strategic management: questions
TRANSCRIPT
Strategic Management: Questions
1. The strategic management process is -
A set of activities that will assure a temporary advantage and average returns
for the firm.
A decision-making activity concerned with a firm's internal resources,
capabilities and competencies independent of the conditions in its external
environment.
A process directed by top-management with input from other stakeholders
that seeks to achieve above-average returns for investors through effective use
of the organization's resources.
The full set of commitments, decisions and actions required for the firm to
achieve above-average returns and strategic competitiveness.
2. In the resource-based model, which of the following factors would be
considered a key to organizational success?
Unique market niche.
Weak competition.
Economies of scale.
Skilled employees.
3. The goal of the organization's ______ is to capture the hearts and minds of
employees, challenge them and evoke their emotions and dreams.
Vision.
Mission.
Culture.
Strategy.
4. Internal analysis enables a firm to determine what the firm -
Can do.
Should do.
Will do.
Might do.
5. Compared to tangible resources, intangible resources are -
Of less strategic value to the firm.
Not the focus of strategic analysis.
A more potent source of competitive advantage.
More likely to be reflected on the firm's balance sheet.
6. To be a core competency a capability must satisfy all of the following criteria
except:
Be technologically innovative.
Be hard for competing firms to duplicate.
Be without good substitutes.
Be valuable to customers.
7. Capabilities that other firms cannot develop easily are classified as -
Costly to imitate.
Rare.
Valuable.
Not substitutable.
8. Competitors are more likely to respond to competitive actions that are taken
by -
Differentiators.
Larger companies.
First movers.
Market leaders.
9. Evaluating a diversified company's corporate strategy and critiquing the
pluses and minuses of its business line up involves -
A SWOT analysis of each industry in which the firm has a business interest.
Applying the cost-of-entry test, the better-off test, the profitability test and the
shareholder value test to each business and industry represented in the
company's business portfolio.
Evaluating the strategic fits and resource fits among the various sister
businesses and deciding what priority to give to each of the company's
business units in allocating resources.
10. Acquisition of an existing business is an attractive strategy option for
entering a promising new industry because it -
Is an effective way to hurdle entry barriers, is usually quicker than trying to
launch a brand-new start-up operation and allows the acquirer to move
directly to the task of building a strong position in the target industry.
Is less expensive than launching a new start-up operation, thus passing the
cost-of-entry test.
Is a less risky way of passing the attractiveness test.
11. The most popular strategy for entering new businesses and accomplishing
diversification is -
Forming a joint venture with another company to enter the target industry.
Internal startup.
Acquisition of an existing business already in the chosen industry.
12. The essential requirement for different businesses to be "related" is that -
Their value chains possess competitively valuable cross business
relationships.
The products of the different businesses are bought by much of the same types
of buyers.
The products of the different businesses are sold in the same types of retail
stores.
13. Mergers and acquisitions are often driven by such strategic objectives so as
to -
Expand a company's geographic coverage or extend its business into new
product categories.
Reduce the number of industry key success factors.
Reduce the number of strategic groups in the industry.
14. A good example of vertical integration is -
A global public accounting firm acquiring a small local or regional public
accounting firm.
A large supermarket chain getting into convenience food stores.
A crude oil refiner purchasing a firm engaged in drilling and exploring for oil.
15. The acronym SWOT stands for -
Special Weapons for Operations Timeliness.
Services, Worldwide Optimization, and Transport.
Strengths Worldwide Overcome Threats.
Strengths, Weaknesses, Opportunities, and Threats.
16. Which of the following is not a characteristic of strategic management that
makes it different from other types of management?
It is interdisciplinary.
It has an external focus.
It has an internal focus.
It concerns the present direction of the organization.
17. Which of the following is NOT a major element of the strategic management
process?
Formulating strategy.
Implementing strategy.
Evaluating strategy.
Assigning administrative tasks.
18. Competitive advantage can best be described as:
Increased efficiency.
What sets an organization apart.
A strength of the organization.
Intangible resources.
19. ________________ is the foundation of blue ocean strategy.
Innovation.
Value creation.
Value innovation.
Value cost trade-off.
20. When defining strategic management the most important thing to
remember is that it is:
Not as easy as you think.
Mainly the province of senior managers.
A living evolving process.
More conceptual than practical.
21. Which of the following defines what business or businesses the firm is in or
should be in?
Business strategy.
Corporate strategy.
Functional strategy.
National strategy.
22. Which of the following is NOT included in the Porter’s Five Forces model:
Potential development of substitute products.
Bargaining power of suppliers.
Rivalry among stockholders.
Rivalry among competing firms.
23. Which of the following SWOT elements are internal factors for a business?
Strengths and Weaknesses.
Opportunities and Threats.
Strengths and Opportunities.
Weaknesses and Threats.
24. Which of the following is false regarding why a SWOT Analysis is used?
To build on the strengths of a business.
To minimize the weaknesses of a business.
To reduce opportunities available to a business.
To counteract threats to a business.
25. Which of the following could be a strength?
Weather.
A new international market.
A price that is too high.
The location of a business.
26. Which of the following could be a weakness?
A developing market such as the Internet.
Competitors with access to better channels of distribution.
Poor quality of goods and services.
Special marketing expertise.
27. Which of the following could be an opportunity?
Having quality processes and procedures.
Moving into new market segments that offer improved profits.
Damaged reputation.
A new competitor in your home market.
28. Which of the following could be a threat?
Changes in technology.
A market vacated by an ineffective competitor.
Location of your business.
Lack of marketing expertise.
29. Which of the following is true about preparing a SWOT Analysis?
It should focus on where the organization is today, not where it could be in
the future.
A SWOT Analysis is objective
It should be specific and avoid grey areas.
It should analyze the organization only and ignore the performance of
competitors.
30. Who usually conducts a SWOT Analysis for a business?
Financial Institutions/Banks.
Lawyers.
Employees.
Managers.
31. From the list below, identify which factor does not form one of the six key
areas of a PESTEL analysis.
Socio-cultural changes.
Ecological changes.
Political changes.
Technological changes.
32. Barriers to entry affect the ability of firms outside an industry to enter and
take advantage of profit opportunities. Which of the following is not an example
of such a barrier?
The relative size of existing firms in the industry.
Capital requirements.
Economies of scale.
Product differentiation.
Switching costs.
33. Which of the following statements best defines market segmentation?
Market segmentation is the 'carving-up' of a market by firms so that they all
share in that market.
Market segmentation is the division of a geographical area into specific sales
territories.
Market segmentation is the identification of specific parts of a market and the
development of different market offerings that will be attractive to those
segments.
Market segmentation is the division of a market into different geographical
regions.
34. In many respects, the real danger in analyzing the environment is to limit
the process to examining past events and ways of thinking. It is absolutely
essential to break out of the current mould and examine alternative routes and
ideas.
True.
False.
35. What two types of market segments did Michael Porter use in developing
his generic strategies model?
Lifestyles and behavior.
Geographic and class-based segments.
Residential neighborhoods and occupations.
Broad target and narrow target.
36. BCG in BCG matrix stands for -
Boston Calmette Group.
British Consulting Group.
Boston Corporate Group.
Boston Consulting Group.
