the special needs and tastes of buyers comprising the niche E) Outcompeting rivals based on differentiating features 7 CORRECT The most important aspect of a company's business strategy A) is the linkage with its business model. B) is its ability to increase shareholder value. C) is its approach to competing in the marketplace. deals with how management plans to maximize profits while, at the same time, operatin D) socially responsible manner. E) is the day-to-day demands of delivering a service or producing goods to be sold. 8 CORRECT Strategies that yield sustainable competitive advantage is important because A) increases in shareholder value are contingent on a sustainable competitive advantage. a strategy that yields a competitive advantage over rivals and creates an enduring deman B) company's products or services is the key to a company's ability to earn ongoing aboveprofits. C) competitive advantage forms the underpinnings of a company's strategic vision. D) a competitive advantage is what enables a company to achieve its strategic objectives. E) All of these. 9 CORRECT A company achieves sustainable competitive advantage when A) it has a low-cost business model. B) it is able to increase shareholder value. sufficient numbers of buyers believe the company has demonstrated a commitment to C) environmental sustainability. D) it is consistently able to achieve both its strategic and financial objectives. an attractive number of buyers have a lasting preference for its products or services as c E) the offerings of competitors and any evidence that indicates the strategy is not working well. . C) Strategies keyed to creating a differentiation-based advantage. E) All of these. D) can be called a winning strategy. the fresh moves of comp C) shifting buyer needs and preferences. 11 CORRECT Approaches to achieving a sustainable competitive advantage include which of the following? A) Developing unmatched resource strengths and competitive capabilities. D) Strategies keyed to developing a cost-based advantage. B) Focusing on a narrow market niche within an industry. B) most managers like to develop the strategy in bits and pieces rather than all at once. of the ongoing need to respond to changing market conditions. new ideas for imp strategy.10 CORRECT A strategy that sets a company apart from rivals and that gives it a sustainable competitive adva A) is a company's most reliable ticket to above-average profitability B) is based heavily upon the emergent elements of its strategy. emerging market opportunities. many managers are conservative. is the best indicator that the company's strategy and business model are well-matched an E) synchronized. preferring to carefully contemplate the best responses D) developments and avoiding the risks associated with developing a complete strategy too a strategy does not really transition to a well-crafted stage until a company has been try E) execute it for a number of years and has learned what works and what doesn't. 12 CORRECT Company strategies evolve because A) it is a bad idea to do too much strategizing until a company has been in business long en know what strategies will work best. C) is a reliable indicator that the company has a profitable business model. 13 CORRECT It is normal for a company's strategy to end up being A) little different from management's original planned set of actions and business approach making on-the-spot changes is too risky. (1) specifies a customer value proposition. A company's realized strategy is developed mostly on a day-to-day basis because of the D) efforts of managers to keep rival companies at a disadvantage. 15 CORRECT A company's business model A) determines whether its strategy will be ethical or not. E) a mirror image of its business model. so as to avoid impairing company profitability. a blend of deliberate actions to improve the company's competitiveness and financial pe D) and unplanned reactions to changing circumstances and fresh market conditions. and (3) identif C) resources and processes required to create and deliver customer value identifies how the company plans to outmaneuver and outcompete key rivals and becom D) leader. A company's realized strategy generally changes very little over time unless a newly-ap C) CEO decides to take the company in a new direction with a new strategy. (2) develops a profit formula. A company's realized strategy is typically a blend of deliberate/planned initiatives and E) emergent/unplanned reactive strategy elements. . a combination of defensive moves to protect the company's market share and offensive B) to set the company's product offering apart from rivals. is management's storyline for how the strategy will result in achieving sustainable comp B) advantage. 14 CORRECT Which of the following statements about a company's realized strategy is true? A) A company's realized strategy is usually kept secret. A company's realized strategy is typically planned well in advance and usually deviates B) the planned set of actions. pretty much like the strategies of other industry members since all companies are confro C) the same market conditions and competitive pressures. sets forth the actions and approaches that it will rely on to earn the best profit margins i E) industry. news. E) passes the ethical standards test. sales personnel. 18 CORRECT A winning strategy is one that A) makes the company a market leader. weather. and talk radio that is rarely interrupted by advertisements. The profit formula for Sirius XM is based upon generating sufficient monthly subscript C) sales of satellite radio equipment. builds sustainable competitive advant D) boosts company performance. and maximize B) is highly profitable and boosts the company's market share. 17 CORRECT Which of the following statements concerning Sirius XM's business model and that of over-thebroadcasters (as discussed in Concepts & Connections 1. the competitive advantage test.2) is false? Over-the-air broadcast radio has a proven business model while Sirius XM's business m A) unproven. is ethically and socially responsible. The customer value proposition incorporated into Sirius XM's business model involves B) listeners with digital music. and the profitability tes . and limited advertising to cover fixed and variable co associated with operating a satellite-based music delivery service and provide for attrac The business model of over-the-air broadcast radio requires such key resources as radio D) towers. and programming contracts. an FCC license. passes the profitability test. should explain how the company will achieve high profit margins while at the same tim C) relatively low prices to customers. B) lays out a compelling case for how the strategy will yield competitive advantage. the customer satisfa C) and the shareholder wealth test. D) must be closely linked to the company's business strategy. must have a tight fit with organizational capabilities and generate revenues sufficient to E) and deliver good profitability. fits the company's internal and external situation.16 CORRECT A viable business model A) is derived from the company's strategic vision. The profit formula for over-the-air radio broadcasters involves fixed costs associated w E) operating a satellite-based music delivery service. the ethics and social responsibility test. helping the company achieve a E) competitive advantage. and hourly personnel? C) Is the strategy built upon a viable business model? B) Has management responded to changing market conditions with emergent strategy elem D) Does the strategy strike a balance between shareholder interests and social responsibilit Is the strategy well-matched to the company's situation. and resulting in better company performance? Chapter 2 1 INCORRECT Which one of the following is not an integral part of the managerial process of crafting strategy? A)Developing a strategic vision B)Choosing a strategic intent C)Setting objectives and crafting a strategy to achieve them Evaluating performance and initiating corrective adjustments in the company's D) direction. or execution in light of actual experience. and new opportunities E)Implementing and executing the chosen strategy efficiently and effectively . strategy. objectives. line managers. changi new ideas.19 CORRECT Which one of the following questions can be used to distinguish a winning strategy from a so-so strategy? What portion of the strategy was ultimately abandoned as market conditions changed as A) strategy played out? B) How well does the strategy fit the company's business model? D) Has the strategy produced good financial performance? E) Does the company have viable business model? C) Does the company have a large number of differentiating features in comparison to riva 20 CORRECT Which of the following questions ought to be used to distinguish a winning strategy from a med losing strategy? Did the strategy develop from an inclusive cooperative relationship between top-level A) management. . a mission statement deals with "where we are headed" whereas a strategic visio B) critical answer to "how will we get there?" a mission deals with what a company is trying to do and a vision concerns what C) ought to do. what we do. D)an organization's strategy and management's specific. management's vision mapping out where a company is headed. the company's f B) strategic objectives. and strategy. 3 INCORRECT A strategic vision for a company A)involves how fast to pursue the chosen strategy and reach the targeted levels of B)consists of thinking through what it will take to make the chosen strategy work Describes "where we are going" by delineating the course and direction manage C) charted for the company's future product-customer-market-technology focus. and why we are here"—whereas the focus of a stra on the direction the company is headed and what its future product-customer-m technology focus will be. a mission is about what to accomplish for shareholders whereas a strategic visio E) to accomplish for customers. spells out how the company is going to get from where it is now to where it wan D) when it is expected to arrive. 4 INCORRECT The difference between a company's mission statement and the concept of a strategic v the mission statement lays out the desire to make a profit. and management's strategy to achieve the objectives and m company along the chosen strategic path.2 INCORRECT A company's strategic plan consists of the actions and market maneuvers it plans to use to achieve a sustainable compe A) advantage. a mission statement typically concerns an enterprise's present business scope an D) —"who we are. C)a company's strategic vision. whereas the strategic A) what strategy the company will employ in trying to make a profit. strategic objectives. detailed plans for implem the specific actions management intends to take in detouring strategic inflection E) executing its overall strategy. concerns management's view of how to transition the company's business mode E) is now to where it needs to be. strategic intent. increase sales) C) quantifiable terms (increase after-tax profits by 10% in 2 years. describes the strategic course that management A) the kinds of product-market-customer-technology changes that will help the com for the future) Concrete and unambiguous (leaves no doubt as to what the company is trying to B) shareholders) C)Graphic (paints a clear picture) D)Easy to communicate (ideally.2)? Directional (is forward-looking. reduce costs.5 INCORRECT Which one of the following is not a characteristic of an effectively-worded strategic vis (see Table 2. grow sales reve annually) so that managers will have the latitude to adjust target outcomes to le . or enter most any business Lacking in analysis—based more on managerial emotion and excessive ambitio D) is realistically achievable Not distinctive—provides no unique company identity. or measurable. first choice of buyers) Too broad—so umbrella-like and all-inclusive that the company could head in m C) direction. are best stated in general terms (maximize profits. explainable in 10 minutes) Focused and flexible (specific enough to provide managers with guidance in ma E) and allocating resources but stops short of a once-and-for-all-time statement be strategic path may need to be changed as market-customer-technology circumst 6 INCORRECT According to both the text discussion and the summary in Table 2. recognized leader. and contain a deadline for achievement. pursue most any opportunity. could apply to compani E) several industries (or at least several rivals operating in the same industry or ma 7 CORRECT A company's objectives convert the strategic vision into specific performance targets—well-stated objec A) quantifiable.3. global or w B) leader. most successful. which of the follo common shortcoming of company vision statements? A)Incomplete or vague—short on specifics Too reliant on superlatives (best. are typically established after a company decides on a strategic vision and strate B) will entail performance targets that truly signal business success. functional departments. and other worthy 10 CORRECT Company objectives need to be broken down into performance targets for each of its separate busine A) lines. 8 INCORRECT Establishing and achieving strategic objectives merits very high priority on managemen because strategic outcomes provide better benefits to shareholders in both the short-run A) run. 9 INCORRECT A balanced scorecard for measuring company performance entails balancing the pursuit of good bottom-line profit against the pursuit of no A) objectives (although achieving profitability targets is nearly always given great involves putting equal emphasis on the achievement of financial objectives. should place far more emphasis on financial performance targets than strategic D) targets. . and individual work units. community citizenship. helps prevent the pursuit of strategic objectives from dominating the pursuit of D) objectives. is necessary in order to prevent the drive for achieving financial objectives from E) attention paid to social responsibility. strategic outcomes are leading indicators of a company's future financial perfor C) business prospects. are needed only in those areas directly related to a company's short-term and lo B) profitability. D)well-chosen strategic objectives help managers craft a good strategy a company cannot achieve its strategic intent and strategic vision or gain a com E) advantage over rivals without having and achieving strategic objectives. E)All of these.achieved. stra B) and social responsibility objectives. entails setting both financial and strategic objectives and putting balanced emph C) achievement. a company can't have a shrewd strategic vision without having aggressive and c B) astute strategic objectives. B)business strategy. 