Homework answers / question archive / Chapter 4   Strategic Management 1) A firm's ability to provide value to customers that exceeds what competitors can provide is called competitive advantage

Chapter 4   Strategic Management 1) A firm's ability to provide value to customers that exceeds what competitors can provide is called competitive advantage

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Chapter 4   Strategic Management

1) A firm's ability to provide value to customers that exceeds what competitors can provide is called competitive advantage.

 

 

 

2) A pizzeria in Milford always delivers its orders within 15 minutes. The other pizzerias have failed in their efforts to do so. This is an example of a comparative advantage.

 

 

 

3) Brand recognition can last a long time and may take years to deteriorate.

 

 

 

4) Statements of strategic intent are typically longer than mission statements.

 

 

5) The components of a mission statement include company philosophy, customers and markets, and geographic focus.

 

 

 

 

6) The general environment's effects on a business are very direct.

 

 

7) Managers need to focus on two basic dimensions of the technology environment: product and process changes.

 

 

 

8) Process technological changes are those that lead to completely new products as well as new features and capabilities for existing products.

 

 

9) In an industrial company, such as a manufacturer of automobiles, employees are its primary assets.

 

 

 

10) As a dimension of the external business environment in a foreign country, physical forces include rules, policies, and enforcement processes.

 

 

 

11) The balance of power between a firm and its customers affects its ability to compete effectively and earn above-average returns.

 

 

 

12) The supply chain consists of a set of key activities that directly produce (or support the production of) the products or services that a firm offers to its customers.

 

 

13) According to Michael Porter, primary activities facilitate the creation of a product or service and its transfer to the customer.

 

 

 

14) The strengths and weaknesses of a company's business partners throughout the entire value network have little effect on the competitive position and advantage of the firm.

 

 

 

15) In SWOT analysis, strengths and weaknesses are internal characteristics, whereas, opportunities and threats are external characteristics.

 

 

 

16) Unless an organization translates its strategic intent and mission into specific goals, they will remain statements of good intentions and unrealized achievements.

 

 

 

17) Corporate-level strategy is the most important for achieving a competitive advantage.

 

 

 

18) A firm can limit its strategic scope by focusing on a specific customer segment.

 

 

19) A firm can use a multipoint competitive strategy to compete with firms across markets by using strengths in one market to overcome weaknesses in another market.

 

 

 

20) The key to successful strategy implementation is having an internal organization that is consistent with and supportive of the strategy.

 

 

 

21) The concept of ________ is the ability of a firm to provide value to customers that exceeds what competitors can provide.

A) strategic management

B) distinctive competence

C) competitive advantage

D) core competence

 

 

 

 

22) Nobelle, a chocolatier based in France, produces candy containing exotic ingredients from the rain forests of Brazil. The ingredients are provided by a single supplier who has an exclusive contract with Nobelle. The chocolate manufacturer thus has a great deal of power over the market. This is an example of ________.

A) strategic management

B) distinctive competence

C) competitive advantage

D) strategic vision

 

 

23) Crystal is a vintage champagne, meaning that the champagne is made in the best years for wine production and all grapes used to make the wine are harvested in the same year. No other champagne can match this quality. Crystal has a ________.

A) consistent advantage

B) competitive advantage

C) strategic vision

D) production advantage

 

 

 

24) Which one of the following is necessary if a firm is to maintain a competitive advantage?

A) winning consistently over the short term in a competitive situation

B) charging a higher price than what competitors charge

C) reproducing the successful actions of competitors

D) providing products and services of a superior value than those of competitors

 

 

 

 

25) Aliva, a bottled water company, places a premium on the marketing and sales of its products by offering purified water from the natural streams of the Himalayas. This way, compared to other companies, it provides superior value. This is an example of ________.

A) open source advantage

B) absolute advantage

C) first-mover advantage

D) comparative advantage

 

 

26) Products of a company would ________ when no other firms can have the capabilities needed to provide the same quality and quantity of products and services.