37. What does Stars symbolize in BCG matrix?
Introduction.
Growth.
Maturity.
Decline.
38. Which of the following sentences best summarizes the differences between
the red and blue oceans strategies?
In the red oceans, industry boundaries are defined and accepted and the
competitive rules of the game are known. Blue oceans are occasionally created
well beyond existing industry boundaries.
Red oceans denote an environment where products are not yet well defined
while blue oceans refer to the frequently accessed marketplaces where the
products are well-defined, competitors are known and competition is based on
price, product quality and service.
Blue oceans are an old paradigm that represents all the industries in existence
today while red oceans are those where companies beat competition by
focusing on developing compelling value innovations that create uncontested
market space.
Red oceans are about avoiding head-to-head competition while blue oceans
are about rivals fighting over a shrinking profit pool.
39. The VRIO framework can be used to identify:
A firm's resources and external opportunities.
The organizational structure of multinational firms.
A firm's technical resources.
A firm's core competencies.
40. What is the term used in Ansoff's matrix for increasing market share with
existing products in existing markets?
Product development.
Market penetration.
Diversification.
Market development.
41. Which of the following is typically NOT seen as being associated with
strategic decisions?
The organization’s long-term direction.
The detailed planning of a department's work over the next month.
The values and expectations of powerful actors in the organization.
The scope of the organization’s activities.
42. Which strategy is about how to compete successfully in particular markets?
Business-level strategy.
Corporate-level strategy.
Alliance-based strategy.
Operational-level strategy.
43. A group of managers is considering pricing strategy and differentiation. At
which level of strategy are the managers most likely to be working?
Corporate level.
Operational level.
Business level.
44. An organization’s general expression of its overall purpose is known as its:
Objective.
Vision.
Goal.
Mission.
45. Strategy involves:
Senior managers and board members.
Managers at all levels.
Senior and middle managers.
Senior management.
46. What among the following is not a branch of strategy research that make
up the study of strategy?
Strategy content.
Strategic context.
Strategy lenses.
Strategy processes.
47. In the Exploring Strategy Model, what heading is used to cover
environment, capability, goals and culture?
Strategic applicability.
Strategic choices.
Strategy in action.
Strategic position.
48. A design view of strategy refers to:
The pulling together of ideas that develop from different parts of the
organization.
The pulling together of the different decisions made throughout an
organization, so as to develop a coherent overall strategy.
The systematic, rational way in which strategy is always developed in an
organization.
The deliberate positioning of the organization through a rational, analytic,
structured and directive process.
49. The experience lens suggests that strategies develop:
Through the shared assumptions in the organization, often thought of as the
organizational culture.
Through the shared assumptions across similar types of organizations within an
industry (or organizational field).
Through the individual experience of a few top managers or strategic planners.
All of the above.
50. The variety lens suggests that new strategies take shape in organizations:
Because new ideas are tried out in the market and either succeed or do not.
Because the new ideas that develop from within it are selected by formal
evaluation through strategic planning systems.
Because there are sufficient people who find them attractive.
All of the above.
51. What is the key outcome from PESTEL analysis?
Five Forces.
Identification of the drivers for change.
Critical success factors.
Possible scenarios.
52. When using PESTEL it is easy to get overwhelmed by a multitude of details.
Instead, it is important to step back and identify the:
Key drivers for change.
Relevant Five Forces that exist
Complex links between each of the factors.
Market segments.
53. Which of the following is NOT the most useful ways in which a group of
managers could use scenario planning?
To consider plausible alternative futures.
To ensure that the managers always select the only scenario that will work in
practice.
To develop contingency plans for each scenario.
To increase the managers' understanding and perception of forces in the business
environment.
54. It is always useful to ensure that the three scenarios are 'optimistic',
'middling' and 'pessimistic'.
False.
True.
55. The five forces that affect the level of competition in an industry are:
The threat of entry; the power of buyers; the power of suppliers; the threat of
substitutes; and government action.
The threat of buyers; the power of entry; the power of substitutes; the threat of
suppliers; and the threat of recession.
The threat of recession; the power of buyers; the power of suppliers; the threat
of management failure; and competitive rivalry.
The threat of entrants; the power of buyers; the power of suppliers; the threat of
substitutes; and competitive rivalry.
56. In which of the following situations is buyer power NOT likely to be high?
Where switching costs are low.
Where ultimate consumer power is weak.
Where the buyer can threaten to compete.
Where a few large customers account for the majority of sales.
57. Forward vertical integration occurs when suppliers are able to cut out
buyers who act as intermediaries.
True.
False.
58. When identifying strategic groups, which two headings can the relevant
characteristics most usefully be grouped under?
Resource commitment.
Competitiveness.
PESTEL factors.
59. A strategy canvas is a simple but useful way of comparing competitors'
positions in a market and potential in different segments. What are the two key
benefits of a strategy canvas?
It emphasizes the importance of technical quality.
It demonstrates that focusing on market segments means losing the overall
picture.
It emphasizes the importance of seeing value through the customers' eyes.
60. Which of the following accurately categorizes the machines an organization
uses?
Tangible, financial resources.
Intangible, financial resources.
Tangible, intellectual capital.
Tangible, physical resources.
61. What term is used for an organization’s abilities to renew and recreate its
strategic capabilities to meet the needs of a changing environment?
Competent substitution.
Core competence.
Renewability.
Dynamic capabilities.
62. Core competences are the skills and abilities by which resources are
deployed through an organization’s activities and processes such as to:
Survive using approaches and techniques that others cannot imitate or obtain.
Survive.
Achieve competitive advantage in ways that others cannot imitate or obtain.
Achieve competitive advantage.
63. A competitor finds it difficult to identify the basis for an organization’s
competitive advantage. What term is used for this situation?
Interdependent causality.
Causal dependency.
Causal ambiguity.
Ambiguous intercausality.
64. Which of the following statements incorrectly relates to explicit and tacit
knowledge?
A systems manual is an example of explicit knowledge.
Tacit knowledge is easier to imitate.
Explicit knowledge is easier to communicate.
Tacit knowledge is personal, context-specific and therefore hard to
communicate.
65. The sharing of knowledge and experience in organizations is an essentially
social and cultural process.
False.
True.
66. Which of the following statements correctly relate to value chains?
Technology development is a primary activity.
Marketing and sales is a support activity.
Procurement is a support activity that occurs in many parts of the organization.
67. The purpose of a SWOT analysis is to analyses:
The strategic capability of an organization.
External and internal environments.
The business environment and the strategic capability of an organization
relative to its competitors.
The business environment in which an organization operates.
68. Best-in-class benchmarking seeks to assess organizational performance
against:
The competitor who is 'best in class' wherever that may be.
The nearest geographical competitor.
The nearest principal competitor.
The competitor who is the best in the industry.
69. Which of the following answers the question: 'Where does the organization
aspire to be in the future?'
Mission statement.
Core values.
Vision statement.
Objectives.
70. Which statements does not accurately describe relationships that exist in a
large company?
The board is an agent for investment managers.
Investment managers are ultimately agents for the ultimate beneficiaries.
Investment managers are agents for the board.
71. Which is the most common types of governance structure?
The non-executive board model.
The manager–agent model.