11 INCORRECT The task of crafting a strategy is A)the function and responsibility of a few high-level executives. more of a collaborative group effort that involves all managers and sometimes k B) striving to arrive at a consensus on what the overall best strategy should be. more of a collaborative group effort that involves managers and key employees E) company. . and departmental strategies. operating divisions.C)help answer the question "Where do we want to go. 13 INCORRECT As per Figure 2.2. C)primarily the responsibility of a company's strategic planning staff. functional departments. divisional strategies.2). functional area strategies. C)business strategy and operating strategy. should be set in a manner that does not conflict with the performance targets of E) organizational units. and operating strategies. a job for a company's whole management team—senior executives plus the man D) business units. B)the responsibility of a company's chief executive officer and outside consultants D)first and foremost the responsibility of a company's board of directors. the strategy-making hierarchy in a single business company consists A)business strategy. E)first and foremost the function and responsibility of a company's board of direc 12 INCORRECT Strategy-making is A)primarily the responsibility of the company founder or CEO. manufacturing plan districts (as per the strategy-making hierarchy shown in Figure 2. C)the function and responsibility of a company's strategic planning staff." D)are determined the geographic and business scope of the company's operations. and divisional strategies. geographic units) and specific operating activities ( of specific brands. sales and finance. distribution centers. 14 INCORRECT Functional strategies A)describe the mission and strategic intent of each key functional piece of the bus concern what to do about resolving the specific strategic issues and operating p B) business confronts in each key part of its business—R&D. the relatively narrow strategic initiatives and approaches for managing key oper C) (plants. and so on. are normally crafted by the executive in charge of the overall business and appr C) company's board of directors. 15 INCORRECT Operating strategies concern what a company's various operating departments plan to do to help execute the A) overall strategy. and departmental strategies.D)managerial strategy. competencies. are concerned with what competitive capabilities to build in support of the over E) strategy and what to do to unify the firm's skills. what a company will do once its strategic plan is adopted and approved by the c E) of directors. 16 INCORRECT Which of the following is not among the principal managerial tasks associated with ma strategy execution process? A)Ensuring that policies and procedures facilitate rather than impede effective exe Installing information and operating systems that enable company personnel to B) essential activities . E)corporate strategy. information technology. supply chain–related activities. human resources. divisional strategies. and website sales and operat the specific actions a company's various operating departments plan to take to u D) achieve a sustainable competitive. production. and resource str the various key pieces of a company's business. business strategy. add detail to the overall business strategy and specify what resources and organ D) capabilities are needed to put the business strategy into action. B)the strategic intent of each operating unit. decisive decision-maker that subordinates will wish to emulat delegate little to subordinates and exert a strong. . staying on top of what is ha E) constructive pressure on the organization to achieve good results. highly visible influence on the C) approaches to strategy execution. evaluate the company make corrective adjustments in order to decide whether to continue or change the company's strategic vision. B)be a charismatic. E)stay on track in achieving the company's mission and strategic vision. pushing corre leading the development of stronger capabilities. and displaying ethical integrit spearheading social responsibility initiatives. B)determine whether the company has a Balanced Scorecard for judging its perfo C)determine what changes should be made to its Strategy Map. determine whether the company's business model is well matched to changing m D) competitive circumstances. 18 INCORRECT Leading and managing the strategy process calls upon managers to A)be very personable and an active listener. B)is a strong board of directors that is committed to avoiding ethical scandals. 19 INCORRECT What separates companies that make a sincere effort to be good corporate citizens from are content to do only what is legally required of them are shareholders who insist that senior executives practice corporate citizenship A) responsibility.C)Exerting the internal leadership needed to drive implementation forward D)Engaging the services of staffing firms to maintain the company's personnel dat E)Tying rewards and incentives directly to the achievement of performance objec 17 CORRECT Management is obligated to monitor new external developments. objectives A) strategy execution methods. put constructive pressure on the company's human resources department to dev D) that are likely to boost employee morale. making sure the company has a good strategic plan. is pressure from environmental groups capable of executing a successful boyco C) products or services. and how strong A) is each force? What are the company's competitively valuable resources and capabilities that B) can be used to form the foundation of its competitive approach? What market positions do industry rivals occupy—who is strongly/weakly C) positioned and who is not? . Which of the following is not one of the questions that needs to be answered in thinking strategically about a company's external environment? What kinds of competitive forces are industry members facing. objec A) model. is pressure from customers who expect the companies they do business with to D) responsible in their actions. further. strategy-executing process is concerned? Directing senior executives as to what the company's long-term direction. are company leaders who believe that making a profit is not good enough and th E) should also include social and environmental metrics. closely supervising senior executive to implement and execute the strategy B)Overseeing the company's financial accounting and financial reporting practice C)Evaluating the caliber of senior executives' strategy-making/strategy-executing Being inquiring critics and exercising strong oversight over the company's direc D) and business approaches Instituting a compensation plan for top executives that rewards them for actions E) serve stakeholders' interests. most especially those of shareholders Results Reporter Out of 20 questions. and strategy should be and. you answered 3 correctly with a final grade of 15% 3 correct (15%) 17 incorrect (85%) 0 unanswered (0%) CHAPTER 3 Your Results: The correct answer for each question is indicated by a 1 CORRECT . 20 CORRECT Which one of the following is not among the chief duties/responsibilities of a company directors insofar as the strategy-making. whether all buyers have the same degree of negotiating power. and whether buyers buy frequently or infrequently. demand-supply conditions. and whether there are many or few collaborative partnerships between sellers and buyers. whether the D) costs of switching to competing brands or to substitute products are high or low. 3 CORRECT Whether the buyers of an industry's product have strong or weak bargaining leverage over the terms and conditions of sale depends on how often that sellers alter their prices. and how well informed buyers are about sellers' prices. how sensitive buyers are to price A) differences among sellers. whether the item being purchased is a good or a service. products. the frequency with which rival firms change strategies and the amount of B) advertising that sellers utilize. . there is a need to consider such things as market size and growth rate. product innovation. whether buyers purchase in relatively large or small quantities. the D) extent and importance of seller-buyer collaborative partnerships. and whether competitive pressures from substitutes are strong or weak. and costs. E)All of these. whether the item C) carries a high or low price tag. and the pace of technological change. and the bargaining leverage of sellers and buyers. the extent and importance of seller-supplier collaborative partnerships. the strength of competitive pressures from producers of substitute products and C) which competitors are in which strategic groups.D)What are the key factors of competitive success? What forces are driving changes in the industry. the scope of competitive A) rivalry. and what impact will these E) changes have on competitive intensity and industry profitability? 2 INCORRECT In identifying an industry's dominant economic features. the number of buyers. whether buyer demand is seasonal or year-round. the presence of scale economies and/or learning/experience curve effects. the number of rivals. whether entry barriers are high E) or low. the threat of additional entry into the industry and what the industry's key B) success factors are. entry barriers are moderately high but by no means prohibitive and there is a C) fairly small pool of entry candidates. the industry consists of a relatively large number of rival sellers that are fairly B) equal in size and competitive capability. a number of customers buy in large volumes and are in a strong bargaining D) position to win concessions from sellers. and whether industry members place orders frequently or infrequently with suppliers Whether certain suppliers provide a differentiated input that enhances the E) performance or quality of the industry's product 6 INCORRECT Which of the following is not a reason that industry rivals are often motivated to enter into strategic partnerships with key suppliers? To enhance the quality of parts and components being supplied and/or to reduce A) defect rates B)To speed the availability of next-generation components C)To reduce the bargaining power they face from buyers of their products D)To squeeze out important cost savings for both themselves and their suppliers E)To reduce inventory and logistics costs . E)buyer loyalty to the products they are currently purchasing is relatively low.4 INCORRECT Based on both the chapter discussion and the summary in Figure 3. and buyers' costs of switching to substitutes are relatively high. or weak competitive pressures? A)Whether certain needed inputs are in short supply Whether it is difficult or costly for industry members to switch their purchases B) from one supplier to another or to switch to attractive substitute inputs Whether the item being supplied is a standard commodity that is readily C) available from many suppliers at the going market price Whether the industry supply chain is global or mostly national. buyers don't believe substitute products have equal A) or better features. competitive pressures stemming from substitute products are weaker when substitutes are higher-priced. whether D) suppliers have a wide or narrow product line.4. 5 INCORRECT Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong. moderate. low buyer switching costs. and when a newcomer can reasonably expect to earn attractive profits. 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 E) learning/experience curve effects and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer 9 INCORRECT According to both the text discussion and the summary in Figure 3. 8 INCORRECT Which of the following conditions generally raise the barriers to entering an industry? A) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry Rapid market growth. which of the following is not among the factors that determine whether competitive rivalry among industry members is strong. or weak? A)Whether buyer demand for the product is growing rapidly or slowly B)Whether customers' costs to switch brands is low or high . moderate. and buyers are not brand loyal.7. difficulties in building a network of distributorsD) retailers and securing adequate space on retailers' shelves.7 INCORRECT According to both the text discussion and the summary in Figure 3. and weak brand preferences B) and customer loyalty C)Product offerings that are pretty much standardized from rival to rival High capital requirements. when current industry members are unable or unwilling to strongly contest the entry of newcomers. their products are highly D) differentiated. competitive pressures associated with the threat of new entrants grow stronger when A)buyer demand is growing slowly and the pool of entry candidates is small. entry barriers are high.6. and buyers are brand loyal. industry members are looking to expand their market reach by entering product C) segments or geographic areas where they currently do not have a presence. there are not many competitors already in the industry. a small percentage of companies in the industry are currently earning aboveE) average profits. the number of customers for the industry's product is large and the product B) offerings of rival sellers are strongly differentiated. when customers are brand loyal and their costs to switch to competing brands or B) substitute products are relatively high. A)the more strategic groups there are in an industry. rapid growth in buyer demand. as the number of rivals increases and as they become more equal in size and D) competitive capability. B)slow growth in buyer demand. the stronger the collective impact of the five competitive forces.How active industry rivals are in initiating fresh competitive moves and in using the various weapons of competition to improve their market standing and business performance Whether there are few or many rival sellers and whether there are big D) differences in their sizes and competitive capabilities Whether industry members are vertically integrated and whether the industry is E) characterized by significant scale economies and rapid technological change C) 10 INCORRECT The rivalry among competing sellers in an industry intensifies A)when buyer demand for the product is growing rapidly. and so C) many industry rivals that any one company's actions have little impact on the businesses of its rivals. when the products of rival sellers are highly differentiated products and the E) industry consists of so many rivals that any one company's actions have little direct impact on rivals' business. . when buyer demand is strong and sellers have little or no excess capacity and C) only minimal inventories. 12 INCORRECT As a rule. 11 INCORRECT Factors that cause the rivalry among competing sellers to be weak include A)low buyer switching costs. D)standardized or else weakly differentiated products among rival sellers. buyer costs to switch brands are high. the presence of one or more rivals that are dissatisfied with their current position E) and market share. and determine what strategy changes are needed to prepare for the impacts of the driving forces. changes in the number of seller-supplier C) collaborative alliances. marketing innovation. acting to make the industry more or less attractive. the lower the combined profitability of industry participants and the more C) "competitively unattractive" is the industry environment. on E) the whole. and increasing globalization of the industry Changes in the long-term industry growth rate. 14 INCORRECT Which of the following is not among the most common types of driving forces? Product innovation. changes in who buys the product B) and how they use it. D)the weaker the industry's driving forces. technological change.B)the lower the number of industry key success factors. and growing buyer preferences for differentiated products Ups and downs in interest rates. and D) the diffusion of technical know-how across more companies and more countries Changes in cost and efficiency. attitudes. assess whether the drivers of change are. identify what the driving forces are. B)predict what new forces of competitive and market change will emerge next. the entry or exit of major firms. and lifestyles A) 15 CORRECT The procedure for constructing a strategic group map involves . 