Why is it important for managers to understand a companys resources and capabilities?

An _______________ strategy element is the result of a failure of a part or all of a deliberate strategy in the marketplace.

abandoned

Widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing

balanced scorecard

As suppliers gain strong bargaining power, they can undermine industry profitability by doing which of the following? (choose all that apply)

(a) Passing on costs to industry members
(b) Charging industry members higher prices
(c) Reporting industry members to regulations for invented violations
(d) Limiting industry member access to better deals

a, b, d

Which of the following steps are part of driving forces analysis?

(a) Determine what strategy changes are needed to prepare for the impact of the driving forces
(b) Evaluate the current characteristics of the industry environment
(c) Identify what the driving forces are
(d) Assess whether the drivers of change are acting to make the industry more or less attractive

a, c, d

A ____________ evaluates the sustainable competitive advantage provided by a company resource or capability

VRIN Test

The strategy elements that most affect industry member's ability to prosper in the marketplace are known as

key success factors

Most driving forces originate in the

company's competitive environment

A capability is

(a) a competitive asset that is owned or controlled by the company
(b) the company's collection of tangible and intangible competitive resources
(c) the capacity of the company to perform an internal activity
(d) not the same thing as a competence

c

Which of the following are common methods of gathering information for benchmarking?
(choose all that apply)

(a) analyzing detailed reports of competitors' cost structures
(b) interviewing knowledgeable analysts or market participants such as customers or suppliers
(c) consulting information published by trade groups and industry research firms
(d) direct observation of competitors' activities

b, c, d

Competitively valuable resources tend to be rate, hard to copy, and

(a) expensive and time consuming to develop
(b) difficult to quantify
(c) almost always patented or copyrighted
(d) not easily replaced by rivals' substitute resources

d

Whenever the extra price that a product commands outweighs the cost of achieving the differentiation, __________________ is enhanced.

profitability

Reengineering the company's value chain to achieve significant cost advantages can include which of the following? (choose all that apply)

(a) reducing manufacturing capacity to lower fixed overhead costs
(b) reducing materials handling and shipping costs
(c) selling directly to consumers by circumventing distributors and dealers
(d) streamlining operations by eliminating low value-added or unnecessary activities

b, c, d

In a focused, or market niche, strategy the targeted segment can be defined by which of the following?

(a) special product attributes that appeal only to niche customers
(b) geographic uniqueness
(c) the price sensitivity of commodity buyers
(d) a range of products that appeal to a broad variety of customers

a, b

Under which of the following situations will a differentiation strategy likely be least successful?

(a) when few competitors are following a similar differentiation approach
(b) when there are only a few ways to differentiate that have value to buyers
(c) when technological innovation is rapid
(d) when buyer needs are diverse

b

To sift through information and construct strategic profiles of rivals, some firms form a competitive ________________ unit.

intelligence

In 2015, almost __________% of companies in the world use a balanced scorecard approach to measure their performance.

50

Together, deliberate strategy elements and emergent strategy elements make up a company's _____________ strategy.

realized

What are the key elements of a company's business model?

profit formula, customer value proposition

Pet Foods and Supplies Inc. sells dog and cat products directly to pet owners via a website. In order to maximize its customer value proposition, the company must offer valuable products along with

low prices

Pet Foods Inc. sells cat and dog products directly to pet owners via a website. Given pricing strategy described in the customer value proposition, the firm can increase its profits by

lowering costs

Which of the following are questions that can be used to identify a winning strategy?

(a) Has the strategy been used successfully in another industry?
(b) In the strategy helping the company achieve a sustainable competitive advantage?
(c) Is the strategy producing good company performance?
(d) Is the strategy a secret from competitors?
(e) How well does the strategy fit the company's situation?

b, c, e

The three tests of a winning strategy can be used to evaluate

proposed strategies, existing strategies

Which of the following statements are true regarding the evolution of a company's strategy?

(a) Changes in strategy are typically major shifts in response to failure of the current strategy or dramatic changes in market conditions
(b) Crafting strategy is always a work in progress
(c) Crafting strategy is usually a one-time process
(d) Most of the time, changes in strategy are small adjustments rather than major shifts

b, d

Strategy measures that are implemented in response to surprise developments in the market are known as __________ moves.

adaptive

The biggest portion of a company's strategy is based on

(a) targeting a narrow market niche so as to fine-tune product or service offerings
(b) reactions to immediate crises and rapidly changing market conditions
(c) finding ways to lower prices as much as possible to enhance competitive advantage over rivals
(d) ongoing actions that have proven to be successful and proactive attempts to improve finances and build a competitive advantage

d

A company's strategy is most likely to be successful when it

(a) resembles the strategy of an industry-leading competitor
(b) appeals only to a very narrow, selective target customer base
(c) is based on doing what competitors can't or don't do
(d) captures consumer interest in ways that distinguish the company from its competitors

c, d

Which of the following is not true of strategy?