The shareholder model.
72. Which of the following statements accurately relates to the stakeholder
model of governance?
Shareholders have a legitimate primacy in relation to the wealth generated by
organizations.
Boards attempt to consider the wishes of all stakeholders.
All board members are insiders (typically managers of the company).
Firms generally have a single-tier structure.
73. Which of the following is claimed to NOT be an advantage of the
shareholder model of governance?
Investors get higher returns than they would under the stakeholder model.
There is a reduced risk for shareholders.
Major investors are more likely to view their investments as being long term.
There is a greater chance of entrepreneurship.
74. Which of the following is not a corporate social responsibility stance?
Enlightened self-interest.
Free enterprise.
Laissez-faire.
Shaper of society.
75. Which stance on corporate social responsibility would focus on social and
market change, and give individuals in the organization responsibility for social
responsibility issues?
Enlightened self-interest.
Forum for stakeholder interaction.
Laissez-faire.
Shaper of society.
76. What name is given to the process of divulging information to outside bodies
when a person believes that their organization is failing in its corporate social
responsibility?
Showing enlightened self-interest.
Social auditing.
Legitimizing.
Whistle-blowing.
77. An indicator of the power held by external stakeholders is:
The organizational perception of the status of an external party.
The personal relationship with a key decision maker.
Mutual resource dependency.
Their negotiating skills.
78. Power is:
The ability of individuals or groups to persuade, induce or coerce others into
following certain courses of action.
The ability of individuals or groups to persuade others into following certain
courses of action.
The ability of groups to persuade, induce or coerce others into following certain
courses of action.
The ability of individuals to persuade, induce or coerce others into following
certain courses of action.
79. Which of the following is not one of the four broad categories of external
stakeholders?
Environmental.
Technological.
Economic.
Socio-political.
80. In many businesses there are periods of relative continuity during which
strategy changes incrementally. What is NOT the main reason for this?
By maintaining continuity during a period of environmental change, managers
can ensure growth.
Managers are experimenting around a theme.
Managers are unwilling to change a strategy that has been successful.
The environment is changing gradually.
81. Identify the reason for the development of core rigidities that make it
difficult for organizations to change.
Relationships are crucial to the change process.
Organizational practices are developed over time. These practices may become
embedded in organizational routines that are difficult to change.
Performance effects lag the development of core techniques.
82. Which of the following accurately relate to transformational change?
It is usually the result of a downturn in performance.
It often occurs too early to result in an improvement in market position or jobs.
It generally occurs in response to changes suggested by existing middle
management.
83. Which of the following is NOT a reason why the history of the organization
is important for strategists?
It helps detect and avoid strategic drift.
It avoids misattributing the reasons for success.
It focuses the manager purely on the relevant organization.
It avoids the recency bias.
84. What term is used for a situation where early events and decisions establish
policy paths that have lasting effects on subsequent events and decisions?
Historicisation.
Strategic drift.
Cyclical strategy.
Path dependency.
85. Which of the following is not a way of carrying out an historical strategic
analysis?
Rigidity analysis.
Historical narratives.
Cyclical influences.
Chronological analysis.
86. Which approach to historical analysis would be most suitable for a manager
wanting to assess an organization’s attitudes to markets, customers and
change?
Cyclical influences.
Anchor points.
Key events and decisions ('anchor points').
Historical narratives.
87. Which of the following is not one of the four layers of organizational
culture?
Values.
Beliefs.
Paradigm.
History.
88. Which of the following best describes the cultural web?
A representation of the politics in an organization.
A representation of the power in an organization.
A representation of the taken-for-granted assumptions, or paradigm, of an
organization and its competitors.
A representation of the taken-for-granted assumptions, or paradigm, of an
organization and the physical manifestations of the organization culture.
89. Which of the following questions is NOT the most likely to be useful when
analyzing the cultural web of an organisation?
Who are the heroes and villains?
How is power distributed?
How has the organisation been affected by strategic drift?
Is emphasis on reward or punishment?
90. Which two of the following explain why the 'taken-for-granted' nature is
centrally important in relation to strategy and the management of strategy?
Because this inevitably means that the culture gives an inaccurate picture of
the organisation.
Because the culture does not apply directly to managers.
Because organisations can be 'captured' by their culture and find it difficult to
change their strategy outside that culture.
91. Organizational culture has largely been created by previous management
actions and decisions, so can relatively easily be changed in the future.
False.
True.
92. ‘The approach was tried last year and failed.' Which of the following apply
to this statement?
It is an example of a routine or ritual.
It is an example of a rigid control system.
This statement could only be made in a flat organisational structure.
93. When describing organisational culture some writers use phrases such as
'the way things are around here'. In relation to this comment, which of the
following is the most useful task of strategists?
To build a future based solely on the existing culture.
To investigate the taken-for-granted aspects of the culture.
To make changes in control systems so that the culture changes.
To make structural change so that the culture changes.
94. What is the key benefit of identifying the organisation's SBUs?
It helps the development of business-level strategies.
It makes financial control easier.
It prevents a focus solely on market-based criteria.
It decreases the complexity of the organisation's structures.
95. Which of the following are generally used when identifying SBUs?
Market-based criteria.
Structurally-based criteria.
Finance-based criteria.
96. What is meant by focused differentiation?
Providing a high perceived value service or product to a selected market
segment that justifies a substantial price premium.
Simultaneously seeking to achieve differentiation and a price lower than that
of competitors.
Concentrating on a particular feature of a product or service to achieve
differentiation.
Concentrating on differentiation as the primary means of achieving
competitive advantage.
97. A differentiation strategy is defined as:
The provision of products or services that offer benefits different from those
of competitors and that are widely valued by buyers.
The innovation of products or services greater than the competition.
Higher quality products or services than those of competitors.
The provision of different products or services that draw upon competences
or resources which competitors do not have.
98. How might an organisation sustain and win a price war?
By cross-subsidizing one business from another.
By having 'deeper pockets' to fund short- to medium-term losses.
By having a lower cost structure.
All of the above.
99. Which one of the following best explains the aim of collaboration?
To achieve advantage.
To avoid competition.
Neither to achieve advantage nor to avoid competition.
To achieve advantage or avoid competition.
100. Which of the following could be major benefits for a seller that collaborates
with a major customer in a technological industry such as aerospace or car
manufacturing?
Increased seller power.
It increases the buyer's power.
It enables the customer to increase barriers to entry.
101. Many governments have promoted, or required, collaboration between
buyers of pharmaceuticals and centralized government drug-specifying
agencies. What is the outcome of these moves?
Greater sensitivity to end-user requirements.
Increased selling power.
Increased buyer power.
Greater barriers to entry.
102. What among the following is a key assumptions in understanding
competitive dynamics in terms of game theory?
Competitors may opt to follow game rules of their own choosing.
Competitors are in an interdependent relationship.
Competitors approach business as though it was a game, so do not always
behave rationally.
103. Based on the basic assumptions of game theory, which principle guides the
development of successful competitive strategies?
'Think forwards and reason backwards'.
'Assume that your competitor cannot get in your mind'.
104. Consider the example of a company that is always battling on the basis of
price, but realizes that with its cost structure it cannot hope to compete
effectively. What, according to game theory, should it do?
