PRACTICE Allset Motors, a manufacturer of self-driving delivery trucks, is working on developing its nextgeneration vehicles. It has decided on a strategy of focusing on a narrow buyer segment and outcompeting its rivals by offering buyers customized vehicles at a lower cost than its rivals. What basic strategic approach has Allset Motors decided upon? [a] [b] [c] [d] True-cost Focused low-cost Best-cost Broad differentiation Amy's Drive-Thru, a fast food facility near a college campus, offers healthy, sustainably grown vegetarian and vegan fast-food at higher prices than its competitors in the market and has a drive-through and indoor-seated, casual-dining operation. What strategy is Amy's Drive-Thru using to gain a competitive advantage? [a] [b] [c] [d] A best-cost provider strategy A low-cost provider strategy A focused low-cost provider strategy A focused differentiation strategy Domino's Pizza has a well-known slogan: "We'll deliver in 30 minutes or less, or it's free!" By using this slogan, what has the pizza maker achieved? [a] [b] [c] [d] Given a sense of exclusivity to its customers Increased its ability to charge a price premium for its product (because buyers see its differentiating features as worth something extra) Coordinated with suppliers to better address customer needs Built a unique customer value proposition An industrial air-conditioner manufacturing giant decides to outsource its operations to a new geographical location with cheaper labor amidst ongoing labor strikes in a few of its existing locations (due to proposed job cuts and relocation of the plant offshore). This draws criticism in its home market and affects its current market position and productivity. Which of the following would be an appropriate reactive (emergent) strategy while moving forward? [a] [a] [b] [c] Hiring and training new talent to begin operations in the emerging market Acquiring a local computer chip marketing and distribution specialist firm in the new location Canceling the idea of outsourcing and retaining the existing workforce to run operations Canceling the job cuts till the market situation and entry operations stabilize Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive? [a] When it is costly or difficult for multi-segment competitors to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers [b] When the industry has many different segments and market niches, thereby allowing a focuser to pick an attractive niche suited to its resource strengths and capabilities [c] When industry leaders have chosen not to compete in the niche [d] When buyers are not strongly brand loyal and a large number of other rivals are attempting to specialize in the same target segment Which of the following is not a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage? [a] aiming for a cost-based competitive advantage [b] outcompeting rivals on the basis of such differentiating features as higher quality, wider product selection, added performance, better service, or more attractive styling [c] simply trying to mimic the successful strategies of rivals [d] focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche In value chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity? [a] Purchasing key inputs [b] Recruiting and training employees [c] Repairing the product for the consumer [d] Monitoring the cost of producing the product through a cost accounting system The competitive moves and business approaches a company's management is using to grow the business, compete successfully, attract and please customers, conduct operations, respond to changing economic and market conditions, and achieve organizational objectives is referred to as its [a] strategy. [b] mission statement. [c] strategic intent. [d] business model. The four key attributes of strategic management include the idea that strategy must [a] be directed towards overall organizational goals and objectives [b] be focused only on long term objectives [c] be focused on only one specific area of an organization [d] focus only on competitor strength Which of the following best describes the market opportunities that tend to be most relevant to a particular company? [a] those that provide avenues for taking market share away from close rivals and enhance a company's image as a leader in product innovation and product quality [b] those that offer the company a chance to raise entry barriers [c] those that help promote greater diversification of revenues and profits [d] those that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage A company's value chain identifies [a] the steps it goes through to convert its net income into value for shareholders. [b] the primary activities that create value for customers and related support activities. [c] the series of steps it takes to get a product from a raw materials stage to a finished product. [d] the activities it performs in transforming its competencies into distinctive competencies. The difference between a distinctive competence and a core competence is that [a] a distinctive competence refers to a company's best-executed functional strategy and a core competence refers to a company's best-executed business strategy. [b] a distinctive competence refers to a company's most strategically important resource whereas a core competence refers to the basis of a company's competitive advantage over rivals. [c] a distinctive competence is a competitively relevant internal activity that a firm performs especially well relative to other internal activities, whereas a core competence is a competitively important activity performed by key strategic allies. [d] a distinctive competence represents internal activity that is performed with a very high level of proficiency whereas a core competence is a proficiently performed internal activity that is central to a company's strategy and competitiveness A company’s [a] [b] [c] [d] strategy consists of actions to develop a more appealing business model than rivals. plans involving alignment of organizational activities and strategic objectives. offensive and defensive