(a) Companies that imitate the strategies of rivals will struggle to maintain a competitive advantage
(b) A brilliant strategy, even if poorly executed, will lead to outstanding market performance
(c) An effective and well-executed strategy improves a firm's chances of performing well in the marketplace
(d) A sound strategy and good strategy execution are the best indicators of effective management

b

Companies using a __________ strategy compete by attempting to have lower costs than competitors.

low-cost provider

Which of the following are choices that managers must make in crafting their company's strategy?

(a) How to position the company in the industry
(b) How to operate each functional area of the business
(c) How to create products or services that will attract and please customers
(d) How to compensate employees and attract top talent

a, b, c

A company's ________ consists of the actions the company takes to use its resources and capabilities to create superior value for customers.

strategy

A company achieves sustainable competitive advantage when

(a) It achieves a market share of over 50%, thereby limiting opportunities for competitors
(b) Its revenue reaches a specified target
(c) A significant number of customers develop a strong and lasting preference for its products or services
(d) It is profitable for a period of ten years or more

c

Banana Computers manufacturers products that appeal to a wide target market, and they remain competitive because they frequently introduce innovative new products that are difficult for their competitors to copy. Banana is most likely using which strategy?

broad differentiation

In a __________ strategy, a company seeks to satisfy the needs of a narrow group of customers by offering affordable prices on goods produced at a low cost.

focused low-cost provider

A company's managers should be prepared to modify strategy in response to which of the following events?

(a) Shift in manager's interests
(b) The strategy is not achieving the company's objectives
(c) The firm has identified new market opportunities
(d) Buyer tastes and preferences in the company's target market have evolved

b, c, d

Designer Handbags Inc. manufactures and sells fine leather handbags with price tags ranging from $5,000 to $10,000. Their target market is affluent women who want a prestigious brand name. Designer Handbags is competing based on which strategy?

focused differentiation

Which two kinds of improvements in performance provide the best information about whether a strategy is producing good company performance?

(a) stronger consumer response to advertising expenditures
(b) improved competitive strength and market standing
(c) improvements in employee morale
(d) growing profitability and financial strength

b, d

Which of the following strategies enhances fit with the company's situation? (choose all that apply)

(a) a strategy that works well with a company's existing strengths and resources
(b) a strategy that is based on the company's weaknesses
(c) a strategy that addresses existing market conditions
(d) a strategy that requires a firm to expand its resources

a, c

A company using a ___________ strategy seeks to provide value by keeping costs low yet providing key features or quality attributes difficult for competitors to imitate.

best-cost provider

A strategy that does not give a company a lasting advantage over its rivals fails which of the following tests of a winning strategy?

(a) "Is the strategy helping the company achieve a sustainable competitive advantage?"
(b) "How well does the strategy fit the company's situation?"
(c) "Does the strategy result in long-term profitability?"
(d) "Is the strategy producing good company performance?"

a

As a level of a company's strategy-making hierarchy, ____________ strategy focuses on the day-to-day activities of key operating units, such as factories and distribution centers.

operating

Which of the following are key corporate governance responsibilities of boards of directors? (choose all that apply)

(a) approving week-to-week planning by middle management
(b) evaluating the strategic performance of top executives
(c) offering judgements on the strategic decisions made by managers
(d) monitoring the financial accounting and reporting activities of the firm

b, c, d

What is the first step of the strategy-making process?

Developing a vision, mission, and set of values

Which of the following most accurately describes the distinction between a strategic vision and a mission statement?

