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| 1 | |
Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies? |
| | A) | How best to tailor the company's strategy to such industry conditions as rapid growth, slow growth or market stagnation |
| | B) | Whether to bolster the company's market position and competitiveness via acquisition or merger |
| | C) | Whether to employ a low-end strategy or a middle-of-the-road strategy or a high-end strategy |
| | D) | Whether to integrate forward or backward into more stages of the industry value chain |
| | E) | Whether to enter into strategic alliances or collaborative partnerships |
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| 2 | |
Which one of the following is not a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement? |
| | A) | The alliance involves joint contribution of resources and is mutually beneficial. |
| | B) | The alliance helps block a competitive threat or open up new market opportunities. |
| | C) | The alliance helps mitigate a significant risk to a company's business. |
| | D) | The alliance helps build, enhance, or sustain a core competence or competitive advantage. |
| | E) | The alliance is critical to the company's achievement of an important objective. |
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| 3 | |
Companies are motivated to enter into strategic alliances or cooperative arrangements |
| | A) | to expedite the development of promising new technologies or products. |
| | B) | to bring together the personnel and expertise needed to create desirable new skill sets and capabilities to improve supply chain efficiency, and/or gain economies of scale in production and/or marketing. |
| | C) | to acquire or improve market access through joint marketing agreements. |
| | D) | to help win the race against rivals for global market leadership or to seize opportunities on the frontiers of advancing technology and build the resource strengths and business capabilities to compete successfully in the industries and product markets of the future. |
| | E) | All of these. |
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| 4 | |
The best strategic alliances |
| | A) | aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation. |
| | B) | are those whose purpose is helping a company master a new technology. |
| | C) | are those formed to enable the partners to be consistent first movers or fast followers. |
| | D) | are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit. |
| | E) | aim at insulating the partners against the impacts of the five competitive forces and industry driving forces. |
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| 5 | |
Companies racing against rivals for global market leadership often utilize strategic alliances and collaborative partnerships with companies in foreign countries in order to |
| | A) | better master new technologies, combat the bargaining power of foreign suppliers and foreign buyers, and facilitate global vertical integration. |
| | B) | build a bigger customer base quickly and better differentiate their product offerings. |
| | C) | win stronger brand name recognition among foreign buyers. |
| | D) | get into critical country markets quickly and accelerate the process of building a potent global market presence, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. |
| | E) | gain better control over their foreign-related transportation and logistics costs. |
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| 6 | |
Which of the following is not a typical reason that many alliances prove unstable or break apart? |
| | A) | Inability to work well together |
| | B) | Mounting competition between one or more allies in the marketplace |
| | C) | Changing conditions that render the purpose of the alliance obsolete and the emergence of more attractive technological paths |
| | D) | Disagreement over how to divide the added market share and profits gained from joint collaboration |
| | E) | Diverging objectives and strategic priorities |
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| 7 | |
Mergers and acquisitions are a much used strategy because they are an effective means of |
| | A) | revamping a company's value chain. |
| | B) | facilitating the employment of both offensive and defensive strategies. |
| | C) | creating a more cost-efficient operation, expanding a company's geographic coverage, and extending a company's business into new product categories. |
| | D) | gaining quick access to new technologies or other resources and competitive capabilities and trying to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities. |
| | E) | Both C and D. |
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| 8 | |
Which one of the following statements about merger and acquisition strategies is true? |
| | A) | Merger and acquisition strategies are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. |
| | B) | Merger and acquisition strategies tend to be far more successful that forming strategic alliances and cooperative partnerships with other companies. |
| | C) | Merger and acquisition strategies often do not produce the hoped-for outcomes—examples of mergers/acquisitions where the results have been disappointing include the merger of AOL and Time Warner, the merger of Daimler Benz and Chrysler, Hewlett-Packard's acquisition of Compaq Computer, Ford's acquisition of Jaguar, and Best Buy's acquisition of Musicland. |
| | D) | Mergers and acquisition strategies are a very high-risk strategy because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. |
| | E) | Merger and acquisition strategies are one of the best ways for helping a company strengthen its brand image. |
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| 9 | |
Which of the following is not a potential advantage of backward vertical integration? |
| | A) | Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage |
| | B) | Reduced risk of disruptions in the supply and delivery of crucial materials and components |
| | C) | Reduced costs for items purchased from suppliers (if internal manufacture is more economical than buying from powerful suppliers who have big profit margins and provided entry barriers into a supplier's business are low or can be hurdled) |
| | D) | Enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality |
| | E) | Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity) |
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| 10 | |
Which of the following is typically the strategic impetus for forward vertical integration? |
| | A) | To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers |
| | B) | To make it easier to expand the company's product line |
| | C) | To gain better access to end users and better market visibility |
| | D) | To achieve greater control over advertising and in-store retail merchandising |
| | E) | To gain better access to greater economies of scale |
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| 11 | |
Which of the following is not a strategic disadvantage of vertical integration? |
| | A) | It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs. |
| | B) | Vertical integration poses all kinds of capacity-matching problems. |
| | C) | It boosts a firm's capital investment in the industry and thus increases business risk if the industry becomes unattractive later. |
| | D) | Integrating forward or backward can entail taking on the performance of value chain activities that require radically different skills and business capabilities than the firm possesses. |