Change the rules.
Avoid all collaboration.
Continue with current strategies, knowing that the competition will act
irrationally.
Continue with its current strategy.
105. What are the two constraints most likely to face organisations seeking
greater market penetration?
The risk of downsizing.
The need to consolidate market share.
Legal constraints.
106. In what way may market development NOT take place?
By focusing on new users.
By focusing on efficiency of production.
By focusing on new geographies.
By focusing on economies of scale.
107. What term is used for corporate development beyond current products
and markets, but within the capabilities or the value network of the
organisation?
Backward integration.
Related diversification.
Vertical integration.
Divergent diversification.
108. Which of the following is most likely to be a source of conglomerate value
creation?
Exploiting dominant logics rather than concrete operational relationships.
Divestment.
Entering markets of high risk.
109. What is meant by diversifying through vertical or horizontal integration?
Vertical integration describes either backward or forward integration into
adjacent activities in the value network. Horizontal integration is development
into activities that are complementary to present activities.
Vertical integration is where a firm diversifies activities that are inputs into
the company's current business. Horizontal integration refers to
diversification into activities that are concerned with the company's outputs.
Vertical integration is where a firm diversifies into activities that are
competitive with or complementary to its current activities. Horizontal
integration is either backward or forward integration into adjacent activities
in the value network.
110. A film company and a music recording company may choose to combine,
believing that the result will be more effective than the sum of the two
component parts. What term is used for the benefits?
Synergy.
Diversification.
Integration.
Consolidation.
111. Diversification may create efficiency gains by applying the organisation's
existing resources or capabilities to new markets, products or services. These
gains are known as economies of scale.
False.
True.
112. What does conventional finance theory say about the spreading of risk for
shareholders when a company diversifies?
There is significant benefit, provided the diversification leads to synergy.
There is little benefit to shareholders as they have already spread their risk by
holding a range of shares.
There is significant benefit, provided the diversification leads to an increase
in corporate parenting capabilities.
There are always significant benefits from the reductions in risk.
113. Which of the following definitions explains what is meant by the corporate
parent?
The central head office of the organisation.
The founder of the business.
The owner or major shareholder of the corporation.
The levels of management above that of business units.
114. Which of the following is NOT the key criteria that should be considered
in relation to a multi-business portfolio?
Potential problems.
Attractiveness.
Balance.
Fit.
115. A particular business unit operates in a low-growth, mature market, in
which it has a large market share. What term is used in the BCG matrix for
this business?
Ballast.
Cash cow.
Star.
Harvest/divest.
116. Which of the following does not come under categories of cost drivers of
internationalization?
Scale economies.
Similar customer needs.
Country-specific differences.
Favorable logistics.
117. Interdependence between country operations increases the pressure for
global coordination.
False.
True.
118. Internationalization is increasingly not about exploiting existing
capabilities in new national markets.
False.
True.
119. What name is given to the purchase of components and services from the
most appropriate suppliers around the world regardless of location?
International compartmentalization.
Multidomestic marketing.
Global sourcing.
The global–local dilemma.
120. The global–local dilemma in international strategy means:
The issues related to globalization and the alleged disadvantaging of
developing countries.
How many local people to employ in foreign subsidiaries.
Whether to centralize strategic decisions in head office or to devolve decision
making to subsidiaries.
The extent to which products and services may be standardized across national
boundaries or need to be adapted to meet the requirements of specific national
markets.
121. Which international strategy has a dispersed configuration and low levels of
coordination of international activities?
Transnational.
Global.
Multidomestic.
Export.
122. What do the four elements of Gehemawat's CAGE represent?
Cultural distance, administrative and political distance, geographical distance
and environmental distance.
Cultural distance, administrative and political distance, geographical distance
and economic.
Country distance, administrative and political distance, geographical distance
and environmental distance.
Country distance, administrative and political distance, gross distance and
economic distance.
123. Which of the following key factor should NOT be considered when
assessing international retaliation?
The reactiveness of the defender.
Five Forces analysis.
The clout that a defender can muster.
The attractiveness of the market to the new entrant.
124. What term is used for an approach where firms initially use entry modes
that allow them to maximize knowledge acquisition while minimizing the
exposure of their assets?
Multidomestic expansion.
International competitor elimination.
Foreign direct investment.
Staged international expansion.
125. The view that innovation involves technologists creating new knowledge,
which then forms the basis for new products for the rest of the organisation to
produce and market, is known as market push.
True.
False.
126. Which of the following statements correctly describe product or process
innovation?
Small new entrants typically have the greatest opportunity in the mature stage
of an industry.
Industries typically favor product innovation.
Product innovation typically precedes process innovation.
127. What term is used for the process by which innovations spread among
users, varying in pace and extent?
The tipping point.
Incremental innovation.
Radical innovation.
Diffusion.
128. Wherever possible, companies should aim to be first-movers.
False.
True.
129. Which of the following are likely to be late-mover advantages?
Pre-emption of scarce resources.
Gaining experience curve benefits.
Learning.
130. Which of the following is NOT the contextual factors that managers should
consider when deciding whether to move first or not?
The speed of change in the market.
The shape of the experience curve.
The organisation's capacity for profit capture.
The availability of complementary assets.
131. Which of the following is most likely to be a key issue during the start-up
stage?
Releasing capital as a reward.
Changing to intrapreneurship.
Sources of capital.
Changing from the role of entrepreneur to manager.
132. What name is given to people who set up a succession of enterprises,
investing the capital raised on exit from an earlier venture into new growing
ventures?
Serial entrepreneurs.
Serial venturists.
Venture capitalists.
Intrapreneurs.
133. Which of the following is key issues that a social entrepreneur may NOT
consider at start-up?
The development of ecosystems.
Business model.
Social mission.
Organisational form.
134. Common problems in making acquisitions work relate to:
Lack of cultural fit.
Failure to add value, inability to integrate the new company, lack of
organisational learning and poor cultural fit.
The two companies having different core competences.
Failure to add value and inability to integrate the new company.
135. Which of the following is least likely to be a motive for acquisitions and
mergers?
To increase capabilities.
To create consolidation opportunities.
To use existing capabilities more successfully.
To increase speed of entry into a rapidly changing market.
136. What term is used for M&A integration in which it is implied that both the
acquired firm and the acquiring firm learn the best qualities from the other?
Preservation.
Symbiosis.
Holding.
Absorption.
137. In the context of strategic alliances, what is meant by the term
'collaborative advantage'?
The benefits of being part of a network of alliances of which an organisation
is a member.
The aim of two or more organisations in sharing resources and activities to
pursue a strategy.
The benefit of creating a new entity that is owned separately by the partners
involved.
The result of managing alliances better than competitors.
138. Which of the following is not a stage that occurs when two organisations
form and eventually dissolve an alliance?
Courtship.
Negotiation.
Storming.
Maintenance.
139. Networks differ from joint ventures in that networks:
Are arrangements whereby two or more organisations work in collaboration
without creating a new formal entity, but where there is mutual advantage in
doing so.
Are based on personal relationships.
Are arrangements whereby two or more organisations work in collaboration
with the creation of a new formal entity.
Are limited to e-commerce businesses.