(a) A strategic vision is very specific; a mission statement is very general
(b) A strategic vision portrays the company's future accomplishments; a mission statement describes the company's present purpose
(c) A strategic vision describes the company's present business and purpose; a mission statement portrays a company's future business scope
(d) A strategic vision is industry-wide; a mission statement applies to the specific company

b

A well-conceived mission statement would (choose all that apply)

(a) establish a unique identity for the company
(b) set specific profit objectives
(c) identify the company's customers or target market
(d) describe the company's products or services

a, c, d

A company's values are

(a) a statement of how the company intends to pursue its financial obligations to key shareholders
(b) the beliefs and behavioral expectations that guide a company toward achieving its objectives
(c) intended to be separately considered from the company's strategic vision and mission
(d) a compilation of legal and regulatory guidelines that must be adhered to by all employees to avoid lawsuits and government-imposed fines

b

Long-term objectives are useful because they

(a) set specific expectations for employees on a day-to-day basis
(b) emphasize performance improvements in the current period
(c) prevent a company from becoming overly focused on the near term and losing sight of larger trends and opportunities
(d) can be accurately measured, whereas short-term objectives are vague and difficult to quantify

c

When setting objectives, a company should include performance targets for which of the following? (choose all that apply)

(a) individual work units
(b) product lines
(c) macro-environment forces
(d) departments

a, b, d

A ___________ combines both strategic and financial objectives, allowing managers to achieve a complete assessment of a company's performance.

balanced scorecard

When a company reaches a strategic inflection point

(a) the strategy has been deemed a success
(b) the company should toss out its old strategy without further analysis
(c) a new strategy should be immediately implemented
(d) management must weight the benefits of changing strategy against the risks of changing course

d

Which of the following statements correctly describes a strategic plan?

(a) It provides a road map for the company to meet its strategic and financial objectives
(b) It is a set of detailed, measurable objectives for the company
(c) It includes all five steps of the strategy-making, strategy-executing process
(d) It is a plan for how to imitate and improve upon competitor's strategic moves

a

Evaluating company performance and making corrective adjustments (choose all that apply)

(a) is necessary only when the company's strategic vision changes significantly
(b) is an ongoing process
(c) is important in understanding how well strategy is being executed
(d) helps management determine whether to maintain or alter the company's vision, objectives, and strategy

b, c, d

Which of the following are problems with some company strategic vision statements? (choose all that apply)

(a) They don't specify the company's future focus
(b) They are vague and unrevealing
(c) They are general and could apply to most any company in any industry
(d) They force the company to commit to a specific course of action

a, b, c

Which of the following are recommendations for making a company's strategic vision effective in moving the company in the intended direction? (choose all that apply)

(a) The vision statement should be distributed organization-wide
(b) Company executives should personally explain the vision to as many people as possible
(c) The strategic vision should be considered a legal formality, not as a motivational document
(d) The "where are we going and why" of the strategic vision should be put in writing

a, b, d

As a step in the strategy-formulating, strategy-executing process, setting objectives

(a) is generally not necessary
(b) involves creating a vision, mission, and core values
(c) helps the company measure and track performance and progress
(d) is the execution aspect of strategy

c

As a level in the strategy-making hierarchy, corporate strategy

(a) is developed by functional unit managers and operating managers
(b) is a broad plan for managing all businesses in a multibusiness company
(c) is a collection of strategic initiatives and actions devised by managers up and down the hierarchy
(d) is focused on achieving certain objectives in a single business owned by a multibusiness company

b

In a single-business company, business strategy consists of both

(a) functional area and operating strategies
(b) nondiversified and functional-area strategies
(c) corporate and business strategies
(d) corporate and operating strategies

c

Which of the following statements is NOT true of a company's functional-area strategies?

(a) Responsibility for them is delegated to the heads of the respective functions
(b) They are at the lowest level of the strategy-making hierarchy
(c) The strategies of the various functional units should be compatible rather than having separate, narrow purposes
(d) They are focused on particular functions or processes within a business

b

A company's strategic vision communicates which of the following to stakeholders?

(a) "What is our current strategic plan?"
(b) "What is our current mission?"
(c) "Where are we going?"
(d) "How profitable is our strategy?"

c

Which of the following is NOT a characteristic of a "good" vision statement?

(a) clearly indicated the company's focus
(b) distinctive
(c) generalized to the industry
(d) specific to the company

c

For a strategic vision to function as a valuable managerial tool, it must (choose all that apply)

(a) clearly communicate what management wants the business to look like
(b) be useful to managers in making strategic decisions
(c) be explicit about the company's position in the future
(d) describe the nature of the business as it currently exists

a, b, c

Attaining financial objectives is important because

(a) they are more important than strategic objectives
(b) they indicate company's future business prospects
(c) it ensures the company's visibility over the long term
(d) they are short-term measures of marketing success

c

Attainment of strategic objectives

(a) is less important than attaining financial objectives
(b) is useful only for evaluation of the company's current and past performance
(c) is a lagging indicator that reflect the results of past decisions
(d) is a leading indicator, providing evidence of a company's prospects and future financial performance

d

A company's ______________ objectives communicate management's targets for revenues, profits or investment returns, whereas __________ objectives are related to a company's competitive strength and market position

financial, strategic

A company can show strategic intent in which of the following ways (choose all that apply)