moves to generate revenues and increase profit margins competitive moves and approaches that managers have developed to grow the business, attract and please customers, conduct operations, and achieve targeted objectives Which one of the following is NOT a reason industry members are often motivated to enter into collaborative partnerships with key suppliers? [a] to reduce the costs of switching suppliers [b] to speed the availability of next-generation components [c] to enhance the quality of parts and components being supplied and reduce defect rates [d] to squeeze out important cost savings for both themselves and their suppliers Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on [a] how many buyers are engaged in collaborative partnerships with sellers. [b] whether entry barriers are high or low. [c] whether the overall quality of the items being furnished by industry members is rising or falling [d] whether buyer demand is strong or declining. Why should long-run objectives take precedence over short-run objectives? [a] The focus is placed on improving performance in the near term [b] Long-run objectives are necessary for achieving long-term performance and stand as a barrier to undue focus on short-term results. [c] Long-run objectives will satisfy shareholder expectations for progress [d] Long-run objectives will force the company to deliver performance improvement in the current period Which one of the following does not intensify the competitive pressures associated with the threat of entry? [a] Incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers. [b] Industry members are struggling to earn good profits. [c] Entry barriers are relatively low. [d] Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence. Strategy formulation and implementation is a challenging ongoing process. To be effective, it should NOT involve [a] the CEO and the board of directors [b] the board of directors, CEO and CFO [c] rivals [d] line and staff managers The value of SWOT analysis in evaluating a company's resources and competitiveness is that [a] it assists strategy-makers in crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being. [b] it helps strategy-makers benchmark the company's resource strengths against industry key success factors. [c] it enables a company to assess its overall competitive position relative to its key rivals. [d] it allows a company to compare its market share, measures of profitability, and sales with its key competitors. A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through [a] improved employee training programs, new marketing promotions, or technological enhancements to production processes. [b] the development of a new business strategy that draws upon existing resource strengths. [c] extensive strategic planning and resource identification sessions involving managers at all levels of the organization. [d] bundled resources that enable superior performance of crossfunctional capabilities that can be leveraged to support its business model and strategy. Vision statements are used to create a better understanding of the overall purpose and direction of the organization. Vision statements [a]are very specific. [b]provide specific objectives. [c]Set organizational structure [d] evoke powerful and compelling mental images Human capital includes [a] the relationship between people [b] an improved product [c] the output from assembly line employees [d] capabilities, knowledge and skills of an individual Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of [a] not only explaining "where we are going and why" but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction. [b] helping company personnel understand why "making a profit" is so important. [c] making it easier for top executives to set strategic objectives. [d] helping lower-level managers and employees better understand the company's business model. Two software engineers working together on a computer code share their _____ knowledge in order to create new knowledge. [a] explicit [b] theoretical [c] tacit [d] intangible Which one of the following is NOT a characteristic of an effectively worded strategic vision statement? [a] directional (is forward-looking, describes the strategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future) [b] easy to communicate (is explainable in 10 to 15 minutes, can be reduced to a memorable slogan) [c] graphic (paints a picture of the kind of company management is trying to create and the market position or positions the company is striving to stake out) [d] consensus-driven (commits the company to a "mainstream" directional path that most all stakeholders will enthusiastically support) In the knowledge economy, if a large portion of company value is in intellectual and human assets, the difference between the market value and book value of the company should __________ a company with mostly physical and financial assets [a] be equal to [b] not be correlated with [c] be smaller than [d] be larger than A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantage are based upon [a] path dependency [b] social complexity [c] physical uniqueness. [d] tangible resources Which of the following would be most difficult to assess? [a] The liquidity position of a firm [b] Market share growth [c] The legitimacy and reputation of a firm [d] The efficiency with which a firm utilizes its assets. In social network analysis, groups can become too insular and fail to share what they have learned with people outside the group. This is a result of [e] closure [f] intellect [g] bridging relationship [h] diverse knowledge Although general administration is often viewed only as overhead expense, it can become a source of competitive advantage. Examples include all of the following except: [a] Negotiating and maintaining ongoing relations with regulatory bodies [b] Effective information systems contributing significantly to a firm's overall cost leadership strategy [c] Marketing expertise increasing a firm's revenues and enabling it to enter new markets [d] Top management providing a key role in