140. Analysis suggests that a company could find a strategy that gains market
share for advantage, and that exploits its superior resources and competences.
The organisational culture suggests that it should stick to what it knows best.
What strategy would you suggest?
Diversification.
Retrenchment.
Market penetration
Market development.
141. Analysis suggests that a company's existing markets are saturated. The
company wants to exploit its strategic capabilities in new arenas and satisfy its
stakeholders by making rapid growth. What strategy would you suggest?
Retrenchment.
Market development.
Diversification.
Market penetration.
142. If managers use their judgment when applying the techniques, the criteria
of suitability, acceptability and feasibility will identify the best strategy.
True.
False.
143. What is most often the limitation when assessing return using cost–benefit
analysis?
Difficulty in quantification.
Clear identification of the key stakeholders.
Difficulties in establishing the timescales to be applied.
Identifying objectives of the strategy.
144. Profitability analyses for assessing the acceptability of a strategy include:
Return on capital employed (ROCE); ratio analysis; and funds flow analysis.
Return on capital employed (ROCE); payback period; and discounted cash flow
(DCF).
Payback period; discounted cash flow; and decision trees.
Ranking; decision trees; and scenarios.
145. Acceptability' assessment concerns:
The strategic fit of the strategy to the future trends and changes in the
environment.
The resources and competences required to implement the strategy.
The expected performance outcomes, such as risk, return and stakeholder
reactions, if a strategy is implemented.
The stakeholder reaction to a strategy.
146. Which of the following best describes a 'deliberate' strategy?
A strategic direction that emerges from a stream of decisions.
A strategy that is the product of competitive pressure.
An expression of desired strategic direction, intentionally formulated or
planned by managers.
An expression of desired strategic direction deliberately formulated or planned
by managers that is realized in the fullness of time.
147. The purposes of strategic planning systems are:
To assist in the communication, coordination and control of strategy.
To provide a structured means of analyzing and thinking about complex
strategic problems and expanding the planning horizons of strategists.
To develop ownership of the strategy.
All of the above.
148. Which four of the following are the central tenets of organisational
learning?
Experimentation is the norm.
Employees should be appointed on the basis of their previous educational
success.
Organisations are pluralistic.
Managers facilitate rather than direct.
149. The resource allocation process explanation of strategy development says:
That strategy develops as the outcome of the taken-for-granted assumptions and
behaviors in organisations.
That strategy develops as the outcome of resource allocation routines in
organisations.
That strategy develops as the outcome of processes of bargaining a negotiation
among powerful internal or external interest groups.
That strategy develops as the outcome of logical incrementalism.
150. What is the cultural explanation of strategy development?
Strategy development must not be based on the taken-for-granted assumptions
and behaviors in organisations.
Strategy development occurs as the outcome of the taken-for-granted
assumptions and behaviors in organisations.
According to Hofstede's theories, strategies that work in one culture cannot be
transferred to another culture.
151. What term is used for an organisation capable of continual regeneration
from a variety of knowledge, experience and skills of individuals within a
culture that encourages mutual questioning and challenge around a shared
purpose or vision?
Strategic organisation.
Learning organisation.
Pluralistic organisation.
Emergent organisation.
152. A 'learning organisation' requires:
A stable hierarchy.
A shared vision and culture that is challenging and questioning.
A questioning culture.
Knowledge management systems.
153. Strategies most often develop in organisations:
As the outcome of cultural and political processes in the organisation.
Through formal strategic planning processes.
Through multiple processes that vary according to the type of organisation and
the context of that organisation.
Through a process of learning by doing, often known as 'logical incremental'.
154. Middle managers are likely to see strategy development in terms of
intended, rational, analytical planned processes, whereas SEOs see strategy
development more as a result of cultural and political processes.
False.
True.
155. Organisations in complex situations are most likely to succeed if they use:
Strategies that have been successful in the past.
Different processes for different purposes.
Top-down strategic planning.
Different processes for different purposes and different strategy development
roles at different organisational levels.
156. What term is used for the structures, processes and relationships through
which an organisation operates?
The organisational design.
The organisation's culture.
The organisation's configuration.
The organisational paradigm.
157. The speed of change and increased levels of uncertainty in the business
environment have increased. What is the most important result from this for
organisations?
They must become learning organisations.
They must develop into international organisations.
Their structures must become more rigid and stronger.
They must have flexible designs and be skilled at reorganizing.
158. Transnational corporations are required to simultaneously achieve local
responsiveness and global coordination. For this to work, global managers need
to:
Cross national and functional boundaries while also being sensitive to local
needs.
Ensure global innovation and learning.
Spot talent and foster innovation.
All of the above.
159. Functional structures are based on:
Business units.
Geographic divisions.
The primary activities of an organisation such as production, finance and
marketing.
Product divisions
160. A 'holding company' structure can be defined as:
One that is holding control over product or market divisions.
One that is an investment company consisting of shareholdings in separate
businesses.
One that is managed by a group of managers who are shareholders.
One that is holding control based on portfolio management principles.
161. Balanced scorecards are a means of control through:
Qualitative measures.
Performance targets.
Portfolio management.
162. Market systems as control processes typically involve:
A system for the allocation of resources.
Outsourcing of activities.
Using real market forces in the allocation of resources.
A formalized system of contracting for resources.
163. Cultural systems of control are aiming at:
Standardization of outputs.
Standardization of norms/behaviors.
Standardization of skills and behaviors.
Standardization of processes.
164. Adopting a 'financial control' approach from the corporate center
involves:
Retaining financial control and strategic planning principles.
Complete devolution of both financial and strategic issues.
Complete devolution of strategic issues but retention of major financial
controls.
Providing financial devolution but retaining strategic planning principles.
165. The 'strategic control' approach is characterized by:
Agreement between the center and divisions within central guidelines.
Complete devolution of strategic and financial controls.
The retention of strategic and financial controls in a top-down approach.
Complete devolution of strategic controls but retention of financial controls.
166. Which three of the following are typical dilemmas in organizing for
success?
Holding the ring versus holistic solutions.
Vertical accountability versus horizontal integration.
Empowering versus best practice.
Centralizing and decentralizing.
167. A company is dominated by principles of hierarchy and vertical
accountability, and is highly antagonistic to radical innovation. Which
approach would be most suitable if management wanted to develop a new
venture?
Subdivide the organisation, setting up a new division.
Reorganize the whole organisation around the new venture.
Change the company culture.
168. A dilemma for managers in the interconnectedness of configurations is
which element drives the others. The aim is to ensure that strategic elements
drive structural elements.
False.
True.
169. There are different styles of managing strategic change. Which of the
following are the potential benefits of 'direction' as a change style?
Clarity and speed.
Increasing ownership of a decision or process.
Maintaining control over the change process while also involving people in it.
Overcoming lack of information or misinformation.
170. The style of leading change associated with ‘persuasion' is best described
as:
Personal authority is used to set direction and the means of change.
A strategic leader retains coordination and authority but delegates elements of
the change process.
Gaining support for change by generating understanding and commitment.
Involvement in setting the strategy agenda and resolving strategic issues by
groups.
171. What type of change leadership involves 'incremental realignment'?
Reconstruction.
Adaptation.