(a) by considering the pros and cons of pursuing a specific strategic objective
(b) by focusing all of its resources on achieving a strategic objective
(c) by channeling its competitive actions in seeking a strategic objective
(d) by pursuing an ambitious strategic objective relentlessly

b, c, d

Company managers use stretch goals for which of the following purposes? (choose all that apply)

(a) to get the company to reach its full potential
(b) to spur the company to better financial performance
(c) to push the company to be more inventive
(d) to maintain the company's status

a, b, c

Which of the following are key aspects to managing the strategy execution process? (choose all that apply)

(a) creating a conductive company culture
(b) staffing the organization to provide the needed expertise
(c) presenting the proper internal leadership
(d) providing employees rewards not linked directly to performance objectives

a, b, c

T/F The purpose of setting objectives is to convert the company's strategic vision into a broad road map for the future.

false (specific road map)

Crafting strategy

(a) is not generally a collaborative team effort
(b) is often a process that includes managers up and down the whole organizational hierarchy
(c) is rarely delegated to managers of specific work units
(d) is almost always something that only high-level executives do

b

Hiring employees, determining incentives for achieving objectives, maintaining a productive work environment, and installing information and operating systems are all part if which stage of strategic management?

(a) crafting strategy to achieve objectives and move the company along the intended path
(b) evaluating performance and initiating corrective adjustments
(c) setting objectives for measuring company performance
(d) implementing and executing the chosen strategy

d

When a manager has evidence that a strategy is falling to achieve the company's objectives, the manager should

(a) completely reverse course and develop an entirely new strategy
(b) invest more money in the chosen strategy to ensure it is successful
(c) adjust the strategy as needed in the first four stages of the strategy process
(d) do nothing; wait to see if things get better

c

A strategic objective should be both concrete and measurable in order to be a valuable management tool. Which of the following is the best example of an objective that is a valuable management tool?

(a) increase sales by 5% over the next fiscal year
(b) reduce costs
(c) increase sales
(d) maximize profits in the near future

a

Which of the following is not a desirable characteristic of an effective board of directors?

(a) The board advises management as needed
(b) The board considers the merits of important decisions and actions
(c) The board confirms that the CEO is acting in the best interest of shareholders
(d) The board refrains from challenging the CEO's decisions out of respect for his or her authority

d

Proficient strategy execution

(a) indicated that corrective adjustments will rarely need to be made
(b) is the result of an organization learning from its mistakes
(c) is almost always achieved quickly
(d) is almost always achieved very slowly

b

Evaluating company performance and making corrective adjustments (choose all that apply)

(a) is necessary only when the company's strategic vision changes significantly
(b) helps management determine whether to maintain or alter the company's vision, objectives, and strategy
(c) is an ongoing process
(d) is important in understanding how well strategy is being executed

b, c, d

From one industry to another, competitive forces

(a) can be understood piecemeal instead of holistically
(b) are consistent
(c) are never the same
(d) are either very strong or very weak

c

Which of the following are factors in a company's macro-environment? (choose all that apply)

(a) internal employee relations
(b) technological factors
(c) economic conditions
(d) regulatory factors

b, c, d

To sift through information and construct strategic profiles of rivals, some firms form a competitive ___________________ unit

intelligence

Buyer bargaining power is weakest when buyers

(a) can demand concessions for large quantities of purchases
(b) are likely to switch to competing brands due to cost
(c) are a threat to integrate backwards into the business
(d) place a great deal of importance on the brand reputation

d

The competitive force of substitute products is strong when

(a) acceptable substitutes are not available
(b) end users face high costs when switching to substitutes
(c) substitutes are more highly priced relative to the performance they deliver
(d) substitutes are attractively priced

d

When suppliers have sufficient ___________________ power, they can influence the terms and conditions of what they supply to producers.

bargaining

After graduating from college, Jake is considering starting a business, either a pizza restaurant or a commercial airline. Compared to the airline industry, the pizza restaurant industry likely has _____________ entry barriers.

lower

Of the five competitive forces, the strongest is almost always

(a) the demand curve
(b) the rivalry of competing sellers
(c) the supply curve
(d) the market's tendency to grow over time

b

As the collective impact of the five competitive forces increases, the combined profitability of industry participants ______________

decreases

Assessing a rival's assumptions entails which of the following? (choose all that apply)