| | E) | Vertical integration backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components (it is easier to change out parts and components made by outside suppliers than those made in-house). |
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| 12 | |
Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders? |
| | A) | Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company's Web site. |
| | B) | Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best |
| | C) | Improving the company's ability to innovate by allying with "world-class" suppliers who have cutting edge intellectual capital and are first-to-market with next-generation parts and components |
| | D) | Being able to speedily and efficiently assemble diverse kinds of competitively valuable expertise |
| | E) | Obtaining higher quality and/or cheaper components or services |
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| 13 | |
Which of the following is not an aspect of the strategy-making challenge associated with competing in emerging industries? |
| | A) | Strong learning and experience curve effects may be present, allowing significant price reductions as volume builds and costs fall |
| | B) | Many potential buyers expect first-generation products to be rapidly improved and delay their purchase until technology and product design mature |
| | C) | The marketing challenge is to induce first-time purchase and overcome customer concerns about product features, performance reliability, and conflicting claims of rival firms |
| | D) | Whether to compete locally, regionally, nationally, internationally or globally |
| | E) | There are often uncertainties surrounding an emerging industry's technology and there may also be no consensus regarding which product attributes will prove decisive in winning buyer favor |
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| 14 | |
Which one of the following is not likely to be a suitable strategy option for companies competing in rapid-growth industries? |
| | A) | Driving down costs per unit so as to enable price reductions that attract droves of new customers |
| | B) | Pursuing rapid product innovation, both to set a company's product offering apart from rivals and to incorporate attributes that appeal to growing numbers of customers |
| | C) | Gaining access to additional distributional channels and sales outlets |
| | D) | Expanding the product line to add models/styles that appeal to a wider range of buyers |
| | E) | Putting top priority on heavy advertising and other marketing-related actions calculated to strongly differentiate its product offering from rivals |
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| 15 | |
Which one of the following statements does not represent one of the typical fundamental changes in an industry as it approaches maturity? |
| | A) | Firms encounter growing difficulty in coming up with new product innovations and developing new uses and applications for the product |
| | B) | The established rules of competition disintegrate, market conditions become quite turbulent, and business risk increases because of growing uncertainty about whether the industry will stagnate |
| | C) | Industry profitability falls temporarily or permanently, international competition increases, and mergers and acquisitions that drive industry consolidation to a smaller number of larger players |
| | D) | Greater head-to-head competition for market share and increased competitive emphasis on lowering costs and improving service |
| | E) | Buyers become more sophisticated and often drive a hard bargain on repeat purchases |
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| 16 | |
A slow-exit type of end-game strategy involves |
| | A) | a gradual phasing down of operations coupled with an objective of generating the greatest possible harvest of cash from the business for as long as possible. |
| | B) | selling off assets gradually and liquidating the business over a period of 5-10 years. |
| | C) | gradually reducing the size of the company's customer base, starting with the least profitable customers and moving steadily toward the most profitable customers—with the intent of selling out to the highest bidder when the business starts to become unprofitable. |
| | D) | withdrawing, one by one, from the various country markets where the firm competes and gradually retreating to the country market where sales and profits are highest. |
| | E) | pruning the operating budget by 5-10 percent annually and outsourcing more and more value chain activities to outside suppliers. |
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| 17 | |
In trying to cope with a turbulent, high-velocity market environment, a company |
| | A) | should usually put a strong emphasis on short-term profitability rather than worrying excessively about building and strengthening the company's long-term market position—the direction of market change is too volatile and unknowable to put much time into worrying about the long-term. |
| | B) | can assume any of three strategic postures—it can react to change, it can anticipate change, and it can lead change; typically all three postures will have to be employed at one time or another (though not in the same proportion). |
| | C) | should strive to be a fast follower and occasionally a slow-mover (like when the actions of early movers involve adoption of a radically different technological approach)—being an aggressive first mover carries too much risk and can dismay shareholders. |
| | D) | generally needs to put most of its strategic emphasis on defensive-type strategies because offensive strategies are so risky. |
| | E) | is well-advised to compete with a broad differentiation or best-cost strategy. |
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| 18 | |
Which of the following is unlikely to be a promising option for competing in a fragmented industry? |
| | A) | Employing deep price discounting, extensive advertising, and other muscle-flexing maneuvers to gain market dominance in a select few country markets |
| | B) | Specializing by product type or becoming a low-cost operator |
| | C) | Specializing by customer type |
| | D) | Focusing on a limited geographic area |
| | E) | Constructing and operating "formula" facilities at many different locations |
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| 19 | |
A blue ocean type of offensive strategy |
| | A) | is a pre-emptive strike type of price-cutting offensive used by a market leader to steal customers away from higher-priced rivals. |
| | B) | 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. |
| | C) | involves deliberately attacking those market segments where a key rival makes big profits. |
| | D) | involves using innovative advertising and deep price discounts to grab sales and market share from complacent or distracted rivals. |
| | E) | employs highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals. |
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| 20 | |
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff? |
| | A) | When pioneering helps build up a firm's image and reputation with buyers |
| | B) | When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases |
| | C) | When late movers can copy a successful pioneer's moves quickly and at lower cost |
| | D) | When moving first can constitute a preemptive strike, making imitation extra hard or unlikely |
| | E) | When moving first can result in a cost advantage over rivals |
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