A) have no market value

B) be a rarity

C) be difficult to imitate

D) be substituted easily

 

 

27) Which of following is a requirement for a product to have competitive advantage over others?

A) durability

B) responsiveness

C) rarity

D) assurance

 

 

 

 

28) ________ refers to the ability to fulfill a customer's need by alternative means.

A) Rearrangement

B) Segmentation

C) Elimination

D) Substitution

 

 

 

29) Which of the following best describes a situation where there is a high potential for substitutes?

A) the unique and highly valued flavor, including the taste and texture, of Godiva chocolates

B) the superior after-sales service offered by Toyota to customers of its Lexus brand of automobiles

C) Consumers can choose between soda, water, iced tea and many other options to quench their thirst.

D) Windows software is used by a wide variety of customers, from household users to giant industries.

 

 

30) If a firm can earn ________, the firm is creating value for its shareholders.

A) diminishing returns

B) above-average returns

C) marginal returns

D) market-average returns

 

 

 

31) A(n) ________ provides a view of the firm over the long term and what it should achieve in the future.

A) strategic vision

B) annual report

C) differentiated leadership strategy

D) multipoint competitive analysis

 

 

32) Which of the following is the first step in the strategic management process?

A) determining strategic vision

B) securing interim financing

C) establishing objectives

D) formulating strategy

 

 

 

 

33) A(n) ________ articulates the fundamental purpose of the organization and often contains several components.

A) income statement

B) annual report

C) statement of faith

D) mission statement

 

 

 

 

34) By stating its intention to "To be the world's leading sports and fitness company," Nike is articulating its ________.

A) action plan

B) mission statement

C) global forecast

D) marketing target

 

 

35) Which one of the following is NOT included in a firm's mission statement?

A) company philosophy

B) sources of revenues

C) principal products or services

D) customers and markets

 

 

 

36) Which of the following best illustrates the assertion that "demographics provide important data about the population, but societal values translate that data into business implications"?

A) Many North American steel manufacturers were driven into bankruptcy because they were slow to adopt an important new process technology.

B) The construction industry tends to have higher peaks and lower valleys than the overall national economy.

C) New pollution laws significantly increased the operating costs of coal-burning power plants.

D) Baby boomers will be reaching retirement age, however, society's idea of retirement has expanded to include the pursuit of second careers. Therefore, companies will be able to hire experienced workers at open-market prices.

 

 

 

 

37) ________ are those that lead to new features and capabilities in existing products or to completely new products.

A) Sociocultural changes

B) Economic changes

C) Process technological changes

D) Product technological changes

 

 

 

38) ________ typically relate to alterations in how to make products or how to manage enterprises.

A) Economic changes

B) Process technological changes

C) Product technological changes

D) Sociocultural changes

 

 

39) Which of the following is true about the economic forces in the external environment?

A) All economic forces affect all organizations equally.

B) In many service companies, such as consulting and law firms, the company's primary assets are its people.

C) Changes in the economy are usually temporary and are not long-term, structural changes.

D) Structural changes significantly affect the current and future dynamics of economic activity.

 

 

 

40) In Albany, Georgia, the bars and restaurants built outdoor seating areas after the city passed laws banning indoor smoking to accommodate customers who smoked. To what dimension of the general environment were the bar and restaurant owners reacting?

A) political-legal forces

B) economic forces

C) institutional forces

D) sociocultural forces

 

 

 

 

41) When conducting an environmental analysis in a foreign country, two additional dimensions of the external environment that are typically examined are ________ environmental forces.

A) commercial and industrial

B) military and governmental

C) institutional and physical

D) educational and cultural

 

 

 

42) Federal spending pushes the federal deficit up, causing an increase in interest rates. What is the LEAST likely result of this occurrence?

A) unemployment increases

B) it becomes more expensive to borrow money

C) businesses expand at a slower rate

D) consumer spending increases

 

 

 

43) In a global context, ________ include the rules, policies, and enforcement processes that influence the behavior of individuals and organizations within a country.