(a) considering assumptions about the industry in which the rival competes
(b) reviewing available information issued by the rival
(c) considering its assumptions about itself
(d) revising the definition of "assumption" to make it broader

a, b, c

Buyer bargaining power is strong when

(a) buyers place high importance on brand reputation
(b) buyers make purchases in small quantities
(c) demand is weak
(d) the cost of switching to a competing brand is high

c

When a company has good information about the strategic direction of key competitors, the company can do which of the following? (Choose all that apply)

(a) prepare defensive countermoves
(b) exploit opportunities provided by the competitors' actions
(c) file preemptive lawsuits against competitors
(d) craft an effective strategy of its own

a, b, d

Which of the following statements are true about evaluating an industry for profit potential? (choose all that apply)

(a) a company needs to analyze prevailing driving forces to determine if they will affect profitability favorably
(b) some potential entrants to an industry may consider it attractive while others do not
(c) a particular industry will be equally attractive or unattractive to all industry participants
(d) an industry's growth potential is an important factor in its profitability

a, b, d

Which of the following are strongly influenced by driving forces? (choose all that apply)

(a) the number of employees in a firm
(b) the industry landscape
(c) the route of transportation vehicles
(d) the competitive conditions

b, d

Which of the following steps are part of driving forces analysis? (choose all that apply)

(a) Assess whether the drivers of change are acting to make the industry more or less attractive
(b) Determine what strategy changes are needed to prepare for the impact of the driving forces
(c) Identify what the driving forces are
(d) Evaluate the current characteristics of the industry environment

a, b, c

When analyzing driving forces, it is important to determine whether the driving forces are making the industry environment

(a) bigger or smaller
(b) more or less technical
(c) more or less attractive
(d) local or global

c

T/F A driving forces analysis is useful in understanding the macro-environment of an industry but not in directly influencing strategic choices.

false

Technological change, marketing innovation, and innovation in manufacturing processes are all types of industry driving _____________.

forces

Which of the following is NOT a likely key success factor?

(a) product attributes
(b) strategy elements
(c) competitive capabilities
(d) rivals' assumptions

d

The most important revelation to be gleaned from strategic group maps is identifying

(a) the firms who have gone out of business
(b) near and far suppliers
(c) close and distant rivals
(d) the number of firms in a given country

c

A good example of a manufacturing key success factor is

(a) patent protection
(b) high labor productivity
(c) national or global distribution capabilities
(d) strong e-commerce capabilities

b

Which of the following strategic questions can be used to assess a company's industry and competitive environment? (choose all that apply)

(a) What are the key factors of competitive success?
(b) Does the industry outlook offer good prospects for profitability?
(c) What strategic moves should the company make to reduce overhead in the short term?
(d) What strategic moves are rivals likely to make next?

a, b, d

Which of the following are guidelines that should be followed in creating a strategic group map? (choose all that apply)

(a) The sizes of the map circles should be proportional to the combined sales of firms in each strategic group
(b) Creating multiple maps should be considered if there are more than two good competitive variables
(c) The two variables selected for the map axes should not be highly correlated
(d) The variables used as map axes should always be quantitative and continuous

a, b, c

Which of the following are examples of industry driving forces? (choose all that apply)

(a) changes in who buys the product and how they use it
(b) changes in currency valuation around the globe
(c) increasing globalization
(d) product innovation

a, c, d

The best technique for identifying the market position of industry rivals is a

(a) five-forces analysis
(b) driving forces analysis
(c) SWOT analysis
(d) strategic group map

d

When buyer demand drops off suddenly, rivals

(a) concede volume losses to each other
(b) battle for market share
(c) seek a smaller share of volume
(d) often close temporarily

b

As part of a SWOT analysis, "costly new regulatory requirements" would be a

threat

A SWOT analysis is used to (choose all that apply)

(a) analyze the industry five-forces at a company level
(b) evaluate the strengths and weaknesses of a company's resources
(c) evaluate a company's ability to pursue market opportunities and defend against threats
(d) predict which competitors are most likely to grab market share

b, c

The outcome of a competitive strength assessment is to

(a) identify the key success factors that have the most impact on the competitiveness of rivals in a given industry
(b) develop an accurate method for assigning strength weightings to each competitive measure
(c) determine the company's external threats that must be remedied in order to remain competitive with the industry
(d) reach an informed and specific understanding of the company's competitive advantages or disadvantages to other firms in the industry

d

These are all indicators of how well a company's strategy is working, but which two are the best indicators?