13 INCORRECT The task of driving forces analysis is to A) identify all the underlying factors that can cause industry profitability to rise or fall in the years ahead. identify which companies are being driven to move from one strategic group to D) another strategic group. the higher the barriers to entry and the less likely it is that industry members will E) make fresh strategic moves very frequently. determine which of the five competitive forces is the biggest driver of industry C) change. and changing E) societal concerns. and changes in overall industry profitability Emerging new Internet applications and capabilities. and E) . using only variables for the map's axes that are quantitative in nature (qualitative C) measures of market positions and competitive approaches are too subjective and unreliable). determining which companies have how big a competitive advantage and how B) good their prospects are for increasing their market shares. A) 17 INCORRECT Trying to determine what strategic moves rivals are likely to make next is interesting but usually has little bearing on a company's own best strategic moves. B)selecting variables for the map's axes that are highly correlated. understanding the thinking of their managers. and making the size of the circles for each strategic group proportional to the size of its members' share of total industry sales revenues. drawing circles D) around those firms occupying about the same strategy space. usually requires evaluating the industry's key success factors as well as B) determining how many driving forces are present.A) identifying the competitive characteristics that differentiate firms' market positions and competitive approaches. earnings per share. plotting the firms on a two-variable or two-dimensional map. pinpointing which of the five competitive forces is the strongest and which is E) the weakest. determining who competes most closely with whom. E)Both A and D 16 INCORRECT A strategic group map is a helpful analytical tool for assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups. A) D)cannot be done effectively without first drawing a strategic group map. is best done by monitoring each rival's market share. and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each group's respective market positions. and C) 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. determining which company is the most profitable in the industry and why it is C) doing so well. evaluating whether D) industry driving forces and competitive pressures favor some strategic groups and hurt others. entails each rival's situation. A) 19 INCORRECT Which of the following is not a good example of a marketing-related key success factor? A)A well-known and well-respected brand name B)Breadth of product line and product selection C)Product innovation capabilities D)Clever advertising E)Courteous. are mainly a function of an industry's macro-environment and dominant C) economic features. B) and intangible assets with the greatest impact on future success in the industry. competitive capabilities. 18 INCORRECT An industry's key success factors can best be determined by studying the strategies of those companies in the industry's best strategic group and those in the worst strategic group. can best be determined by identifying the similarities in the strategies of rival D) 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 E) distribution or marketing capabilities.evaluating the relative merits of their strategic options. competencies. concern the particular product attributes. personalized customer service 20 INCORRECT 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? Whether powerful competitive forces are squeezing industry profitability to A) subpar levels and whether competition appears destined to grow stronger or weaker B)The industry's growth potential Whether industry profitability will be affected favorably or unfavorably by the C) prevailing driving forces How many of the industry's key success factors do companies in the industry D) . being in business more years than rivals. relative cost position. and smaller ca B) expenditures than rivals C) Intangible assets such as a well-known brand name .typically incorporate into their strategies E)The company's competitive position in the industry relative to rivals Results Reporter Chapter 04 1 INCORRECT Evaluating a company's resources and capabilities. and competitive stre rivals does not include developing answers to which one of the following questions? A) How good is the company's value chain? B) Is the company competitively stronger or weaker than key rivals? C) What are the company's competitively important resources and capabilities? D) Are the company's prices and costs competitive? E) What strategic issues and problems merit front-burner managerial attention? 2 INCORRECT Which one of the following is not a good indicator of how well a company's present strategy A) Whether it is achieving its stated financial and strategic objectives B) Whether it is an above-average industry performer C) Whether the firm's sales and earnings are increasing or decreasing Whether the company's resource strengths and competitive capabilities outnumber it D) weaknesses and competitive vulnerabilities The rate at which new customers are acquired and whether the company's overall fin E) improving or on the decline 3 CORRECT Which one of the following groups of characteristics is least likely to represent valuable com competitive capabilities? Physical assets such as state-of-the-art plants. attractive real estate locations. and wo A) facilities More employees than rivals. D) Strong collaborative partnerships with key suppliers and an experienced and capable E) Organizational assets such as proven quality control skills or proprietary technology 4 INCORRECT Which of the following is not a measure of the competitive power of a company's resource st A) How hard it is for competitors to copy the resource strength B) Whether the company has more resources/capabilities than any other key rival C) Whether a company's resource is really competitively valuable E) Whether the resource or capability is rare and something rivals lack D) How easily the resource or capability can be trumped by the substitute resources/cap 5 INCORRECT A company that lacks a single resource strength capable of contributing to competitive advan develop a distinctive competence through A) devising clever approaches to turning resource weaknesses into resource strengths. D) the development of a new business model. improved employee training programs. C) changing its industry positioning and approach to building competitive advantage. new marketing promotions. . C) undertake efforts to develop a distinctive competence. or technological E) production processes. A) should adopt a new competitive strategy that might better match the circumstances o D) is virtually blockaded from using offensive strategies and must rely on defensive stra may be able to develop substitute resources that accomplish the same objective as th E) possessed by rivals. 6 INCORRECT A company that is a disadvantage in the marketplace because it lacks competitively valuable by rivals B) should abandon strategy elements that have caused its weakness in the marketplace. B) bundled resource strengths that can be leveraged to develop a core competence. a core competence tends to be grounded in cr combinations of knowledge and expertise rather than being the product of a single d group. is typically knowledge-based. is usually tied closely to the caliber of a company's manufacturing capability and/or D) technology and know-how. D) can underpin and add real punch to a company's strategy. E) is a competitive intelligence tool that discloses rivals' key weaknesses." usually resides in a company's technology and physical assets (state-of-the-art plants B) attractive real estate locations. E) All of the above. . residing in people and in a company's intellectual capi C) assets on the balance sheet. B) is a tool for benchmarking whether a firm's strategy is closely matched to industry ke C) reveals whether a company is competitively stronger than its closest rivals. D) examines the company's cost position activity by activity. is better suited to helping a company defend against external threats than in pursuing E) opportunities. and external threats to its future well-being. 8 INCORRECT A distinctive competence A) is a more important competitive asset than a core competence. and so on) whereas a co usually resides in a company's human assets. C) is a competitively important value chain activity that a company performs better than 9 CORRECT SWOT analysis A) provides an appraisal of a company's resource strengths and competitive deficiencies opportunities. moreover. modern distribution facilities. represents uniquely strong capability relative to rival companies—it qualifies as a co B) resource strength with competitive advantage potential.7 INCORRECT A core competence A) is a more durable company resource than a "distinctive competence. and key succes C) Value chain analysis and benchmarking. best practices analysis. strategy assessment. A) opportunities that are well-matched to the company's competitive capabilities and re D) opportunities where the company has the greatest potential for competitive advantag 11 INCORRECT Which of the following is not an example of an external threat to a company's future business Table 4. competitive strength assessment. C) opportunities that offer important avenues for growth. best practices analysis. and competi E) assessment.10 CORRECT The industry or market opportunities that are most relevant to a company and those which its at capturing include B) opportunities which the company has the financial resources to pursue. Competitive position assessment. E) All of the above. SWOT analysis. activity-based costing analysis.1)? A) Mounting intensity of competition among industry rivals and costly new regulatory r B) Having a weaker brand image than rivals and a smaller network of retailer dealers th C) Shifts in buyer needs and preferences away from using the industry's product Vulnerability to unfavorable industry driving forces and adverse demographic chang D) curtail demand for the industry's product E) Growing bargaining power on the part of customers and/or suppliers 12 INCORRECT Which of the following analytical tools are particularly useful for determining whether a com costs are competitive? B) SWOT analysis. activity-based costing analysis. and value A) SWOT analysis. competitive strength assessment. . strategic group m D) analysis. and value chain analysis. " D) the activities that a company performs in developing a distinctive competence. core competencies. 15 INCORRECT A company's cost competitiveness is largely a function of A) whether it does a good enough job of benchmarking its value chain activities against competitors so that it knows exactly how low to drive its costs to be cost-competitive how efficiently it manages its internally performed value chain activities and the cos B) of its suppliers and forward channel allies. C) those activities a company performs that represent "best practices. C) whether it does a better job of building its resource strengths more cost effectively th D) whether it possesses more core competencies and competitive capabilities than rivals how closely its internally-performed activities are linked to the activities performed E) the activities performed by forward channel allies. the activities that represent a company's competencies. producing. is not a valid tool for measuring the cost-effectiveness of an activity unless it is restr B) the same industry. distinctiv E) competitive capabilities. marketi B) supporting its product or service. D) loses much of its managerial usefulness if it is done with the aid of third-party organ entails calculating the costs of performing each of the primary and related support ac E) company's value chain. .13 CORRECT A company's value chain consists of A) the activities a company performs in converting its resource weaknesses into resourc the collection of activities it performs in the course of designing. 14 CORRECT Benchmarking A) is inherently unethical if it involves companies that are direct competitors because it competitively sensitive information about the operations and costs of rivals. entails comparing how different companies perform various value chain activities an C) company comparisons of the costs of these activities. are likely to be most effective when they are aimed at lowering the costs of the value a company performs internally. C) outsourcing high-cost activities to vendors capable of performing the activity at mor 18 INCORRECT The options for attacking the high costs of items purchased from suppliers does not include w following? A) Pressuring suppliers for more favorable prices Integrating backward into the business of high-cost suppliers and making the item in B) control the cost C) Switching to lower priced substitute inputs D) Raising prices to customers (so as to cover the high costs) E) Collaborating closely with suppliers to identify mutual cost-saving opportunities .16 CORRECT Strategic actions to eliminate a cost disadvantage A) B) C) D) E) can aim at lowering costs (1) in the suppliers' part of the industry value chain. (2) in internally-performed activities. B) trying to eliminate some cost-producing activities altogether by revamping the value D) investing in productivity enhancing. and/or (3) in the forward channel portion of the value work best when they aim at lowering the costs of performing those tasks and activiti company has core competencies and distinctive competencies. cost-saving technology. are most likely to be successful when they involve efforts to concentrate more comp talents on those value chain activities where the company already has the lowest cos 17 INCORRECT Strategic actions to eliminate an internal cost disadvantage include A) implementing the use of best practices. work best when aimed at increasing the amount of the company's low-cost competiti decreasing the amount of its high-cost competitive assets. E) All of these. . E) All of the above.19 INCORRECT Which one of the following is not something that can be learned from doing a competitive str A) Identifying the competitive factors where a company is strongest and weakest vis-àkinds of offensive/defensive actions the company can use to exploit its competitive s its competitive vulnerabilities B) Whether a company utilizes more best practices than rivals in performing its value c C) Which of the rated companies is competitively strongest and what size competitive a Whether a company has a net competitive advantage or is a net competitive disadvan D) rivals (with the size of the advantage/disadvantage being indicated by the differences companies' competitive strength scores) Which rival company is competitively weakest and the areas where it is most vulner E) attack—when a company has important competitive strengths in areas where one or weak. deals exclusively with the specifics of management's game plan for securing a compe C) advantage vis-à-vis rivals. B) pinpoints the precise things management needs to worry about. Results Reporter Chapter 05 1 INCORRECT A company's competitive strategy deals with A)the specific actions management plans to take to develop a better value chain than riv how it plans to unify its functional and operating strategies into a cohesive effort aime B) successfully taking customers away from rivals. sets the agenda for deciding what actions to take next to improve the company's perf C) business outlook. entails locking in on what challenges the company has to overcome in order to be fin D) competitively successful in the years ahead. it makes sense to consider offensive moves to exploit rivals' competitive weak 20 CORRECT Identifying the strategic issues that company managers need to address A) involves using the results of both industry and competitive analysis and evaluations internal situation. D)its plans for under-pricing rivals and achieving product superiority. the specific actions management intends to take to strongly differentiate its product o E) from the offerings of rival companies in the industry. middle-of-the-road strategies. B)bigger profit margins than rival firms. 