A) physical forces

B) institutional forces

C) sociocultural forces

D) technological forces

 

 

 

44) ________ involve a country's infrastructure, such as roads, telecommunications, air links, arable land, deep water harbors, mineral resources, forests, and climate.

A) Physical forces

B) Institutional forces

C) Sociocultural forces

D) Geopolitical forces

 

 

 

45) Which of the following would lead to higher profits for an industry?

A) price-based competition

B) many new entrants

C) fragmented customers

D) few suppliers

 

 

 

46) Which of the following would lead to lower profits for an industry?

A) low entry barriers

B) many suppliers

C) few substitutes

D) quality-based competition

 

 

 

47) Action Shoes is a company that manufactures shoes. It has a lot of competitors in the market. However, it only builds its strength around market segments that the other companies avoid. It can be said that Action Shoes understands the ________ among its competitors.

A) substitutes

B) suppliers

C) new entrants

D) nature of rivalry

 

 

 

48) A newly established company, The Malt Company, wishes to enter the beer market in Country A by building a new brewery there. Many companies already have breweries in Country A. These companies spend heavily on advertising, which Malt is finding difficult to afford. This is an example of ________.

A) low costs of switching

B) barriers to entry

C) substitution

D) high costs of switching

 

 

 

49) A firm's value chain consists of ________.

A) primary and support activities

B) primary and secondary activities

C) observable and surreptitious activities

D) regional and global activities

 

 

 

 

50) According to Michael Porter, primary value chain activities involve ________.

A) planning, finance, accounting, legal activities, and government relations

B) acquiring, training, evaluating, compensating, and developing human resources

C) expertise and the tools or equipment related to the exercise of that expertise

D) creating a product or service and distributing it to customers

 

 

 

51) Redeem is a local microbrewery that is working on its methods of advertising, promoting, and selling its product. This is an example of ________.

A) primary activities in the value chain

B) support activities in the value chain

C) procurement activities in the value chain

D) service activities in the value chain

 

 

 

52) In the value chain, ________ facilitate the creation of the product or service and its transfer to the customer.

A) primary activities

B) tertiary activities

C) support activities

D) procurement activities

 

 

53) The ________ of a product or service is a function of how many customers are willing to purchase the product or service and how much they are willing to pay for it.

A) market value

B) relative value

C) absolute value

D) intrinsic value

 

 

54) The ________ component of the value chain consists of activities that are designed to receive, store, and then disseminate various inputs related to the firm's products or services.

A) procurement

B) inbound logistics

C) operations

D) service

 

 

55) Activities that transform inputs into the products and services of the firm, as well as maintenance of machines, are part of the ________.

A) operations component of the value chain

B) procurement component of the value chain

C) inbound logistics component of the value chain

D) outbound logistics component of the value chain

 

 

 

56) In the value chain, ________ include activities that move the product or service from the firm to the customers.

A) technology developments

B) services

C) marketing and sales

D) outbound logistics

 

 

 

 

57) In the cut-flower industry, fresh flowers must be available to customers as soon as possible after they have been harvested. On which of the following activities in the value chain does this places a premium?

A) service

B) procurement

C) operations

D) outbound logistics

 

 

 

58) ________ activities are designed to inform potential customers about the products and services the firm has available and entice them to purchase them.

A) Service

B) Operation

C) Marketing and sales

D) Procurement

 

 

59) Which of the following is a primary value chain activity?

A) technology development

B) human resource management

C) marketing and sales

D) firm infrastructure

 

 

 

60) Service activities are designed to ________.

A) inform potential customers about the products and services the firm has available

B) ensure that the product satisfies the customer after the purchase

C) move the product or service from the firm to the customers

D) transform inputs into the products and services of the firm

 

 

61) A firm's ________ consists of its planning, finance, accounting, legal, government relations, and other activities supplied by its various primary activities.

A) marketing strategies

B) infrastructure

C) human resource management

D) procurement

 

 

 

 

62) Which of the following is the first step in managing the value chain?