(a) gains in financial strength and profitability
(b) improvement in competitive strength and market standing
(c) change in company image and reputation with customers
(d) customer retention rate

a, b

Competitively valuable resources tend to be rate, hard to copy, and

(a) not easily replaced by rivals' substitute resources
(b) expensive and time consuming to develop
(c) almost always patented or copyrighted
(d) difficult to quantify

a

Which of the following strategic approaches can be used to remedy internal cost disadvantages? (choose all that apply)

(a) Detour around the activities or items where costs are high
(b) Relocate manufacturing to geographic areas with lower costs
(c) Hire more production workers to increase output
(d) Invest in productivity-enhancing equipment or technology
(e) Outsource internally performed activities to vendors who can do them more cheaply

a, b, d, e

Sweet Tooth Baking has experienced eroding profit margins due to the rising cost of inputs such as flour and sugar. This is an example of a(n) _____________ cost disadvantage.

supplier-related

Exercise equipment manufacturer Heavyweight, Inc. has experienced disappointing financial results due to the costs associated with shipping its products to wholesalers. This is an example of a(n) _____________ cost disadvantage.

forward channel ally

A company's value chain consists of (choose all that apply)

(a) the company's customer base
(b) secondary activities that support the performance of primary activities
(c) primary activities that create value for customers
(d) the company's managers and other employees

b, c

The purposes of __________ are to identify which companies are best at performing particular activities to emulate those best practices to improve the cost and effectiveness of the company's own internal activities.

benchmarking

Acme Inc. sends some of its managers on a field trip to another company in the industry to observe their practices and processes. This is an example of

benchmarking

An accurate assessment of a company's cost structure and customer value proposition requires that managers

(a) understand the value system for the entire industry
(b) evaluate the specific value chain activities under their control
(c) separate their activities from those of their distribution channel allies
(d) examine current accounting data

a

A company's resources can include

(a) external assets, such as rising consumer demand
(b) financial assets, such as cash reserves and available credit
(c) intangible assets, such as a reputation for quality
(d) physical assets, such as plants and equipment

b, c, d

Which of the following is not true about capabilities?

(a) They rely on tangible resources of the company only
(b) They an take multiple forms and vary in importance
(c) Some capabilities create more competitive advantage than others
(d) They are developed through the use of company resources

a

Substitute resources

(a) allow a company to match head-on the resources of a competitor
(b) result in lower profitability even if higher market share is obtained
(c) can make a rival's competitively valuable resources and capabilities less of an advantage
(d) are unlikely lead to competitive advantage

c

A company possessing a ___________ is proficient in altering its resources and capabilities to remain competitive

dynamic capability

A ___________ is a tool for evaluating a company's internal strengths and competitive deficiencies, emergent market opportunities, and external threats

SWOT analysis

In doing a SWOT analysis, "better product quality than rivals" would be a

strength

In doing a SWOT analysis, which of the following is the best example of a market opportunity?

(a) good supply chain management capabilities
(b) economies of scale
(c) product innovation capabilities
(d) falling trade barriers in attractive foreign markets

d

As part of SWOT analysis, which of the following is the best example of internal weaknesses?

(a) Costly new regulatory requirements
(b) Higher overall unit costs relative to competitors
(c) Shift in buyer needs away from the industry's products
(d) Slowdowns in market growth

b

The most important "payoff" from conducting a SWOT analysis is

(a) an understanding of whether the company's financial situation and stock price compares favorably with competitors
(b) the resulting list of strengths, weaknesses, opportunities, and threats
(c) the strategy suggestions that emerge from a thorough analysis of the results
(d) improved knowledge of consumer demands and important trends among competitors

c

Which of the following is an example of a tangible company resource?

(a) experienced workforce
(b) proven managerial know-how
(c) distribution centers
(d) buyer loyalty

c

A company that lacks a competitively powerful stand-alone resource

(a) is likely to be a failure in the marketplace
(b) may attempt to develop a competitive advantage through resource bundling
(c) must continue searching for a resource that passes five tests of competitive power
(d) will be unable to develop competencies through cross-functional efforts

b

Why is it important for managers to understand a company's resources and capabilities? (choose all that apply)

(a) In order to execute a strategy efficiently, companies should avoid exploiting resources that are rate and hard to copy
(b) Deficient resources and capabilities are unlikely to create customer value
(c) Evaluating a company's resources and capabilities helps identify their potential for giving the company a lasting competitive edge over rivals
(d) A company's business model and strategy must be compatible with its existing resources and capabilities

b, c, d

A company's "worry list" could include (choose all that apply)