4 INCORRECT A low-cost provider's basis for competitive advantage is A)using an everyday low pricing strategy to gain the biggest market share. defensive strategies. differentiation strategies. B)striving for a high degree of customer loyalty to the company's brand. E)a reputation for charging the lowest prices in the industry. market leadership E) strategies. broad differentiation. D)meaningfully lower overall costs than competitors. and core C) competencies. premium price strategies. low-price strategies. technological leadership strategies. . and product superiority strategies. and (2) whether t E) company should pursue a competitive advantage linked to low costs or product differentiation. and a collection of valuable resources. focused differentiation. D)developing a better credit rating than rivals. offensive strategies. 3 INCORRECT The five generic types of competitive strategies include A)offensive strategies. defensive strategies.2 INCORRECT Competitive strategies that provide distinctive industry positioning and competitive advantage involve A)a customer value proposition. C)high buyer switching costs because of the company's differentiated product offering. attacking competitor strengths. and prod C) innovation strategies. choosing between (1) a market target that is either broad or narrow. an B) cost provider. focused low-cost. competitive capabilities. assembling a wide portfolio of company resources. and mar D) share leadership strategies. attacking competitor weaknesses. profit formula. and low-cost strate low-cost provider. D)buyers are not swayed by advertising and are not very brand-loyal. aggressive use of activity-based costing. paying lower wages than rivals. and D) a narrower product line than rivals. C)there are many ways to achieve higher product quality that have value to buyers. . 6 INCORRECT Which of the following is not a distinguishing feature of a low-cost provider strategy? A)The product line consists of a few basic models having minimal frills and acceptable The production emphasis is on continuously searching for ways to reduce costs witho B) sacrificing acceptable quality and essential features C)The marketing emphasis is on making virtues out of product features that lead to low The strategic target is value-conscious buyers and sustaining the strategy depends on D) frequent advances in technology and occasional product innovations Sustaining the strategy revolves around managing costs down year-after-year and del E) good value at economical prices 7 CORRECT A competitive strategy of striving to be the low-cost provider is particularly attractive when A)buyers are large and incur low costs in switching their purchases from one seller to an B)most rivals are trying to differentiate their product offering from those of rivals. E)Both A and C. C)doing a better job than rivals in performing essential activities. utilizing more best practices than rivals. having a smaller labor force than rivals. E)most rivals are pursuing best-cost or broad differentiation strategies. and outsourcing many value chain activities to suppliers with world-class technological capabilities.5 INCORRECT Striving to be the industry's low-cost provider and achieving lower costs than rivals entails A)eliminating or curbing nonessential activities. locating all f B) in countries where labor costs are low. E)do not offer the promise of sustainable competitive advantage. offers a better chance for gaining market share than low-cost or best-cost provider str D) and typically allows a firm to charge the highest price in the industry. 9 INCORRECT Easy-to-copy differentiating features A)lead to excessive price competition. 10 INCORRECT A broad differentiation strategy is an attractive competitive approach whenever buyers' needs and preferences are too A) to be satisfied by a product that is essentially identical from seller to seller. works best when the basis for differentiation is superior performance features and buy C) switching costs are low. B)earn the highest profit margins of any company in the industry. B)are less expensive to integrate into a product or service offering. . E)Both A and D. E)Both A and B. D)should be patented before other companies imitate the features. command a premium price for its product and/or increase unit sales (because addition D) buyers are won over by the differentiating features).8 INCORRECT Successful differentiation allows a firm to gain buyer loyalty to its brand (because some buyers are strongly attracted to the A) differentiating features and bond with the company and its products). attract many more buyers by charging a lower price than rivals and thereby take sales C) market share away from rivals. C)tend to satisfy the needs of most buyers. can produce sustainable competitive advantage if the differentiating features possess B) buyer appeal and can't be copied or easily matched by rivals. C)are those that either lower buyer switching costs or enhance the differentiator's brand 12 INCORRECT In which one of the following market circumstances is a broad differentiation strategy genera well-suited? When buyer needs and preferences are too diverse to be fully satisfied by a standardiz A) product B)When few rivals are pursuing a similar differentiation approach. E)are typically based on either superior product quality or superior customer service. D)generally relate to product superiority or clever merchandising.11 INCORRECT The most appealing approaches to broad differentiation A)are those that hinge upon first-rate R&D and frequent product innovation. When most competitors are using eye-catching ads to set their product offerings apart C) build a brand image that is differentiated When there are many ways to differentiate the product or service and many buyers pe D) these differences as having value When technological change is fast-paced and competition revolves around rapidly ev E) product features 13 INCORRECT Which of the following is not one of the hazards of pursuing a differentiation strategy? A)Trying to charge too high a price premium for the differentiating features Over-differentiating so that the features and attributes incorporated exceed buyer need B) requirements Trying to create strong brand loyalty rather than being content with weak brand loyal C) (which usually means lower costs and higher profitability) D)Differentiating on features or attributes that rivals can easily copy E)Overspending on efforts to differentiate the company's product offering . involve features or attributes that have considerable buyer appeal and are hard or exp B) for rivals to duplicate. their concentrated attention on serving the needs of buyers in a narrow piece of the ov B) market. B)catering to buyers looking for a medium-quality product at an average price. 16 INCORRECT A focused differentiation strategy aims at securing competitive advantage by providing buyers in the target market niche with the best performance features at the A) price. E)convincing buyers that the company is a true leader in product innovation. 15 CORRECT A focused low-cost strategy involves a serving buyers in the target market niche at a lower cost and a lower price A) rival competitors. offering carefully designed products or services to appeal to the unique preferences an C) needs of a narrow. entails trying to wrest market share away from rivals via extra advertising. D)developing unique product attributes. B)is the hardest of the four generic types of competitive strategies to employ successful C)involves the use of deep price discounting to capture customers. and heavy use of point-of-sale merchandising techniques. E)their bold strategic intent of global market leadership via heavy advertising. above-ave D) expenditures for promotional programs. their suitability for market situations where technological change is fast-paced and D) continuous product innovation is a key success factor. cannot be sustained over time unless the focuser is aggressive in entering other segme E) where it also can achieve a low-cost advantage. well-defined group of buyers. . C)greater opportunity for brand loyalty.14 INCORRECT What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is A)the extra attention paid to establishing a distinctive competence. and emphasis on C) differentiating features D)A competitive advantage based on more value for the money Using constant product innovation. B)economies of scope or greater scale economies than rivals. E)a short. 18 INCORRECT Which of the following are distinguishing features of a best-cost provider strategy? A)The strategic target is price-conscious buyers A marketing emphasis on charging a slightly higher price than rival brands having B) comparable features and attributes A product line that stresses wide selection. a superior value chain configuration and unmatched efficiency in managing value cha C) activities. a "middle of the road" strategic approach that attempts to satisfy the product or servic E) of consumers with average household incomes. and periodic technological E) breakthroughs to sustain the strategy 19 INCORRECT For a best-cost provider strategy to be successful. 20 INCORRECT A company's biggest vulnerability in employing a best-cost provider strategy is . many product variations. excellent R&D skills. low-cost value chain. achieves competitive advantage because its operating activities are "best-in-industry" C) "best-in-world. tries to have the best cost (as compared to rivals) for each activity in the industry's va B) chain." D)is a hybrid strategy based upon superior resources and a narrow market niche. D)superior product innovation skills and manufacturing capabilities. a company must have A)excellent supply chain capabilities and product design expertise.17 CORRECT A firm pursuing a best-cost provider strategy seeks to offer more value-adding features than the industry's low-cost providers and l A) prices than those pursuing differentiation. 3 INCORRECT Companies are motivated to enter into strategic alliances or cooperative arrangements .A)relying too heavily on price discounting. are collaborative arrangements where two or more companies join forces to achieve m E) beneficial strategic outcomes. not having the needed efficiencies in managing value chain activities to add differenti C) features without significantly increasing costs. D)help insulate a firm from the adverse impacts of industry driving forces. Results Reporter Chapter 06 1 INCORRECT Which one of the following is not a strategic choice that a company must make to complement supplement its choice of one of the five generic competitive strategies? A)Which value chain activities. B)adding features not needed by the majority of buyers. being timid in cutting its prices far enough below high-end differentiators to win awa D) of their customers. B)are a proven means of reducing the costs of performing value chain activities. if any. C)are best used to insulate a company from the impact of the five competitive forces. should be outsourced B)Whether to bolster the company's market position and competitiveness via acquisition C)Whether to employ a low-end strategy or a middle-of-the-road strategy or a high-end s E)Whether to enter into strategic alliances or collaborative partnerships D)Whether to integrate forward or backward into more stages of the industry value chain 2 INCORRECT Strategic alliances A) are the cheapest means of developing new technologies and getting new products to m quickly. E)relying excessively on outsourcing in an attempt to boost gross profit margins. aim at insulating the partners against the impacts of the five competitive forces and ind E) driving forces. work best when they are aimed at achieving a mutually beneficial competitive advanta D) allies. (1) involve collaboration with suppliers or distributors. E)All of these. are rarely useful in helping a company win the race for global industry leadership than E) establishing positions in industries of the future. 6 INCORRECT Which of the following is not a typical reason that many alliances prove unstable or break apar A)Inability to work well together . B)are those whose purpose is helping a company master a new technology. and/or gain economies of scale in prod and/or marketing." B)are generally successful. 5 CORRECT Experience indicates that strategic alliances A)have a high "divorce rate. or (2) occur when both parties D) that continued collaboration is in their mutual interest. C)to acquire or improve market access through joint marketing agreements.A)to expedite the development of promising new technologies or products. 4 INCORRECT The most long-lasting strategic alliances A) aim at teaming up with world-class suppliers or else companies with world-class know product innovation. to bring together the personnel and expertise needed to create desirable new skill sets a B) capabilities to improve supply chain efficiency. C)are those formed to enable the partners to be consistent first movers or fast followers. D)to overcome deficits in their own technical and manufacturing expertise. work well in cooperatively developing new technologies and new products but seldom C) well in promoting greater supply chain efficiency. 9 INCORRECT Which of the following is not a potential advantage of backward vertical integration? . FedEx's acquisition of Kinkos. expanding a company's geographic coverage. C) extending a company's business into new product categories. Ford acquisitions of Jaguar and Land Rover. B)facilitating the employment of both offensive and defensive strategies. creating a more cost-efficient operation. gaining quick access to new technologies or other resources and competitive capabiliti D) trying to invent a new industry and lead the convergence of industries whose boundari being blurred by changing technologies and new market opportunities. the merger of Daimler Benz and Chrysler. 