A) analyze how suppliers, distributors, and other business partners fit into a value net

B) develop valuable capabilities and use them to provide products that are superior in value

C) determine where in the value chain there is potential to add the greatest value

D) use formulated strategies to earn above-average returns

 

 

63) A ________ is an interrelated set of activities that can deliver competitive advantage not only in the short term but also in the long term.

A) core competence

B) corporate strategy

C) competitive advantage

D) strategic vision

 

 

 

64) SWOT analysis stands for ________.

A) strengths, weaknesses, opportunities, and tools

B) strengths, weaknesses, opportunities, and threats

C) strengths, weaknesses, organizations, and threats

D) strengths, weaknesses, organizations, and tools

 

 

 

 

65) What part of a SWOT analysis focuses on the internal environment?

A) strengths and weaknesses

B) weaknesses and threats

C) opportunities and threats

D) strengths and opportunities

 

 

 

66) What part of a SWOT analysis focuses on the external environment?

A) strengths and weaknesses

B) weaknesses and threats

C) opportunities and threats

D) strengths and opportunities

 

 

 

 

67) Refer to the scenario above. Which of the following, if true, would suggest that the company should concentrate on its strengths?

A) The barriers to entry for this industry are low and the bargaining power of suppliers is increasing.

B) The managers make sure that they get the best talent in the market, even if they have to pay a high price for it.

C) With access to technology, the firm is able to produce some of the best ads in the market.

D) Employees have become complacent after a few successful campaigns, are highly demotivated and lack creativity.

 

 

 

68) Which of the following, if true, would suggest that the company should concentrate on its opportunities?

A) The managers make sure they get the best talent in the market, even if they have to pay a high price for it.

B) Employees have become complacent after a few successful campaigns, are highly demotivated, and lack creativity.

C) Despite innovative technology and the Internet, employees continue to use traditional animation techniques to create ads.

D) The company has no competitors due to high entry barriers.

 

 

69) PetroJac is a premier provider of oil field consultancy services in Roswell, New Mexico. Its consultants are experts on local conditions. Recent discoveries of metal deposits in its region have spawned attractive new markets outside of the oil field, which PetroJac has been unable to exploit. Global firms with cutting-edge technology have been attracted by the new markets. If PetroJac conducts a SWOT analysis, what would be one of its weaknesses?

A) lack of access to cutting-edge technology

B) recent discoveries of metal deposits

C) detailed knowledge of local oil markets

D) entry of international companies into the market

 

 

70) ________ translate(s) the strategic intent and mission of the firm into concrete and measurable goals.

A) Strategic alliance

B) Core competencies

C) Strategic objectives

D) Strategic planning

 

 

 

 

71) In the process of strategic management, the ________ strategy determines what business or businesses the firm wishes to operate.

A) functional

B) business-level

C) corporate-level

D) unit-level

 

 

72) The ________ strategy determines how a firm will compete in each of these markets.

A) functional

B) corporate-level

C) unit-level

D) business-level

 

 

 

73) ________ strategies focus on the operations of each function and their contribution to help the firm achieve a competitive advantage.

A) Competitive

B) Corporate-level

C) Unit-level

D) Business-level

 

 

 

74) Which of the following is true about cost leadership strategy?

A) In this strategy, firms seek to make their product or service different from those of competitors.

B) The key to this strategy is to add value at a cost that produces a superior margin.

C) Firms using this strategy charge slightly higher than industry-average prices.

D) One of the ways of achieving cost leadership is by using special technology.

 

 

 

75) A manufacturer striving to be the lowest-cost producer of a product or service, while charging slightly less than industry-average prices, is pursuing a(n) ________.

A) cost leadership strategy

B) differentiation strategy

C) integrated leadership strategy

D) multipoint competition strategy

 

 

 

76) SockUp is a company that manufactures socks of different sizes, types, and colors for men, women, and children. The company aims at being the lowest-cost provider and charges slightly lower than the market price. This is an example of ________.

A) multipoint competition strategy

B) integrated leadership strategy

C) differentiation strategy

D) cost leadership strategy

 

 

 

 

77) Which of the following typically helps achieve cost leadership?