Revolution.
Evolution.
172. Which of the following description does NOT correctly apply to
revolutionary change?
It involves major strategic change.
It occurs incrementally.
It is rapid.
It is likely to involve cultural change.
173. What type of change involves incremental transformation?
Adaptation.
Evolution.
Revolution.
Reconstruction.
174. Political processes in managing change may involve:
Senior managers.
Employees.
All stakeholders.
The Board of Directors.
175. Strategic change levers may be symbolic in nature. Which of the following
do you think is the most powerful symbol?
Behavior of managers.
Changes to systems such as reward, information and control systems.
Use of stories such as newsletters.
Physical changes in the work environment, such as relocations or changes to
office space.
176. Which of the following is least likely to be used as a mechanism for
managing change from a political perspective?
Using symbols, rituals and language to legitimize change.
Building alliances and networks.
Associating with powerful stakeholder groups.
Looking for windows of opportunity.
177. Which of the following is least likely to be an important element in a
turnaround strategy?
Crisis stabilization.
Focusing on long-term cost cutting.
Gaining stakeholder support.
Financial restructuring.
178. Porter's view is that the CEO has a key role as a strategic leader, setting a
disciplined approach to what fits and does not fit the overall strategy. Which of
the following are dangers of this approach?
Non-executive directors gain a greater say in strategic planning.
CEOs can become over-confident and launch strategic initiatives of ever-
increasing ambition.
The CEO 'owns' the strategy and is responsible for its success.
179. Which of the following is claimed to be the main benefit of using the top
management team to carry out strategic planning activities?
Top management teams are often made up of diverse individuals.
They are often appointed by the CEO, so act independently.
They bring additional experience and insight to the CEO.
They can develop a cohesive and consistent approach to decision making.
180. Which of the following is NOT one of the good reasons why a strategic
planner is often recruited from within the organisation?
Participating in strategy provides promising managers with an overview of the
organisation as a whole.
They bring intuitive understanding, networks and credibility to the planning
process.
Participating in strategy provides promising managers with exposure to senior
management.
It introduces new ideas and perspectives on the organisation.
181. Which of the following may decrease the influence of middle managers on
strategy making?
When they have access to an organisation's 'strategic conversation'.
When they have access to organisational networks.
When they are deeply involved in operations.
When they have key organisational positions.
182. Which of the following is not one of the four roles that consultants may
play in strategy development in organisations?
Providing support for top management's views on the organisation's strategic
issues.
Transferring knowledge.
Promoting strategic decisions.
Analyzing, prioritizing and generating options.
183. What is the key finding of the McKinsey & Co. research on who should be
included in strategy making?
Only the most senior managers should be involved.
The people involved should be kept the same to ensure consistency.
The people involved should vary according to the nature of the issue.
Managers at many levels should always be involved.
184. What term is used for the process of winning the attention and support of
top management and other important stakeholders for strategic issues?
Behavioral economics.
Issue packaging.
Strategic workshops.
Strategic issue selling.
185. Senior managers should plan a strategy workshop with an open mind
about what they hope to achieve.
False.
True.
186. Horizontal integration is concerned with -
Production.
Quality.
Product planning.
All of the above.
187. It refers to formal and informal rules, regulations and procedures that
complement the company structure.
Strategy.
Systems.
Environment.
All of the above.
188. Micro environment is the _______ environment of a company.
Working.
Human.
External.
Internal.
189. Techniques used in environmental appraisal are -
Single-variable extrapolation/multivariable interaction analysis.
Structured/ unstructured expert/inexpert opinion.
Dynamic modes and mapping.
All of the above.
190. It enables the strategists to take corrective action at the right time
Implementation control.
Special alert control.
Strategic Surveillance control.
Premise control.
191. Like roots of a tree, ________of organization is hidden from direct view.
Performance.
Strategy.
Core competence.
All of the above.
192. Changes in company ________ also necessitates changes in the systems in
various degrees.
Structure.
System.
Strategy.
Turnover.
193. The actual performance deviates positively over the budgeted
performance. This is an indication of ______ performance.
Superior.
Inferior.
Constant.
Any of the above.
194. Criteria for making an evaluation is (are) -
Consistency with goals.
Consistency with environment.
Money.
All of the above.
195. The ________ of any organization is “the aggregate of all conditions, events
and influences that surround and affect it.”
System.
Environment.
Structure.
Strategy.
196. Strategic management is mainly the responsibility of -
Lower management.
Middle management.
Top management.
All of the above.
197. The major issue(s) of appraisal system is (are) -
Factors of appraisal.
Relevance of appraisal.
Procedure of appraisal.
All of the above.
198. They have time based utility -
Goals.
Resources.
Both ‘A’ and ‘B’.
None of the above.
199. Formal systems are adopted to bring ________ & amalgamation of
decentralized units into product groups.
Manpower.
Co-ordination.
Production.
All of the above.
200. Both Goal and Resources have time based utility.
True.
False.
201. A popular strategy that occurs when two or more companies form a
Temporary partnership for the purpose of capitalizing on some Opportunity is
called a(n):
Merger.
Joint venture.
202. Outsourcing strategies can offer such advantages as -
Increasing a company's ability to strongly differentiate its product and be
successful with either a broad differentiation strategy or a focused
differentiation strategy.
Obtaining higher quality and/or cheaper components or services, improving a
company's ability to innovate and reducing its risk exposure.
Speeding a company's entry into foreign markets.
203. The big risk of employing an outsourcing strategy is -
Causing the company to become partially integrated instead of being fully
integrated.
Hollowing out a firm's own capabilities and losing touch with activities and
expertise that contribute fundamentally to the firm's competitiveness and
market success.
Hurting a company's R&D capability.
204. Which of the following is not one of the principal offensive strategy
options?
Leapfrogging competitors by being the first adopter of next- generation
technologies.
Offering an equally good or better product at a lower price.
Blocking the avenues open to challengers.
205. Which one of the following is an example of an offensive strategy?
Blocking the avenues open to challengers.
Signaling challengers that retaliation is likely.
Pursuing continuous product innovation to draw sales and market share away
from less innovative rivals.
206. A blue ocean type of offensive strategy -
Is an offensive attack used by a market leader to steal customers away from
unsuspecting smaller rivals.
Involves a preemptive strike to secure an advantageous position in a fast-
growing market segment.
Works best when a company is the industry's low-cost leader
Involves abandoning efforts to beat out competitors in existing markets and,
instead, inventing a new industry or new market segment that renders existing
competitors largely irrelevant and allows a company to create and capture
altogether new demand.
207. A hit-and-run or guerilla warfare type of offensive strategy involves -
Random offensive attacks used by a market leader to steal customers away from
unsuspecting smaller rivals.
Undertaking surprise moves to secure an advantageous position in a fast-
growing and profitable market segment; usually the guerilla signals rivals that
it will use deep price cuts to defend its newly-won position.
Work best if the guerilla is the industry's low-cost leader.
Pitting a small company's own competitive strengths head-on against the
strengths of much larger rivals.
Random raids by a small competitor to grab sales and market share from
complacent or distracted rivals.
208. Launching a preemptive strike type of offensive strategy entails -
Cutting prices below a weak rival's costs.