8 INCORRECT Which one of the following statements about merger and acquisition strategies is true? A) Merger and acquisition strategies are nearly always a superior strategic alternative to f alliances or partnerships with these same companies. Merger and acquisition strategies are one of the best ways for helping a company stren E) brand image. and eBay's acquisition of Skype. Merger and acquisition strategies often do not produce the hoped-for outcomes—exam C) mergers/acquisitions where the results have been disappointing include the merger of S Nextel. Mergers and acquisition strategies are a very high-risk strategy because of the financia D) using the company's cash resources to accomplish the merger or acquisition. Merger and acquisition strategies tend to be far more successful that forming strategic B) and cooperative partnerships with other companies. E)Both C and D.B)Mounting competition between one or more allies in the marketplace Changing conditions that render the purpose of the alliance obsolete and the emergenc C) attractive technological paths Disagreement over how to divide the added market share and profits gained from joint D) collaboration E)Diverging objectives and strategic priorities 7 INCORRECT Mergers and acquisitions are a much used strategy because they are an effective means of A)revamping a company's value chain. It boosts a firm's capital investment in the industry and thus increases business risk if t C) industry becomes unattractive later. more loyal clientele of custo B)To make it easier to expand the company's product line C)To gain better access to end users and better market visibility D)To achieve greater control over advertising and in-store retail merchandising E)To gain better access to greater economies of scale 11 CORRECT Which of the following is not a strategic disadvantage of vertical integration? A) It greatly reduces the opportunity for capturing maximum scale economies and achievi lowest possible operating costs. a overall product quality Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at ev E) opportunity) 10 INCORRECT Which of the following is typically the strategic impetus for forward vertical integration? A)To charge lower retail prices and thereby attract a bigger. more flexibility in incorporating state-of-the-art parts and components.A) Adding to a company's differentiation capabilities and perhaps achieving a differentiat competitive advantage B)Reduced risk of disruptions in the supply and delivery of crucial materials and compon Reduced costs for items purchased from suppliers (if internal manufacture is more eco C) than buying from powerful suppliers who have big profit margins and provided entry b into a supplier's business are low or can be hurdled) Enhanced R&D capability. B)Vertical integration poses all kinds of capacity-matching problems. better opportunity to establish a core competence in supply D) management. Integrating forward or backward can entail taking on the performance of value chain a D) that require radically different skills and business capabilities than the firm possesses. Vertical integration backward into parts and components manufacture can impair a com E) operating flexibility when it comes to changing out the use of certain parts and compon easier to change out parts and components made by outside suppliers than those made . 12 CORRECT Which of the following is not an advantage of outsourcing the performance of certain value ch activities to outsiders? Being able to reduce distribution costs by eliminating the use of wholesale distributors A) dealers and. employs highly creative. Allowing a company to concentrate on its core business. an B) better what it already does best Improving the company's ability to innovate by allying with "world-class" suppliers w C) cutting edge intellectual capital and are first-to-market with next-generation parts and components Being able to speedily and efficiently assemble diverse kinds of competitively valuabl D) expertise E)Obtaining higher quality and/or cheaper components or services 13 INCORRECT Which of the following is not one of the principal offensive strategy options? A)Leapfrogging competitors by being the first adopter of next-generation technologies B)Offering an equally good or better product at a lower price C)Blocking the avenues open to challengers D)Attacking the competitive weakness of rivals E)Attacking market segments where key rivals earn big profits 14 INCORRECT A blue ocean type of offensive strategy A) is a pre-emptive strike type of price-cutting offensive used by a market leader to steal c away from higher-priced rivals. involves using innovative advertising and deep price discounts to grab sales and marke D) from complacent or distracted rivals. instead. instead. selling direct to end-users at the company's Web site. in C) new industry or new market segment that renders existing competitors largely irreleva allows a company to create and capture altogether new demand. leverage its key resources. B)involves deliberately attacking those market segments where a key rival makes big pro involves abandoning efforts to beat out competitors in existing markets and. . never-used-before strategic moves to attack the competitive E) weaknesses of rivals. weaken the impact of any attack that occurs. guard against adverse changes in the company's macro-environment and insulate the c C) from the impact of industry driving forces. C)work best if the guerilla is the industry's low-cost leader.15 INCORRECT A hit-and-run or guerilla warfare type of offensive strategy involves A) random offensive attacks used by a market leader to steal customers away from unsusp smaller rivals. 16 INCORRECT Which one of the following is not a good type of rival for an offensive-minded company to tar A)Market leaders that are vulnerable B)Runner-up firms with weaknesses in areas where the challenger is strong C)Small local and regional companies with limited capabilities E)Struggling enterprises that are on the verge of going under D)Other offensive-minded companies with a sizable war chest of cash and marketable se 17 INCORRECT The purposes of defensive strategies are to A)aggressively retaliate against rivals pursuing offensive strategies and prevent against p lower the risk of being attacked by rivals. B) influence challengers to aim their offensive efforts at other rivals. usually the guerilla signals rivals that it will use deep price cuts to de newly-won position. D)strengthen a company's competitive advantage and reduce its exposure to business risk eliminate a company's resource weaknesses and competitive deficiencies. random raids by a small competitor to grab sales and market share from complacent or E) distracted rivals. thereby mak E) invulnerable to competitive attack from would-be challengers. . undertaking surprise moves to secure an advantageous position in a fast-growing and p B) market segment. pitting a small company's own competitive strengths head-on against the strengths of m D) larger rivals. and products are easily copied or even bested by C) movers D)When customer loyalty to the pioneer is low When technological change is rapid and following rivals find it easy to leapfrog the pio E) next-generation products of their own Results Reporter Chapter 07 . know-how. C)moving first can result in a cost advantage over rivals.18 CORRECT Being first to initiate a particular move can have a high payoff when A)pioneering helps build up a firm's image and reputation with buyers. making imitation extra hard or unlikely 19 CORRECT In which of the following situations is being first to initiate a particular move not likely to resu positive payoff? A)When late movers can copy a successful pioneer's moves quickly and at lower cost B)When pioneering helps build up a firm's image and reputation with buyers C)When first-time buyers remain strongly loyal to a pioneering firm in making repeat pu E)When moving first can result in a cost advantage over rivals D)When moving first can constitute a preemptive strike. B)first-time buyers remain strongly loyal to pioneering firms in making repeat purchases D)moving first can constitute a preemptive strike. making imitation extra hard or u 20 INCORRECT In which of the following cases are first-mover disadvantages not likely to arise? A) When the costs of pioneering are much higher than being a follower and only negligib loyalty or cost savings accrue to the pioneer B)When new infrastructure is needed before market demand can surge When the pioneer's skills. E)All of these. whether the company should engage in exporting. 3 INCORRECT Which one of the following is not a factor that a company must contend with in co markets of foreign countries? Variations in market growth rates from country to country and A) country-to-country differences in consumer buying habits and b preferences Country-to-country variations in host government policies and B) requirements The fact that product designs suitable for one country are some C) inappropriate in another D) Vulnerability to adverse shifts in currency exchange rates E) A need to convince shippers to keep cross-country transportatio . neutralize the b of important suppliers. and escape having to deal with strong labor unions gain access to new customers. or C) enter new country markets. avoid restrictions. avoid the threat of c subsidization from rivals. grow sales faster than the industry average.1 INCORRECT Companies opt to expand into foreign markets for such reasons as to A) B) C) D) E) boost returns on investment. capitalize on core competencies. and increase the numb customers. D) how to take advantage of the low wage rates prevailing in some E) whether to pursue a global strategy or an international strategy. and enable the use of a global strateg multicountry strategy. and open up more opportunities to enter into strategic all avoid having to employ an export strategy. raise the entry barriers for industry newcomers. and spread b across a wider market base. B) whether to charge the same price in all country markets. achieve lower costs and enhance competitiveness. reduce the competi rivals. broaden their product lines. licensing. grow sales faster. 2 CORRECT One of the biggest strategic challenges to competing in the international arena incl A) whether to offer a mostly standardized product worldwide or w customize the company's offerings in each different country ma tastes and preferences of local buyers. a profit sanctua A) a cross-market subsidization strategy A global strategy where a company uses essentially the same co B) strategy approach in all country markets where it has a presenc C) A localized multicountry strategy An export strategy and using strategic alliances or joint venture D) companies as the primary vehicle for entering foreign markets A franchising strategy and a strategy of licensing foreign firms E) company's technology or to produce and distribute the company 6 INCORRECT The advantages of manufacturing goods in a particular country and exporting them markets are seriously compromised by the potential for local governmen A) raise tariffs on the imports of foreign-made goods into their cou are greatest when local consumers prefer products manufacture B) country's borders.25 per euro.S. . Domestic companies under pressure from lower-cost imports ar C) their government's currency grows weaker in relation to the cur countries where the imported goods are being made.1 E) $1. then it is correct to say that the U.4 INCORRECT Which one of the following statements concerning the effects of fluctuating excha companies competing in foreign markets is true? Domestic companies trying to combat competition from foreign A) even more when their government's currency grows weaker in currencies of the countries where the imported goods are being Fluctuating foreign exchange rates greatly reduce the risks of c B) foreign markets—the big problem occurs when exchange rates unreasonably low levels. dollar has g 5 CORRECT Which of the following is/are not "valid" strategy options for entering and/or comp markets? An import strategy.S. dollars for euros changes from $1. If the exchange rate of U. Manufacturers that are exporting much of what they produce ar D) their country's currency grows stronger relative to the currencie that the goods are being exported to. a strategic alliance strategy. are weakened when that country's currency grows stronger rela currencies of the countries where the output is being sold. D) is usually a weak strategy when competitors are pursuing licens can be a powerful strategy because the company is not vulnerab E) quotas. economically uncertain. B) being able to charge lower prices than rivals. 8 INCORRECT The advantages of using a licensing strategy to participate in foreign markets inclu A) being especially well suited to the exploit a profit sanctuary. having franchisees bear most of the costs and risks of establishi B) locations and requiring the franchiser to expend only the resour train. 9 INCORRECT The advantages of using a franchising strategy to pursue opportunities in foreign m A) being particularly well suited to the international expansion eff with global strategies. C) enabling a company to achieve competitive advantage quickly D) being able to achieve lower costs than with a localized multicou being able to leverage the company's technical know-how or pa E) committing significant additional resources to markets that are politically volatile. or otherwise risky. 7 INCORRECT Using domestic plants as a production base for exporting goods to selected foreign A) is usually a superior approach to competing in international ma can be a competitively successful strategy when a company is f B) vacant market niches in each foreign country. can be wiped out when that country's currency grows weaker re D) currencies of the countries where the output is being sold. C) E) are largely unaffected by tariffs or quotas. C) can be an excellent initial strategy to pursue international sales. . and support foreign franchisees. C) protects a multinational firm against fluctuating exchange rates is generally an inferior strategy when one or more foreign comp D) pursuing a global low-cost strategy. E) Both B and C. act local" type of multicountry suited to achieving low unit costs than a global strategy. cultural traditions. and market conditions. act global" approach to strategy-making is preferable to a "think l approach when . has two big drawbacks: (1) the bigger the country-to-country va C) strategy. is generally inferior to a global strategy when it comes to pursu D) differentiation. always makes a company vulnerable to rivals employing "think B) global" strategies. 10 CORRECT A "think local. 11 INCORRECT A localized or multicountry strategy A) is generally preferable to a global strategy in situations where b sensitive because a "think local. is one where a company varies its product offering and compet B) from country to country in an effort to be responsive to differin preferences and market conditions. act local" multicountry type of strategy A) becomes more appealing the bigger the country-to-country diff tastes. unified competitive advantage. the harder it is difficult to transfer a company's compe resources across country boundaries and (2) it does not promote single.C) helping build brand awareness in international markets D) being well suited to companies who employ cross-market subsi gaining support from local governments in the form of subsidie E) local content requirements. 12 INCORRECT A "think global. employs essentially the same basic competitive strategy theme E) markets. A) customer preferences vary significantly from country to country it is necessary to delegate strategy making to local managers w B) knowledge of local conditions. a "think global. a "think global. local managers are given more latitude in adapting the global st D) as may be needed to accommodate local buyer preferences and local market and competitive conditions. 