(a) external threats and challenges within the industry
(b) potential downturns in the macroeconomy
(c) internal weaknesses that need fixing
(d) problems throughout the value chain that require immediate attention

a, c, d

Comparing a company's advantages and disadvantages as well as its likelihood of market success to those rival firms

(a) is a waste of management's time
(b) reveals more about competitors than the company itself
(c) is an important part of understanding the company's overall competitive strength
(d) should only be performed by large companies with a significant number of powerful competitors

c

A company's competitive strength ratings offer guidelines

(a) to indicate whether the company has a sustainable competitive advantage
(b) to show where costs can be contained in the company's value chain activities
(c) to show whether the company's strategies are profitable
(d) for offensive and defensive strategies the company could pursue to outcompete rivals

d

The outcome of a competitive strength assessment is to

(a) determine the company's external threats that must be remedied in order to remain competitive within the industry
(b) reach an informed and specific understanding of the company's competitive advantages or disadvantages relative to other firms in the industry
(c) identify the key success factors that have the most impact on the competitiveness of the rivals in a given industry
(d) develop an accurate method for assigning strength weightings to each competitive measure

b

A company's competitive strength scores indicate

(a) how customers perceive the image and reputation of the company's products or services
(b) whether the company is at a net advantage or disadvantage relative to competitors
(c) the overall attractiveness of the industry in which the company company competes
(d) the value of benchmarking data that can be used to adjust internal processes for more cost-effectiveness

b

A successful differentiation strategy allows a company to do which of the following? (choose all that apply)

(a) increase unit sales
(b) gain buyer loyalty to a brand
(c) command a premium price
(d) reduce the features a product has

a, b, c

A differentiation strategy has the most success when which of the following are true? (choose all that apply)

(a) The differentiation is easy for rivals to imitate
(b) The differentiation is hard for rivals to imitate
(c) The differentiation is expensive for rivals to imitate
(d) The differentiation is based on service rather than product innovation

b, c

Which of the following are value chain activities that can enhance differentiation?

(a) product innovations and technological advances
(b) strict quality specifications on raw material from suppliers
(c) superior product features and performance
(d) resourceful attempts to clone features of products from successful competitors

a, b, c (an investing in production-related R&D activities, pursuing continuous quality improvement, emphasizing human resource management activities that improve skills expertise and knowledge of company personnel, increasing emphasis on marketing and brand-building activities, improving customer service or adding additional services)

In which of the following ways can a company make its products more economical for buyers? (choose all that apply)

(a) by reducing product reliability to reduce maintenance costs
(b) by providing free technical support
(c) by reducing the buyer's raw materials waste
(d) by reducing a buyer's inventory requirements

b, c, d

As part of a differentiation strategy, signaling value is as important as real value in which of the following situations? (choose all that apply)

(a) when buyers are making a first-time purchase
(b) when buyers are highly sophisticated
(c) when repurchase is infrequent
(d) when the nature of differentiation is hard to quantify

a, c, d (also when buyers are unsophisticated)

Differentiation strategies tend to work best when

(a) technological change in the industry is slow-paced
(b) many rival firms are following the same approach to differentiation
(c) competition is based on features that undergo little change
(d) buyers' needs and uses of a product are diverse

d (There are many ways to differentiate the product or service that has value to buyers, few rival firms are following a similar differentiation, technological change is fast-paced and competition revolves around rapidly evolving product features)

Overdifferentiating so that product quality or service exceeds buyers' needs

(a) is a common mistake companies make in trying to compete using a differentiation strategy
(b) is necessary for sustainable competitive advantage
(c) is a good strategy to ward off competitors' efforts at imitating differentiating features
(d) is an effective way to compete in a price-sensitive market

a

Differentiation that is based on which of the following yields a more durable and profitable competitive edge? (choose all that apply)

(a) product reliability
(b) technical leadership
(c) cosmetic changes to established products
(d) superior customer service

a, b, d

Only when prices are cut by less than the size of the cost advantage or the added volume makes up for lower margins per unit does a low-cost/ ________________-___________________ advantage result in improved profitability

low-price

A broad differentiation strategy

(a) is based on offering a unique product or service that a wide range of buyers find appealing and worth paying for
(b) is mostly based on clever advertising capabilities
(c) is only sustainable with higher-end, more expensive products
(d) appeals to customers who don't tend to be particularly loyal to a brand and who will willingly switch to a different brand if it costs less

a

A company that incorporates appealing features, good-to-excellent product performance, and more satisfying customer service into its product offering at a lower cost than rivals is using a(n) _________________ strategy

best-cost

Substituting lower-cost inputs when there is no loss in product quality and trying to capture all available economies of scale are two approaches for managing the cost drivers in a company's _____________ chain

value

Which of the following describes how a focused competitive strategy differs from overall low-cost and broad differentiation strategies?