Moving first to secure an advantageous position that rivals are prevented or
discouraged from duplicating.
Using hit-and-run tactics to grab sales and market share away from complacent
or distracted rivals.
209. Which one of the following statements about offensive strategies is false?
It often takes the use of successful offensive strategies to build to competitive
advantage.
One situation when a company needs to use offensive strategies is when it has
no choice but to try to whittle away at a strong rival's competitive advantage.
Offensive strategies have much to recommend when a company sees an opening
to gain profitable market share at the expense of rivals.
One of the most potent types of offensive strategy is to introduce new features
or models to fill vacant niches in a company's overall product offering and
thereby better match the product offerings of key rivals.
210. Which one of the following is not a trait of a good strategic offensive?
Trying to build a more cost-efficient supply chain than rivals have.
Being impatient with the status quo and displaying a strong bias for swift,
decisive actions to boost a company's competitive position vis-à-vis rivals.
Applying resources where rivals are least able to defend themselves.
211. Which one of the following is not a good type of rival for an offensive-
minded company to target?
Market leaders that are vulnerable.
Runner-up firms with weaknesses in areas where the challenger is strong.
Small local and regional companies with limited capabilities.
Other offensive-minded companies with a sizable war chest of cash and
marketable securities.
212. Which one of the following statements regarding the basis for offensive
attack on rivals is false?
It is generally wise to use a company's resource strengths to attack rivals in
those competitive areas where they are strong.
Ignoring the need to tie a strategic offensive to a company's strengths is like
going to war with a popgun.
Strategic offensives should, as a general rule, be predicated on leveraging a
company's competitive assets—its core competencies, competitive capabilities
and other resource strengths.
Offensive initiatives aimed at exploiting the competitive weaknesses of rivals
stand a better chance of success than do those that challenge a competitor's
strengths.
Attacking a market leader is always unwise.
213. Which of the following is not a potential advantage of backward vertical
integration?
Reduced vulnerability to powerful suppliers (who may be inclined to raise
prices at every opportunity).
Reduced risks of disruptions in obtaining crucial components or support
services.
Reduced costs.
Reduced business risk because of controlling a bigger portion of the overall
industry value chain.
214. Outsourcing strategies -
Are nearly always a more attractive strategic option than merger and acquisition
strategies.
Carry the substantial risk of raising a company's costs
Carry the substantial risk of making a company overly dependent on its suppliers
Involve farming out value chain activities presently performed in- house to
outside specialists and strategic allies
215. Outsourcing the performance of value chain activities presently
performed in-house to outside vendors and suppliers makes strategic sense
when -
An activity can be performed better or more cheaply by outside specialists.
It allows a company to focus its entire energies on those activities that are at the
center of its expertise (its core competencies) and that are most critical to its
competitive and financial success.
Outsourcing won't adversely hollow out the company's technical know-how,
competencies or capabilities.
It reduces the company's risk exposure to changing technology and/or changing
buyer preferences
All of these.
216. The purposes of defensive strategies are to -
Aggressively retaliate against rivals pursuing offensive strategies and prevent
against price wars.
Lower the risk of being attacked by rivals, weaken the impact of any attack that
occurs and influence challengers to aim their offensive efforts at other rivals.
Guard against adverse changes in the company's macro- environment and
insulate the company from the impact of industry driving forces.
217. Which one of the following is not a defensive option for protecting a
company's market share and competitive position?
Adding new features or models and otherwise broadening the product line to
close off vacant niches and gaps to opportunity-seeking challengers.
Thwarting the efforts of rivals to attack with lower prices by maintaining
economy-priced options of its own.
Running comparison ads that call attention to weaknesses in rivals' products.
218. Which of the following is a potential defensive move to ward off
challenger firms?
Granting volume discounts or better financing terms to dealers/distributors and
providing discount coupons to buyers to help discourage them from
experimenting with other suppliers/brands.
Signaling challengers that retaliation is likely in the event they launch an attack.
Lengthening warranties, offering free or low-cost training and support services
and providing coupons and sample giveaways to buyers most prone to
experiment with using rival brands.
Maintaining a war chest of cash and marketable securities.
All of these.
219. A company's competitive strategy deals with -
Management's game plan for competing successfully—the specific efforts to
please customers, offensive and defensive moves to counter the maneuvers of
rivals, the reactions and responses to whatever market conditions prevail at the
moment and the initiatives undertaken to improve the company's market position.
What its strategy will be in such functional areas as R&D, production, sales and
marketing, distribution, finance and accounting and so on.
Its efforts to change its position on the industry's strategic group map.
220. The objective of competitive strategy is to -
Contend successfully with the industry's 5 competitive forces.
Knock the socks off rival companies by doing a better job of satisfying buyer
needs and preferences.
Get the company into the best strategic group and then dominate it.
221. A company achieves competitive advantage whenever -
It is the acknowledged market share leader.
It is the industry's acknowledged technology leader.
It has greater financial resources than its rivals.
It has a well-known and well-regarded brand name, prefers offensive strategies
to defensive strategies and has a strong balance sheet.
It has some type of edge over rivals in attracting customers and coping with
competitive forces.
222. A company can be said to have competitive advantage if -
It is the acknowledged leader in product quality.
It has a different value chain than rivals.
It has some type of edge over rivals in attracting customers and coping with
competitive forces.
223. While there are many routes to competitive advantage, they all involve -
Building a brand name image that buyers trust.
Delivering superior value to buyers and building competencies and resource
strengths in performing value chain activities that rivals cannot readily match.
Achieving lower costs than rivals and becoming the industry's sales and market
share leader.
224. The biggest and most important differences among the competitive
strategies of different companies boil down to -
How they go about building a brand name image that buyers trust and whether
they are a risk-taker or risk-avoider.
The different ways that companies try to cope with the five competitive forces.
Whether a company's market target is broad or narrow and whether the company
is pursuing a competitive advantage linked to low cost or differentiation.
225. Which of the following is not one of the five generic types of competitive
strategy?
A low-cost provider strategy.
A broad differentiation strategy.
A best-cost provider strategy.
A focused low-cost provider strategy.
A market share dominator strategy.
226. The generic types of competitive strategies include -
Build market share, maintain market share and slowly surrender market share.
Offensive strategies and defensive strategies.
Low-cost provider, broad differentiation, best-cost provider, focused low-cost
and focused differentiation.
227. Which one of the following generic types of competitive strategy is
typically the best strategy for a company to employ?
A low-cost leadership strategy.
A broad differentiation strategy.
A best-cost provider strategy.
A focused low-cost provider strategy.
There is no such thing as a "best" competitive strategy; a company’s "best"
strategy is always one that is customized to fit both industry and competitive
conditions and the company's own resources and competitive capabilities.
228. A low-cost leader's basis for competitive advantage is -
Lower prices than rival firms.
Using a low cost/low price approach to gain the biggest market share.
High buyer switching costs.
Meaningfully lower overall costs than competitors.
229. How valuable a low-cost leader's cost advantage is depends on -
Whether it is easy or inexpensive for rivals to copy the low-cost leader's methods
or otherwise match its low costs.
How easy it is for the low-cost leader to gain the biggest market share.