13 INCORRECT As indicated in Figure 7.1. act local" approach involve multiple brands (often a local brand for each local market). a "think global. act local" approach involves charging much dif A) the various country markets where the company competes. act local" approach involves considerably less a C) utilizing the same capabilities. differentiatio focused) in all country markets. C) plants need to be scattered across many countries to avoid high country-to-country differences are small enough to be accomm D) framework of a mostly uniform global strategy. act global" approach involves selling under a si E) worldwide whereas a "think global. and marke worldwide. act global global. distribution channels. act global" strategy D) cross-market subsidization To share distribution facilities and dealer networks. act local" approach to crafting a global strategy is that a "think global. host governments enact regulations requiring that products sold E) strict manufacturing specifications or performance standards. thus mutua E) the allies' access to buyers . the chief difference between a "think global. act local" approach involves much less adheren B) same basic competitive strategy theme (low-cost. 14 INCORRECT Which of the following is not a potential motivation for entering into strategic allia cooperative arrangements with foreign companies? A) To gain wider access to attractive country markets B) To gain better access to scale economies in production and/or m To fill competitively important gaps in their technical expertise C) knowledge of local markets To better enable the use of a "think global. C) if economies of scale are essential to achieving acceptable prod . host country governments can be persuaded to erect high tariff D) protect the company's operations from foreign competitors and imperative to be responsive to buyer needs and competitive con country. 17 INCORRECT Dispersing the performance of value chain activities to many different countries ra concentrating them in a few country locations tends to be advantageous when high transportation costs make it expensive to operate fro A) locations. competitive conditions make it infeasible to employ a profit san E) or an export strategy. there are significant scale economies and/or steep learning curv B) associated with performing certain activities in a single location performing the activity are lower in particular geographic locat locations have superior resources.15 INCORRECT Which of the following is not one of the ways in which a company can pursue com advantage by expanding outside its domestic market and competing multinationall Locating value chain activities among various countries in a ma A) costs B) Pursuing blue ocean opportunities in the company's home coun Locating value chain activities among various countries in a ma C) achieve greater product differentiation Cross-border coordination of its activities in ways that contribu D) competitive edge E) Employing a profit sanctuary strategy to wage a strategic offen 16 INCORRECT Multinational competitors tend to concentrate activities in a limited number of loca A) prices and competitive conditions are strongly linked across co form a world market. allow better coordination of or offer other valuable advantages. whenever buyer-related activities are best performed in location B) buyers. C) the risk of fluctuating exchange rates is very high. E) None of the above. 18 INCORRECT A country (or geographic region) becomes a company's profit sanctuary when A) a majority of the company's customers are in that country. 20 CORRECT Which of the following is not a typical option that companies have to consider to t strategy to fit the circumstances of emerging country markets? Develop new sets of core competencies that allow a company t A) consumers of emerging markets in ways unmatched by rivals B) Prepare to compete on the basis of low price . they enable a company pursuing a global strategy to compete o footing with companies employing a multicountry strategy. without having at least two profit sanctuaries a company is virt from competing globally. a company pursues a "think local. the company earns substantial profits from sales in that nation d D) strong or protected competitive position. act local" type of multicount C) country. 19 INCORRECT Profit sanctuaries are valuable competitive assets because A) B) C) D) E) they enable a company pursuing a "think global.D) Both A and B. that country (or region) is where a company's prices are the hig B) country where it sells its product/service. they provide the financial strength to support strategic offensiv country markets and can help fuel a company's race for global m leadership. act local" type more successful. E) the company is the market share leader in that country market. a domestic competitor with multiple profit sanctuaries can wag win a competitive offensive against a global competitor whose scattered across many different countries. Be prepared to modify aspects of the company's business mode accommodate local circumstances (but not so much that the com advantage of global scale and global branding) Try to change the local market to better match the way the com D) business elsewhere Stay away from those emerging markets where it is impractical E) to modify the company's business model to accommodate local C) Results Reporter Chapter 08 Out of 20 questions, you answered 2 correctly with a final grade of 10% 2 correct (10%) 18 incorrect (90%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a 1 INCORRECT . Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A)Picking the new industries to enter and deciding on the means of entry Initiating actions to boost the combined performance of the businesses the firm has B) entered Standardizing the resource fits across the group of businesses the company has diver C) into Establishing investment priorities and steering corporate resources into the most attra D) business units Pursuing opportunities to leverage cross-business value chain relationships and strate E) fits into competitive advantage 2 INCORRECT Important reasons for a company to consider diversification include A)a desire to avoid putting all of its "eggs" in one industry basket. B)diminishing market opportunities and stagnating sales in its principal business. opportunities to leverage existing competencies and capabilities by expanding into C) businesses where these same resource strengths are key success factors and valuable competitive assets attractive. an opportunity to lower costs by entering closely-related businesses and/or opportun D) transfer a powerful and well-respected brand name to the products of other businesse thereby increase the sales and profits of these newly-entered businesses. E)All of these. 3 INCORRECT To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: A)the attractiveness test, the barrier-to-entry test, and the growth test. B)the strategic fit test, the resource fit test, and the profitability test. C)the barrier-to-entry test, the growth test, and the shareholder value test. D)the attractiveness test, the cost-of-entry test, and the better-off test. the resource fit test, the strategic fit test, the profitability test, and the shareholder val E) test. 4 INCORRECT The better-off test for evaluating whether a particular diversification move is likely to gener added value for shareholders involves evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such t A) the company's different businesses perform better together than apart and the whole up being greater than the sum of the parts. assessing whether the diversification move will make the company better off by B) increasing its resource strengths and competitive capabilities. evaluating whether the diversification move will make the company better off by ma C) it less subject to the bargaining power of customers and/or suppliers. assessing whether the diversification move will make the company better off by D) increasing its profit margins and returns on investment. E)All of these. 5 INCORRECT Which of the following is not accurate as concerns entering a new business via acquisition, internal start-up, or a joint venture? The big dilemma of entering an industry via acquisition of an existing company is A) whether to pay a premium price for a successful company or to buy a struggling com at a bargain price. Acquisition is generally the most profitable way to enter a new industry, tends to be B) suitable for an unrelated diversification strategy than a related diversification strategy usually requires less capital than entering an industry via internal start-up. Acquisition is the most popular means of diversifying into another industry, has the C) advantage of being quicker than trying to launch a brand-new operation, and offers a effective way to hurdle entry barriers. Joint ventures are an attractive way to enter new businesses when the opportunity is D) complex, uneconomical, or risky for one company to pursue alone, when the opportu in a new industry require a broader range of competencies and know-how than a com can marshal on its own, and/or when it aids entry into a foreign market. The big drawbacks to entering a new industry via internal start-up include the costs o E) overcoming entry barriers, building an organization from the ground up, and the extr time it takes to build a strong and profitable competitive position. 6 INCORRECT The defining characteristic of related diversification (as opposed to unrelated diversification that each business the company has diversified into are utilizing similar competitive A) strategies. B)the presence of cross-business value chain relationships and strategic fits. that each business the company has diversified into has very similar core competenc C) and competitive capabilities. that the company has about the same number of cash cow businesses as it does cash D) businesses. the existence of cross-industry resource fits and similar key success factors from ind E) to industry. 7 CORRECT The strategic appeal of related diversification is that it allows a firm to reap the competitive advantage benefits of skills transfer, lower co A) (due to economies of scope), cross-business use of a powerful brand name, and/or cr business collaboration in creating stronger competitive capabilities. it is less capital intensive than unrelated diversification because related diversificatio B) emphasizes getting into cash cow businesses (as opposed to cash hog businesses). C)it involves diversifying into industries having the same kinds of key success factors. it is less risky than unrelated diversification because it avoids the acquisition of cash D) businesses. . C)stem from cost-saving strategic fits along the value chains of related businesses. refer to the cost-savings that flow from being able to combine the value chains of dif D) businesses into a single value chain. 10 INCORRECT Cross-business strategic fits can exist A)in the R&D and technology portion of the value chains of related businesses. are like economies of scale and arise from being able to lower costs via a larger volu E) operation. helmets and toboggans) E)A publisher of college textbooks acquiring a publisher of magazines 9 INCORRECT Economies of scope stem from the cost-saving efficiencies of scattering a company's manufacturing/assem A) plants over a wider geographic area. 8 INCORRECT Which of the following is the best example of related diversification? A manufacturer of golf shoes diversifying into the production of fishing rods and fish A) lures B)A homebuilder acquiring a building materials retailer C)A steel producer acquiring a manufacturer of farm equipment A producer of snow skis and ski boots acquiring a maker of ski apparel and accessor D) (outerwear. All of the above—since cross-business strategic fits can exist anywhere along the va E) chains of related businesses.it facilitates the achievement of greater economies of scale since the company only e E) those businesses that serve the same types of buyer groups and/or buyer needs. C)in the manufacturing or production portions of the value chains of related businesses D)in the sales and marketing portion of the value chains of related businesses. B)in the supply-chain portion of the value chains of related businesses. gloves and mittens. have to do with the cost-saving efficiencies of operating across a bigger portion of an B) industry's total value chain. goggles. the capital gains test. cross-business use of a powerful brand name and/or cross-business collaboration in creating stronger competitive capabilities). 12 CORRECT Which one of the following is not part of the task of critiquing a diversified company's strat assessing its business makeup. and obtaining overall measures of the firm's ability to compete successfully in each of its industries. both D) individually and as a group Assessing the competitive strength of the company's business units and determining E) many are strong contenders in their respective industries 13 INCORRECT Calculating quantitative attractiveness ratings for the industries a company has diversified in involves determining the strength of the five competitive forces in each industry. E)the presence of cross-business financial fit. economies of scope. the value chains of company's businesses offer no opportunities to benefit from skills or technology tran across businesses. the growth rate test. calculating t A) ability of the company to overcome or contend successfully with each force. calculating how far the firm's pro B) . and the resource strength test B)Checking for strategic fits and resource fits Ranking the performance prospects of the businesses from best to worst and determi C) what the corporate parent's priority should be in allocating resources to its various businesses Assessing the attractiveness of the industries the company has diversified into. the presence of cross-business strategic fit (whereas the defining characteristic of rel C) diversification is the presence of cross-business resource fit). D)that the company's businesses are in different industries. and deciding how to improve overall company performance? Checking whether each business a company has diversified into can pass the profitab A) test. that the value chains of different businesses are so dissimilar that no competitively B) valuable cross-business relationships are present (in other words. determining each industry's average profit margins.11 INCORRECT The defining characteristic of unrelated diversification (as opposed to related diversification the presence of cross-business resource fit (whereas the defining characteristic of rel A) diversification is the presence of cross-business strategic fit). summing the C) attractiveness scores. and deciding whether the company's prospects for bei able to charge above-average prices make the industry attractive or unattractive. assess how strongly positioned each business unit is in its industry and the extent to w B) it already is or can become a strong market contender. C)rank the each business unit's strategic fits from highest to lowest. multiplying the industry ratings by the assigned weight to ob weighted rating. 14 INCORRECT The basic purpose of calculating competitive strength scores for each of a diversified compa business units is to determine which business unit has the greatest number of resource strengths. weighting the importance of each D) measure (with the sum of the weights adding to 1. and competitive capabilities and which one has the least. uses quantitative measures of industry attractiveness and competitive strength to plot D) business's location on the matrix—the thesis underlying the matrix is that there are g reasons to concentrate the company's resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to in minimally or even divest those businesses with relatively weak competitive positions industries with relatively low attractiveness. rating the attractiveness of each industry's strategic and resource fits. E)rank each business unit's strategy from best to worst.margins are above/below the industry averages. A) competencies. 