A) investing in research and development

B) employing economies of scale

C) offering superior products and services

D) targeting a niche segment

 

 

78) Managers pursuing a ________ seek to make their product or service different from those of competitors on dimensions valued by customers.

A) global strategy

B) differentiation strategy

C) cost leadership strategy

D) multipoint competition strategy

 

 

 

79) If a firm keeps its costs near the industry average and it can command a premium price, then it can obtain ________.

A) average profits

B) unfair profits

C) fair-market profits

D) above-average profits

 

 

 

80) Which of the following, if true, provides the best explanation of why consumers are willing to pay a premium price for Starbucks coffee?

A) Starbucks has lower costs than its competitors.

B) Starbucks has achieved economies of scale.

C) Starbucks has invested in the latest technology to increase production.

D) Starbucks differentiates itself through its product, service, and brand reputation.

 

 

 

81) Ferrari differentiates its products based on style and performance and targets a narrow segment of customers. Ferrari is pursuing a(n) ________.

A) multipoint competition strategy

B) focused differentiation strategy

C) focused cost leadership strategy

D) integrated differentiation-cost leadership strategy

 

 

82) To succeed when pursuing a ________, there must be significant differences among the firm's target customers or among geographical segments of its customers.

A) focus strategy

B) global strategy

C) leveraged strategy

D) competitive strategy

 

 

 

 

83) A customer segment is defined as a group of customers who ________.

A) place a similar value on product features

B) are the first to purchase innovative products

C) are found in the same geographical location

D) have homogeneous demographic characteristics

 

 

 

84) Campacola is a soda company that is seeking to enter the market by introducing an unusual line of sodas that contain granules that pop in the mouth. It intends to sell these sodas at no greater cost than normal sodas. What strategy is the company using in entering the soda market?

A) cost leadership strategy

B) multipoint differentiation strategy

C) focused differentiation strategy

D) integrated differentiation-cost leadership strategy

 

 

 

85) A ________ involves competing with firms across markets by using strengths in one market to overcome weaknesses in another market.

A) global strategy

B) multicultural strategy

C) multipoint competition strategy

D) differentiation strategy

 

 

86) The "Seven S" approach developed by McKinsey Consulting ________.

A) helps managers develop appropriate strategic alliances

B) allows managers to acquire, train, and develop personnel

C) provides instant access to and immediate knowledge of new markets

D) is perhaps the most widely used strategy implementation framework

 

 

 

87) McKinsey discovered that performance declined when many of their clients implemented new strategic plans because the strategies were ________.

A) not developed organically within the company

B) executed without sufficient studies of the competitive environment

C) implemented within old structures, cultures, skills, styles, and staff

D) not designed, recommended, and reviewed by McKinsey consultants

 

 

 

88) Rainbow Education is a company that decides to enter the commercial education market by purchasing a small company that prepares students to take high-stakes tests. How is the company choosing to enter this new market?

A) by acquisition

B) by organic growth

C) by strategic alliance

D) by leveraging core competencies

 

 

 

89) Companies perform ________ to reinforce efforts that have contributed to desired results and to correct those that have not.

A) internal audits

B) SWOT analyses

C) benchmarking exercises

D) organizational performance evaluations

 

 

 

90) The final step in the strategic management process is ________.

A) performance

B) evaluation

C) internal analysis

D) monitor the outcome

 

 

 

91) What is the meaning of the term competitive advantage? Discuss the four required elements for competitive advantage.

 

 

92) What is the purpose of a strategic vision?

 

 

93) What are the sociocultural forces in the general environment?

 

 

94) What are product and process technological changes?

 

 

 

95) Name the five industry and competitor forces that can significantly influence the performance of organizations within an industry.

 

 

96) What is a value chain?

 

 

 

97) What is core competence?

 

 

98) What happens during a SWOT analysis?

 

 

99) Explain the cost leadership strategy.

 

100) Describe the differentiation strategy.