The aggressiveness with which the low-cost leader pursues converting the cost
advantage into the absolute lowest possible costs.
230. A low-cost leader can translate its low-cost advantage over rivals into
superior profit performance by -
Cutting its price to levels significantly below the prices of rivals.
Either using its low-cost edge to underprice competitors and attract price
sensitive buyers in large enough numbers to increase total profits or refraining
from price-cutting and using the low-cost advantage to earn a bigger profit
margin on each unit sold.
Going all out to use its cost advantage to capture a dominant share of the market.
231. The major avenues for achieving a cost advantage over rivals include -
Revamping the firm's value chain to eliminate or bypass some cost- producing
activities and/or out-managing rivals in the efficiency with which value chain
activities are performed.
Having a management team that is highly skilled in cutting costs.
Being a first-mover in adopting the latest state-of-the-art technologies,
especially those relating to low-cost manufacture.
232. A competitive strategy of striving to be the low-cost provider is
particularly attractive when:
Buyers are not very brand-conscious.
Most rivals are trying to be best-cost providers.
There are many ways to achieve product differentiation that have value to
buyers.
Buyers are large and have significant power to bargain down prices; buyers use
the product in much the same ways; and buyers have low switching costs.
233. Which of the following is not an action that a company can take to do a
better job than rivals of performing value chain activities more cost-
effectively?
Striving to capture all available economies of scale and learning/experience curve
effects.
Trying to operate facilities at full capacity.
Adopting labor-saving operating methods.
Improving supply chain efficiency.
Outsourcing all production-related activities.
234. Which of the following is not one of the ways that a company can achieve
a cost advantage by revamping its value chain?
Cutting out distributors and dealers by selling direct to customers.
Replacing certain value chain activities with faster and cheaper online
technology.
Increasing production capacity and then striving hard to operate at full capacity.
235. To succeed with a low-cost provider strategy, company managers have
to:
Pursue backward or forward integration to detour suppliers or buyers with
considerable bargaining power and leverage.
Move the performance of most all value chain activities to low- wage countries.
Sell direct to users of their product or service and eliminate use of wholesale and
retail intermediaries.
Do two things: (1) do a better job than rivals of pursuing cost savings throughout
the value chain and (2) be proactive in revamping the firm's overall value chain
to eliminate low value-added activities and bypass "nonessential" cost-
producing activities.
236. Achieving a cost advantage over rivals entails:
Concentrating on the primary activities portion of the value chain and
outsourcing all support activities.
Being a first-mover in pursuing backward and forward integration and
controlling as much of the industry value chain as possible.
Out-managing rivals in performing value chain activities cost- effectively and
finding creative ways to cut cost-producing activities out of the value chain.
237. The best evidence that a company is the industry's low-cost provider is
that:
It sells more of its product/service than its key competitors and is the market
share leader.
It has lower overall per unit costs for its product/service than other competitors
in the industry.
It has lower total operating costs on its income statement than do its competitors.
238. A company pursuing a low-cost leadership strategy must generally:
Have products with good-to-excellent attributes so that its low prices will
provide customers with more value for the money.
Have acceptable quality products that incorporate a good basic design with few
frills and offer a limited number of models/styles to select from.
Have a wide selection of products that are of average or better quality.
239. Being the overall low-cost provider in an industry has the attractive
advantage of:
Building strong customer loyalty and locking customers into its product
(because customers have such high switching costs).
Giving the firm a very appealing brand image.
Putting a firm in position to compete offensively on the basis of low price, win
the business of price sensitive customers, set the floor on market price and
defend against price war conditions should they arise.
240. A competitive strategy to be the low-cost provider in an industry works
well when:
Price competition among rival sellers is especially vigorous.
There are few ways to achieve product differentiation that have value to buyers.
Buyers incur low costs in switching their purchases from one seller/brand to
another.
Industry newcomers use low introductory prices to attract buyers and build a
customer base.
All of these.
241. A competitive strategy predicated on low-cost leadership tends to work
best when:
There are widely varying needs and preferences among the various buyers of the
product or service.
There are many market segments and market niches, such that it is feasible for
a low-cost leader to dominate the niche where buyers want a budget-priced
product.
Price competition is especially vigorous and the offerings of rival firms are
essentially identical, standardized, commodity-like products.
242. In which of the following circumstances is a strategy to be the industry's
overall low-cost provider not particularly well matched to the market situation?
When the offerings of rival firms are essentially identical, standardized,
commodity-like products.
When there are few ways to achieve differentiation that have value to buyers.
When price competition is especially vigorous.
When buyers have widely varying needs and special requirements and the prices
of substitute products are relatively high.
243. A strategy to be the industry's overall low-cost provider tends to be more
appealing than a differentiation or best-cost or focus/market niche strategy
when:
There are many ways to achieve product differentiation that buyers find
appealing.
Buyers use the product in a variety of different ways and have high switching
costs in changing from one seller's product to another.
The offerings of rival firms are essentially identical, standardized, commodity-
like products.
244. In which of the following circumstances is a low-cost leadership strategy
not likely to be particularly successful?
When the industry's product is a standardized commodity.
When buyers are looking for a good-to-excellent product at a bargain price.
When the industry is composed of more than three strategic groups and the
companies in at least one of the groups are pursuing full vertical integration
strategies.
245. Which of the following is not one of the pitfalls of a low-cost provider
strategy?
Overly aggressive price-cutting.
Trying to set the industry's price ceiling.
Not emphasizing avenues of cost advantage that can be kept proprietary or that
relegate rivals to playing catch up.
246. The essence of a broad differentiation strategy is to:
Appeal to the high end part of the market and concentrate on providing a top-of-
the-line product to consumers.
Incorporate a greater number of differentiating features into its product/service
than rivals.
Lower buyer switching costs.
Outspend rivals on advertising and promotion in order to inform and convince
buyers of the value of its differentiating attributes.
Be unique in ways that are valuable and appealing to a wide range of buyers.
247. A company that succeeds in differentiating its product offering from
those of its rivals can usually:
Avoid having to compete on the basis of simply a low price.
Charge a price premium for its product (because buyers see its differentiating
features as worth something extra).
Increase unit sales (because of the attraction of its differentiating product
attributes).
Gain buyer loyalty to its brand (because some, maybe many, of its customers
will have a strong preference for the company's differentiating features).
All of the above.
248. A broad differentiation strategy improves profitability when:
It is focused on product innovation.
Differentiating enhances product performance.
The differentiating features appeal to sophisticated and prestigious buyers.
Unit sales increase and the extra price the product commands exceeds the added
costs of achieving the differentiation.
249. Whether a broad differentiation strategy ends up enhancing company
profitability depends mainly on whether:
Many buyers view the product's differentiating features as having value.
Most buyers have similar needs and use the product in the same ways.
Unit sales increase and the extra price the product commands exceeds the added
costs of achieving the differentiation.
250. Using a broad differentiation strategy to produce an attractive
competitive advantage is least likely to be based on:
Developing a superior performing product.
Offering buyers a product which is superior in quality and reliability as
compared to rivals' brands.
Giving consumers comprehensive support services.
Providing buyers with a continuing stream of better-designed, better- performing
and more stylish products.
Undercutting the prices being charged by rivals.