15 INCORRECT The 9-cell industry attractiveness-competitive strength matrix is a valuable tool for ranking a company's different businesses from best to worst bas A) strategic fit.0). and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries. selecting a set of industry attractiveness measures. both individually and as a group. indicates which businesses have the highest/lowest economies of scale and which ha C) the highest/lowest economies of scope. . identifying each industry's average price. and determining whether the overall scores for the industries as group are appealing or not. and then using these values to draw conclusions about industry attractiveness. D)rank the each business unit's resource fits from highest to lowest. rating the difficulty of charging an aboveE) average price in each industry. adding the weighted ratings for each industry to obtain an overall industry attractiveness score. rating each industry on each attractiveness measure. B)shows which of a diversified company's businesses have good/poor resource fit. E)All of the above. thereby reducing cost A) capturing economies of scope. 18 INCORRECT Ranking a diversified company's businesses in terms of priority for resource allocation and capital investment should be done chiefly on the basis of appealing industry attractiveness and resource A) and secondarily on the basis of competitive strength and strategic fit with other businesses. Determining whether the company has enough cash hog businesses to supply capital D) cash cow businesses. thereby leveraging use of existing resources. technology. 16 INCORRECT Checking a diversified company's business line-up for the competitive advantage potential o cross-business strategic fits involves searching for and evaluating how much benefit a diver company can gain from value chain match-ups that present opportunities to combine the performance of certain activities. C)opportunities to share use of a well-respected brand name. Determining whether each business adequately contributes to achieving companywid C) performance targets. quicker first-to market capabilities. 17 INCORRECT Checking a diversified company's business lineup for resource fit does not involve which on the following "tests?" Determining whether a company has or can develop the specific resource strengths a A) competitive capabilities needed to be successful in each of its businesses. Determining whether the company has adequate financial strength to fund the needs E) various businesses and maintain a healthy credit rating. or greater product innovation capabilities).pinpoints which of a diversified company's businesses are resource-rich cash cows an E) which are resource-poor cash hogs. . opportunities for sister businesses to collaborate in creating valuable new competitiv D) capabilities (such as enhanced supply chain management capabilities. Determining whether recently acquired businesses are acting to strengthen the comp B) resource base and competitive capabilities or whether they are causing its competitiv managerial resources to be stretched too thinly. opportunities to transfer skills. or intellectual capital from one business t B) another. should be done principally on the basis of which businesses offer the best prospects C) (given their industry attractiveness and competitive strength) and. and each business's projected ability to cover its debt payments and generate positive cash flows.entails arraying the various businesses from the biggest cash hog down to the bigges B) cow. B)involves rightsizing the company's labor force to reduce the costs of salaries and ben C)is directed at achieving a 1 + 1 = 3 effect from the company's diversification strategy focus on crafting initiatives to restore a diversified company's money-losing business D) profitability. 19 INCORRECT Once a firm has diversified and established itself in several different businesses. then its ma strategic alternatives include all but which one of the following? A)Broadening the firm's business scope by diversifying into additional businesses B)Shifting from a multi-country to a global strategy Restructuring the company's business lineup with a combination of divestitures and n C) acquisitions to put a whole new face on the company's business makeup Sticking closely with the existing business lineup and pursuing the opportunities thes D) businesses present E)Divesting some businesses and retrenching to a narrower base of business operations 20 INCORRECT Corporate restructuring strategies focus on broadening the scope of diversification to include a larger number of busine A) and boost the company's growth and profitability. and potential fo D) achieving cash cow status. big cash hogs get the highest priority for resource allocation and big cash cows the lowest priority. each busines E) unit's relative market share. should be based primarily on cross-business resource fit considerations. also. recent profitability. divesting s E) businesses and acquiring new ones so as to put a new face on the company's business lineup. have solid an appealing strategic fits and resource fits. involve making radical changes in diversified company's business lineup. Results Reporter . should be based chiefly on relative market share. . not by a special set of rules that bus apply to their own conduct. are not materially different from ethical principles in general and have to b D) society's standards of right and wrong. are arrived at by picking and choosing among the consensus ethical standa C) with a set of ethical standards that apply directly to operating a business. you answered 5 correctly with a final grade of 25% 5 correct (25%) 15 incorrect (75%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a 1 CORRECT . involve behavioral guidelines for balancing the interests of non-owner stak E) employees. C)conducting oneself appropriately in a business setting. Business ethics concerns A)the application of ethical principles and standards to business activities. deal chiefly with the actions and behaviors required to operate companies B) manner. and the communities in which the company has oper interests of company shareholders. high worker compensation. suppliers. be a business commitment to safe products. D)developing a special set of ethical standards for businesses to observe in co picking and choosing among various ethical standards of society to arrive E) standards that apply directly to operating a business. 2 INCORRECT Ethical principles in business A) concern the behavioral guidelines a company's top management and board company personnel regarding "what is right" and "what is wrong" in condu business.Chapter 09 Out of 20 questions. and p B) environment. 4 INCORRECT A company's strategy needs to be ethical because A) Potential for embarrassment to top management if the company's unethica exposed. B)unethical strategies are inconsistent with or else weaken the corporate cult C)ethics watchdogs are sure to blow the whistle on the company's unethical b D)of the risks of prosecution by governmental authorities if an unethical strat a strategy that is unethical not only damages the company's reputation but E) consequences. . and other self in culture that puts the profitability and good business performance ahead of heavy pressures on company managers to meet or beat performance target B)the lack of a company code of ethics. wealth. E)All of the above factors. confusing differences between what is ethical behavior in one's personal li D) permissible in business. 5 CORRECT Which of the following are consequences of pursuing a strategy that has unethical A)Government fines and penalties B)Legal and investigative costs incurred by the company C)Customer defections D)Adverse effects on employee productivity E)All of these.3 INCORRECT Unethical managerial behavior tends to be driven by such factors as A) overzealous or obsessive pursuit of personal gain. C)a lack of training in what is ethical and what is not. ethical guidelines exist only when there is universal agreement as to what C) right" and "ethically wrong". B)defines what is meant by "integrated social contracts theory." C)is a view that characterizes the school of ethical relativism. A) what behaviors are "ethically right" and "ethically wrong" vary across relig of what is ethical or not are universal within religions. fair and unfair. . anything not universally viewed as unethical of what is ethically permissible.6 CORRECT Notions of right and wrong. many of the same standards of what's ethical and what's unethical resonate E) societies regardless of local traditions and cultural norms—hence. all societies and countries have some definition of what is ethically permis D) are universal). 8 INCORRECT The thesis that since different societies and cultures have divergent values and sta "ethically right" and "ethically wrong" it is appropriate to judge behavior as ethica local customs and social mores A)is the basis for the theory of ethical variation. and individuals. the definitions of what is ethically permissible va prevailing religious doctrines in each country. however. concepts of right and wrong universally apply to all business situations wi B) can vary across countries or cultures. ethical and uneth A)ultimately depend on a person's own values and beliefs. organizations. ultimately depend on the circumstances—nothing is really black or white w B) standards. moral and immoral. E)vary enormously from country to country across the world. C)are governed mainly by religious views held in different geographic region 7 INCORRECT According to the school of ethical universalism. common ethical standards conduct of personnel at companies operating in a variety of country marke circumstances. D)are present in all societies. to the ex moral agreement about right and wrong actions. E)end up allowing each company employee to determine what set of ethical C)quickly find themselves on a slippery slope with no ethical standards or pr 11 INCORRECT According to integrated social contracts theory. A) the views and principles of the school of ethical universalism are definitely is that ethics is a matter of personal responsibility not a matter of managem the ethical standards a company should try to uphold are governed both by B) universal ethical principles that are widely recognized as putting legitimate actions and behavior in all situations and (2) the circumstances of local cu shared values that further prescribe what constitutes ethically permissible b not—however.D)accounts for why there is no such thing as ethical standards for business en E)is the reason why codes of ethical and social morality have been establishe 9 CORRECT If one adopts the thinking of the school of ethical relativism. 10 INCORRECT Companies that adopt the principle of ethical relativism in providing ethical guida personnel A)are able to comply with the varying ethical standards of the world's differe B)have no fair way to judge the ethical correctness of the conduct of compan D)have a uniform code of ethical standards that is applied globally. the preferred set of ethical standards is the one which society at large has p C) laws and regulations. D)the prevailing ethical standards are the product of a system of "integrated s no ethical standards are ever truly "authentic"—they exist only to the exten E) temporary shared conviction among company managers and company pers behavior is either ethically permissible or ethically impermissible. then A) there are multiple sets of ethical standards because what is ethical or uneth customs and social mores and can vary from one culture or nation to anoth B)there is a "one-size-fits-all" set of authentic ethical standards. universal ethical norms take precedence over local ethical . academics. a company's duty to establish socially acceptable core values and to have a C) . and Spain. Chile. the perceived degree of corru business people. New Zealand. "first order" universal ethical norms always take precedence over "second B) norms. Hong Kong. Denmark. E)is lowest in Denmark. and risk analysts is highest in such places as Germany.S. France. is highest in Finland. 14 INCORRECT The theory of corporate social responsibility concerns A)a company's duty to maximize shareholder value. and Sweden and lowest in I B) Paraguay. and Finland. and Bangladesh. and South Africa. Sweden. C)about the same in all countries that were surveyed. Singapore. B)the blending of shareholder interests and employee interests. and Finlan A) countries as India. D)is lowest in the U. Indonesia. Japan.the standards of what is ethically permissible and what is not should be ba and moral conduct which each society/country/culture adopts and then ena the standards of what is ethically permissible should be determined by the D) contract" which each company employee signs as a condition of employm the only valid ethical standards are those which are universal—and then on E) not absolute and provide some wiggle room according to the circumstance C) 12 INCORRECT Integrated social contracts theory maintains that A) all ethical standards are determined by societal norms and individuals have contract to live up to these standards. New Zealand. Paraguay.. C)there should be no absolute limits put on what is ethically or morally right D)few nations or cultures have common moral agreement on what is ethically each country/culture/society has commonly held views about what constitu E) actions/behaviors that all individuals in that country/culture/society are ob 13 INCORRECT According to the information presented in Table 9.1. distributors. sharehol B) other stakeholders in a manner that protects the environment and provides . suppliers. na C) perhaps other personal characteristics Actions to protect or enhance the environment (apart from what is required D) authorities) E)Actions to create a work environment that enhances the quality of life for e 16 INCORRECT Corporate citizenship goes beyond meeting society's expectations for ethical strate behavior by A)promoting company personnel for political offices. E)ensuring that products meet high standards of performance and reliability. C)addressing unmet non-economic needs of society.ethical conduct. B)enforcing ethical norms among the citizens of the communities in which it D)make sizeable contributions to political action committees representing the 17 INCORRECT Corporate sustainability involves A)a corporate commitment to address the unmet non-economic needs of soci strategic efforts to meet the needs of today's customers. race. the balance between a company's (1) economic responsibility to reward sh E) (2) its legal responsibility to comply with the laws of countries where it op responsibility to abide by society's norms of what is moral and just and (4) philanthropic responsibility to contribute to the non-economic needs of soc 15 INCORRECT Which of the following is not generally on a company's menu of actions to consid of social responsibility? A)Actions to ensure that the company operates in an honorable and ethical m Actions to provide suppliers. and other value chain partners w B) margins Actions to build a workforce that is diverse with respect to gender. the responsibility that top management has for ensuring that the company's D) are in the best interest of society at large. " undertake initiatives directed at improving the company's triple bottle line— E) on economic. environment. D)developing the resource strengths necessary to develop a sustainable comp 18 INCORRECT Companies committed to corporate sustainability A)make major contributions to local civic and charitable organizations. 