collaborating with important customers A strategic group consists of those firms in an industry that [a] are subject to the same driving forces. [b] place about the same emphasis on each distribution channel. [c] use the same key success factors to differentiate their products. [d] employ similar competitive approaches and occupy similar positions in the market. In identifying an industry's key success factors, strategists should [a] try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. [b] consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. [c] consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. [d] consider what it will take to overtake the company with the industry's overall best strategy. The competitive power of a company resource depends on [a] whether it helps differentiate a company's product offering from the product offerings of rival firms. [b] whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals . [c] whether customers are aware of the resource and view it positively enough to boost the company's brand name reputation. [d] whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company's brand image, and if it is the foundation of a cost-based advantage. The difference between a resource and a capability is that [a] a resource refers to a company's best-executed functional strategy, and a capability refers to a company's best-executed business strategy. [b] a resource refers to a company's most strategically important asset, whereas a capability refers to the basis of a company's competitive advantage over rivals. [c] a resource is a competitively relevant internal activity that a firm performs especially well relative to other internal activities, whereas a capability is a competitively important activity performed by key strategic allies. [d] a resource represents a competitive asset that is owned or controlled by the company, whereas a capability is a competently performed internal activity that is developed through the deployment of the company's resources. Bank and airlines are examples of two industries that track competitor offers continually. This is called the process of gathering [a] Consumer responses [b] Competitive intelligence [c] Past decisions [d] Mainline information Identifying the strategic issues, a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because [a] without a precise fix on what problems/issues a company confronts, managers cannot know what the industry's key success factors are. [b] the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook. [c] without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark. [d] the "worry list" helps company managers clarify their thinking about how best to modify the company's value chain. Identifying the primary and secondary activities that comprise a company's value chain [a] indicates whether a company's resource strengths will ultimately translate into greater value for shareholders. [b] reveals whether a company's resource strengths are well-matched to the industry's key success factors. [c] is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs). [d] is called benchmarking Which of the following would be considered part of the general (macro) environment of a firm [a] decreased entry barriers [b] higher unemployment rates [c] increased bargaining power of the firm’s suppliers [d] increased competitive intensity Technology can be used to leverage _______ and _________ within organizations as well as with customers and suppliers beyond their boundaries. [a] human capital; intellectual capital [b] human capital; knowledge [c] knowledge; social capital [d] communication; social capital The bargaining leverage of suppliers is greater when [a] only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes. [b] industry members incur low costs in switching their purchases from one supplier to another [c] industry members purchase in large quantities and thus are important customers of the suppliers [d] it makes good economic sense for industry members to vertically integrate backward. The competitive threat that outsiders will enter a market is weaker when [a] financially strong industry members send strong signals that they will launch strategic initiatives to combat the entry of newcomers. [b] the pool of entry candidates is large, and some have resources that would make them formidable market contenders [c] the industry’s market growth is rapid. [d] newcomers can be expected to earn attractive profits. A competitive advantage based on inimitability can be sustained for at least some time, if it has the following characterisctics: [a] psychographic uniqueness, path dependency, causal ambiguity, causal ambiguity and sustainability [b] physical uniqueness, path dependency, causal ambiguity and social complexity [c] rarity, path dependency, causal ambiguity and social substitutability [d] geographic uniqueness, cause dependency, social ambiguity and social complexity The most powerful of the five competitive forces is usually the [a] competitive pressures that stem from the ready availability of attractively priced substitute products. [b] competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage. [c] benefits that emerge from close collaboration with suppliers and the competitive pressures that such collaboration creates [d] competitive pressures associated with the potential entry of new competitors. A company needs financial objectives [a] to overtake key competitors on such important measures as net profit margins and return on investment [b] because without adequate profitability and financial strength, the company's ultimate survival is jeopardized. [c] to indicate to employees that financial objectives always take precedence over strategic objectives. [d] to convince shareholders that top management is acting in their interests. In order to be considered strategic resources that contribute competitive advantage, they must have several characteristics. Which of the following is NOT one of these? [a] rare [b] valuable [c] inexpensive to imitate [d] costly to substitute Which of the following