(a) It is substitutable for situations where the target market is difficult to define
(b) It is not suitable for use by a large company
(c) It places greater emphasis on quality and customer service
(d) It concentrates on a narrow piece of the total market

d

Which of the following are among the common competitive strategy options? (choose all that apply)

(a) best-cost provider strategy
(b) overall, or broad, low-cost provider strategy
(c) differentiated unfocused strategy
(d) broad differentiation strategy

a, b, d

In general, a company's competitive strategy included which of the following? (choose all that apply)

(a) responding to changes in market conditions
(b) securing a competitive advantage versus rivals
(c) efforts to please customers
(d) imitating competitors' product or service offerings

a, b, c

Which of the following are potential cost drivers that managers can seek to contain? (choose all that apply)

(a) the size of a company's product line
(b) employee benefits packages
(c) the components used in product assembly
(d) governmental regulatory requirements

a, b, c (also its capacity utilization)

Reengineering the company's value chain to achieve significant cost advantages can include which of the following? (choose all that apply)

(a) streamlining operations by eliminating low value-added or unnecessary activities
(b) selling directly to consumers by circumventing distributors and dealers
(c) reducing materials handling and shipping costs
(d) reducing manufacturing capacity to lower fixed overhead costs

a, b, c

When buyers incur low costs in switching their purchases from one seller to another, a _____________ strategy works best

low-cost provider

The difference between a low-cost provider strategy and a focused low-cost strategy is

(a) the company's willingness to accept a lower profit margin
(b) the length of the value chain
(c) the uniqueness of the product or service
(d) the size of the company's targeted buyer group

d

With a focused differentiation strategy, a company focuses on the needs of

(a) diverse market segments
(b) many buyers groups
(c) a well-defined group of buyers
(d) consumers abroad

c

T/F Focused low-cost and focused differentiation strategies carry very little risk for the companies that make use of them

false

Which competitive strategies target a broad range of customers? (multiple)

broad differentiation strategy, low-cost provider strategy

A company achieves a successful low-cost provider strategy by

(a) offering only frills-free products or services
(b) boasting lower costs than rivals, but not necessarily the absolutely lowest cost
(c) always having the rock-bottom lowest cost in the industry regardless of profit margins
(d) being one of several competitors in the industry with low costs

b

Which of the following are avenues for performing value chain activities at a lower cost? (choose all that apply)

(a) conducting essential value activities more cost-effectively than rivals
(b) increasing costs across the value chain so that they are more than competitors' costs
(c) avoiding both outsourcing and vertical integration
(d) changing the value chain to streamline the process

a, d

When a company strives to achieve lower overall costs than rivals and appeals to a broad spectrum of customers, it pursues a

overall low-cost provider strategy

Which of the following resources would be a good fit for a firm pursuing a low-cost provider strategy? (choose all that apply)

(a) the technology to add unique features to its products
(b) the expertise to manage its value chain more cost-effectively than its rivals can
(c) the customer service expertise to make its products more appealing to customers
(d) the innovative capability to bypass value chain activities needed by its rivals

b, d

The essential challenge of a best-cost provider strategy is to

(a) become the low-cost leader of its industry
(b) to add as many features to its products as possible
(c) add differentiating features without significantly increasing costs
(d) become a high-end differentiator within its industry

c

Which competitive strategy works well during an economic recession when many buyers become value-conscious yet seek products and services with appealing attributes?

best cost

A focused low-cost or focused differentiation strategy is attractive under which of the following conditions? (choose all that apply)

(a) the target niche market is extremely small in number
(b) industry leaders have chosen not to compete in the niche market
(c) few rivals are attempting to specialize in the same target market
(d) it is costly or difficult for rivals to meet the specialized needs of niche buyers

b, c, d

A __________ strategy works best in markets where product differentiation is the norm and large numbers of value-conscious buyers will purchase midrange products

best-cost

Why is it important for managers to understand a company's resources and capabilities quizlet?

Why are resources and capabilities important to a business?

Why is it important to know a firms source of capabilities and resources?

How important is the company's resources and capabilities in contributing to a competitive advantage?