19 INCORRECT Which one of the following is not a part of the business case for why companies s responsible manner? A)Acting in a socially responsible manner reduces the risk of reputation-dam The aggressive pursuit of market share.resources needed by future generations. E)All of these. and commitment to shareholders as a "third o believe it is essential to strike a balance between shareholder interests and C) stakeholders such as suppliers. a company may win additional patronage. C)Acting in a socially responsible manner is in the overall best interest of sha To the extent that a company's socially responsible behavior wins applause D) fortifies its reputation. workforce retention. and the communitie D)develop and market only products that are "environmentally friendly. training. and (4) the discretionary responsibility to contribute to the non-economic needs of society. employees. revenues. consider the commitment to the environment as a "first order" priority. and improved worker productivit 20 CORRECT The business case for why companies should act in a socially responsible manner A)helping avoid or preempt legal and regulatory actions that could prove cos . and social metrics. and profits always puts t B) of violating society's social responsibility expectations. customers. Acting in a socially responsible manner can generate internal benefits (as c E) recruiting. striking a balance between (1) the economic responsibility to reward share C) the legal responsibility to company with laws in countries where it operate responsibility to abide by society's moral norms. com B) as a "second order" priority. B)avoiding criticism from consumer. B) C) select people who are charismatic and good communicators. Ensuring that policies and procedures facilitate rather than impede strategy B) execution Reducing the layers of management to a bare minimum and making sure C) employees are empowered D) E) 2 CORRECT Staffing the organization with people having the right skills and expertise Instilling a corporate culture that promotes good strategy execution The overriding aim in building a management team should be to assemble a critical mass of talented managers who can function as agents of A) change and further the cause of first-rate strategy execution. E)All of these. Results Reporter Chapter 10 Out of 20 questions. you answered 2 correctly with a final grade of 10% 2 correct (10%) 18 incorrect (90%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . 1 Which of the following is not one of the principal managerial components associated INCORRECT with implementing and executing strategy? Adopting an organizational structure that supports strategies intended to create A) customer value. D)the potential for increased buyer patronage. . environmental. and human rights activi C)contributing to lower employee turnover and better worker productivity. choose managers who have substantial experience in the industry. and other perks Fostering a stimulating and engaging work environment such that employees will C) consider the company a great place to work Coaching average performers to improve their skills and capabilities. is largely a function of the skills and capabilities of the company's human D) resources staff. engaged employees are a company's best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence. and skill-stretching A) assignments Striving to retain talented. interesting. is important because the quality of an organization's people is always an essential E) ingredient of successful strategy execution—knowledgeable.assemble a team of people who believe in the same leadership approaches and D) use the same approaches to people management. B) the benefits of keeping the layers of management to a minimum. Hiring only people below the age of 35 who have college degrees and a grade E) point average of B or better 5 INCORRECT The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on the contribution it makes to improving labor productivity and reducing labor A) costs. E) 3 INCORRECT choose managers who have the same core values and ethical standards. high-performing employees via promotions. while D) weeding out underperformers. salary B) increases. stock options and equity ownership. performance bonuses. is easily the most critical aspect in building competitively valuable core B) competencies and capabilities. particularly if intellectual capital greatly aids good strategy execution? Providing promising employees with challenging. fringe benefit packages. . is more easily done by large multinational corporations because of their deep C) financial resources and stimulating job assignments. 4 INCORRECT Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find. Recruiting and retaining capable employees is usually much more important to good strategy execution than is assembling a A) capable top management team. and that they lack the knowledge and judgment to make wise decisions about how best to do their work. 8 INCORRECT Prescribing policies and operating procedures aid the task of implementing strategy by helping empower product champions and work teams. E) 6 INCORRECT making it easier to capture the benefits of centralized decision-making. E) Top executives retina authority for most strategic and operating decisions. of corresponding changes in the company's organizational structure and D) budgetary requirements. adopting best practices and pushing for continuous improvement tends to reduce E) costs and reduce overall resource requirements. C) decision-making influence. 7 INCORRECT A change in strategy nearly always entails budget reallocations because A) new strategic initiatives can be costly or capital intensive. Which one of the following falsely describes a centralized approach to decisionmaking? Little discretionary authority is granted to frontline supervisors and rank-and-file A) employees. new equipment. Tight control by a few senior managers makes it easy to fix accountability when C) things do not go well. additional facilities. and above-average increases in their operating budgets. the accompanying policy revisions and compensation incentives tend to require C) different levels of funding than before. There is an assumption that frontline personnel have neither the time nor the D) inclination to direct and properly control the work they are performing.the thesis that if activities crucial to strategic success are to have the resources. and organizational impact they need. . the benefit of keeping the organization structure simple and easy for employees D) to understand. they have to be centerpieces in the organizational scheme. Hierarchical command-and-control structures speed an organization's responses B) to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision. units important in the prior strategy but having a lesser role in the new strategy B) may need downsizing while units and activities that now have a bigger and more critical strategic role may need more people. and total customer satisfaction. providing top-down guidance regarding how things need to be none.A) paving the way for instituting TQM or Six Sigma programs and adopting best B) practices. is a tool for providing customers with the highest quality product of any company in the industry. benchmarking. 100% accuracy in performing tasks. 9 INCORRECT Business process reengineering is a tool for A) remodeling and refreshing a strategy-critical core competence. involves managing company operations in a manner calculated to quickly and efficiently make quantum gains in the quality and effectiveness with which production activities are performed. Total quality management (TQM) A) B) C) D) is a philosophy of managing that involves convincing employees that superior product quality is the most reliable key to competitive success in the marketplace. and promoting the creation of a work climate that facilitates good strategy execution. C) reducing the size of a company's managerial bureaucracy. is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations. involves managing company operations in a manner calculated to result in mistake-free management of a company's entire business. D) helping prevent the corporate culture from being unhealthy and weak. E) 11 INCORRECT Six Sigma quality control . enforcing C) consistency in how activities are performed. boosting the quality of a company's product and the caliber of its customer D) service. team-based work design. pulling the pieces of strategy-critical activities out of different departments and B) unifying their performance in a single department or cross-functional work. pushing employees to accept the need for state-of-the-art operating and support E) systems. E) 10 INCORRECT expediting the development of an important new competitive capability. involvement and empowerment of employees at all levels. statistics-based approach to manufacturing or assembling a E) product and results in 5 defects per million iterations when implemented properly. All of these. web applications. consists of a disciplined. 12 INCORRECT Company strategies and value creating processes can't be effectively executed without internal operating systems that include: A) B) PCs. D) E) 13 INCORRECT benchmarking and best practices. C) and (3) all processes create data that explains variability. supplier/partner data. TQM. a properly designed reward structure. reengineering. Management's most powerful tool for mobilizing employee commitment to competent strategy execution and operating excellence is A) B) C) total quality management. servers.5 defects per million iterations. employee data. is based on three principles: (1) all work is a process. effective screening of job applicants such that only the most motivated and E) energetic people are hired. operations data.is a tool that is superior to TQM in achieving top-notch quality in manufacturing A) a product. D) is the best practice for managing manufacturing and assembly activities. and C) financial performance data. D) and employee perks. making the company a great place to work in terms of pay scales. and Six Sigma programs. statistics-based system aimed at producing not more B) than 2. 14 INCORRECT Which of the following is not characteristic of a compensation and reward system designed to help drive successful strategy execution? . and eBusiness solutions. customer data. fringe benefits. (2) all processes variability. is a disciplined. business process reengineering. business principles. and C) mutual respect among employees and management Providing rank-and-file employees with representation on the company's board D) of directors Using frequent words of praise to recognize employees for commendable E) performance 16 INCORRECT Which one of the following is not something that shapes and helps define a company's culture? The core values. traditions. and business practices C) D) E) A company's approach to people management and its style of operating The strategy and business model that the company has adopted The "chemistry" that permeates its work environment 17 CORRECT Which of the following is not one of the four types of unhealthy company cultures? . caring. beliefs. piece of the total A) compensation package Keeping performance incentives and bonuses to less than 15% of total B) compensation C) Not skirting the system to find ways to reward effort rather than results Having incentives that extend to all managers and all workers and generously D) rewarding people who turn in outstanding performances Making sure the time between achieving the target performance outcome and the E) payment of the reward as short as possible 15 INCORRECT Which of the following is not an important non-monetary approach to enhancing motivation and helping drive successful strategy execution? Adopting promotion from within policies and acting on suggestions from A) employees B) Providing attractive perks and fringe benefits Creating a work atmosphere in which there is genuine sincerity. along with the legends and stories that people repeat to illustrate and reinforce the company's core values. and traditions that permeate the A) workplace The work practices and behaviors that define "how we do things around here" B) The company's standards of what is ethically acceptable and what is not. not minor.Making the performance payoff a major. conducting an employee survey to determine the organization's cultural norms D) and what company personnel like and dislike about the current culture. hosting company outings to help build camaraderie among employees and B) support for the culture change. . identifying which aspects of the present culture are supportive of good strategy E) execution and which ones are not. carefully analyze several alternative responses. strong inclinations to adopt a wait-and-see posture. and then move forward cautiously and conservatively with initiatives that are deemed safe. often with the result that what's best for the company takes a backseat to political maneuvering. pride in doing things right. management should undertake such steps as A) selecting a team of rank-and-file employees to lead the culture change effort. no-excuses accountability. inwardly-focused cultures The hallmarks of a high performance corporate culture include A) a shared willingness to adapt core values and ethical standards to fit the changing requirements of an evolving strategy.A) B) C) D) E) 18 INCORRECT Bureaucratic cultures Change-resistant cultures Unethical and greed-driven cultures Politicized cultures Insular. charismatic managerial leadership. a "can-do" spirit. and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives. learn from the missteps of early movers. use of a balanced scorecard approach to tracking company performance. and a gung-ho approach to discovering best practices. drawing up an action plan to change the present culture and then persuading C) company personnel why this plan of action is good and will be successful. a lean management bureaucracy. and a mustbe-invented-here mindset. considerable political infighting that typically consumes a great deal of organizational energy. B) C) D) E) 19 INCORRECT When trying to change a problem culture. Visible actions on the part of top management to demonstrate their personal D) commitment to the culture change. Promoting individuals who have stepped forward to advocate the shift to a C) different culture and mandating that all company personnel attend culturetraining programs. Shifting from decentralized to centralized decision-making so as to give senior E) executives more authority and control in driving cultural change .20 INCORRECT Which one of the following is a substantive culture-changing action that a company's managers can undertake to alter a problem culture? A) Identifying aspects of the present culture that pose problems Hold ceremonial events to recognize individuals whose actions and performance B) exemplifies what is called for in the new culture.