statements about strategic groups is false? [a] Two assumptions are made: (1) no two firms are totally different, (2) no two firms are exactly the same [b] Strategic groupings are of little help to a firm in assessing mobility barriers that protect a group from attacks by other groups [c] Strategic groups help chart the future directions of firms' strategies [d] Strategic groups are helpful in thinking through the implications of each industry trend for the group as a whole Many Microsoft employees have left to start other companies. In general, when such employees leave, they take with them [a] Social capital [b] Human capital [c] Intellectual capital [d] All of the above When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called [a] a dynamic capability. [b] a core competence. [c] a distinct competence. [d] a strategic assessment. Environmental forecasting does not involve plausible projections about the ____ environmental change [a] direction [b] scope [c] speed [d] lack of intensity For a particular company resource to have meaningful competitive power and perhaps qualify as a basis for competitive advantage, it should [a] be competitively important, hard for competitors to copy or imitate, rare and something rivals lack, and not be easily trumped by the substitute resources/capabilities of rivals. [b] be something that a company does internally rather than in collaborative arrangements with outsiders. [c] be patentable. [d] be rooted in the company's organizational capital, information capital, or human capital. Human capital and social capital are vital for superior performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished by [a] requiring workers to work independently of each other [b] decreasing the interaction of departments within the firm [c] structuring the firm with rigid departmental and employees divisions [d] encouraging the sharing of ideas between employees in the firm 1. Which one of the following is not part of conducting a SWOT analysis? [a] identifying a company's resource strengths and competitive capabilities [b] benchmarking the company's resource strengths and competitive capabilities against industry key success factors [c] identifying a company's market opportunities [d] drawing conclusions about the company's overall business situation 2. A balance scorecard provides top managers with a ______ view of the business. [a] detailed and complex [b] simple and routine [c] fast but comprehensive [d] long-term financial 3. ___________ are typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams [a] Tangible resources [b] Intangible resources [c] Reputational resources [d] Organizational capabilities 4. Why must successful managers recognize opportunities and threats in their company external environment [a] If they miscalculate the market, opportunity will be lost [b] If they misread the market, they are likely to become rich [c] If they identify all of the environmental threats, they are guaranteed to acquire large market share [d] If they identify all the environmental opportunities, they are guaranteed to acquire large market share 5. All the following are examples of socially complex organizational phenomena except [e] a firm’s culture [f] complex physical technology [g] interpersonal relations among a firm’s managers [h] leadership and trust 6. The network of relationships that individuals have throughout the organization is known as [a] human capital [b] social capital [c] intellectual capital [d] tacit knowledge 7. Which of the following is NOT one of the basic reasons that a company's strategy evolves over time? [a] an ongoing need to abandon those strategy features that are no longer working well [b] the proactive efforts of company managers to improve the company's financial performance and secure a competitive advantage [c] the need on the part of company managers to make no adjustments to the company's business model [d] the need to respond to the actions and competitive moves of rival firms 8. Just how strong the competitive pressures are from substitute products depends on [a] whether the available substitutes are strongly or weakly differentiated and whether buyers make purchases frequently or infrequently. [b] whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes [c] whether the available substitutes are products or services [d] whether the producers of substitutes have ample budgets for new product R&D. 9. A competitive environment in which there is strong rivalry among sellers, low entry barriers, strong competition from substitute products, and considerable bargaining leverage on the part of both suppliers and customers [a] is competitively unattractive from the standpoint of earning good profits [b] offers little ability to build a sustainable competitive advantage [c] is highly conducive to achieving strong product differentiation and high brand loyalty [d] offers moderate to good prospects for achieving low costs and building a sustainable competitive advantage. 10. The strategy-making, strategy-executing process [a] is usually delegated to members of a company's board of directors so as not to infringe on the time of busy executives. [b] includes establishing a company's mission, developing a business model aimed at making the company an industry leader, and crafting a strategy to implement and execute the business model. [c] embraces the tasks of developing a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then monitoring developments and initiating corrective adjustments in light of experience, changing conditions, and new opportunities. [d] is principally concerned with sizing up an organization's internal and external situation, so as to be prepared for the challenge of developing a sound business model. 11. In a single-business company, the strategy-making hierarchy consists of [a] business strategy, divisional strategies, and departmental strategies. [b] business strategy and operating strategy [c] business strategy, functional strategies, and operating strategies. [d] managerial strategy, business strategy and divisional strategy.
