Practice Final Part 2 – Flashcards

Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices, such as: A. whether to focus on building competitive advantages. B. whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for. C. whether to display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. D. whether to create and deploy company resources to cause rivals to defend themselves. E. All of these.

Strategic offensives should, as a general rule, be based on: A. exploiting a company's strongest competitive assets—its most valuable resources and capabilities. B. instigating and executing the chosen strategy efficiently and effectively. C. scoping and scaling an organization's internal and external situation. D. molding an organization's character and identity. E. satisfying the buyer's needs that the company seeks to meet.

An offensive to yield good results can be short if: A. buyers respond immediately (to a dramatic cost-based price cut or imaginative ad campaign). B. competition creates an appealing new product. C. the technology needs debugging. D. new production capacity needs to be installed. E. consumer acceptance of an innovative product takes time.

A blue-ocean strategy: A. is an offensive strike employed by a market leader that is directed at pilfering customers away from unsuspecting rivals to boost profitability. B. involves an unexpected (out-of- the-blue) preemptive strike to secure an advantageous position in a fast-growing market segment. C. works best when a company is the industry's low-cost leader. D. involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand. E. involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

Which of the following is NOT a purpose of a defensive strategy? A. To increase the risk of having to defend an attack. B. To weaken the impact of any attack that occurs. C. To pressure challengers to aim their efforts at other rivals. D. To help protect a competitive advantage. E. To decrease the risk of being attacked.

Which of the following ways are employed by defending companies to fend off a competitive attack? A. Remain steadfast to current product features, models, and warranty terms to ensure resources are not diverted toward unproductive efforts. B. Exclude volume discounts or better financing terms from the strategic response in order to maintain current profitability levels. C. Gain product line exclusivity to force competitors to use other distributors. D. Discourage buyers from leaving by offering expensive training and customer support services that highlight the quality of the product. E. All of these.

What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack? A. To alleviate their fears by committing to reduce the costs of value chain activities. B. To cause the challenger to begin the attack instead of waiting. C. To dissuade challengers from attacking or diverting them into using less threatening options. D. To create collaborative relationships with challengers. E. To insulate other firms from adverse impacts resulting from the challenge.

First-mover disadvantages (or late-mover advantages) rarely ever arise when: A. the costs of pioneering are much higher than being a follower and only negligible learning/experience curve benefits accrue to the pioneer. B. rapid market evolution gives fast followers an opening to leapfrog the pioneer with next-generation products of their own. C. the pioneer's products are somewhat primitive and do not live up to buyer expectations, allowing clever followers to win disenchanted buyers with better-performing products. D. the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover. E. the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is: A. to be the first mover. B. to be a fast follower. C. to be a late mover (because it is cheaper and easier to imitate the successful moves of the leaders and moving late allows a company to avoid the mistakes and costs associated with trying to be a pioneer—first-mover disadvantages usually overwhelm first-mover advantages). D. to be the last-mover—playing catch-up is usually fairly easy and almost always is much cheaper than any other option. E. to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

Any company that seeks competitive advantage by being a first-mover must ask several hard questions prior to executing its strategy. Which question would it NOT ask? A. Does market take-off depend on the new development of complementary products? B. Is a new infrastructure required before buyer demand can surge? C. Will buyers encounter high switching costs to move? D. Are there influential competitors in a position to delay or derail the efforts? E. Did the company pour too many resources into getting ahead of the market opportunity?

The difference between a merger and an acquisition is that: A. a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. B. a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired). C. in a merger, the companies retain their original names, whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. D. a merger is a combination of three or more companies, whereas an acquisition is a pooling of interests of just two companies. E. a merger involves two or more companies deciding to adopt the same strategy, whereas an acquisition involves one company taking over the strategy-making function of another company.

The difference between a merger and an acquisition relates to: A. strategy and competitive advantage. B. the presence of available resources and competitive capabilities. C. whether the end result is related to horizontal or vertical scope. D. creating a more cost-efficient operation out of the combined companies. E. the details of ownership, management control, and the financial arrangements.

Merger and acquisition strategies: A. are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies. B. may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. C. are a particularly effective way of pursuing a blue-ocean strategy and an outsourcing strategy. D. seldom are a superior strategic alternative to forming alliances with these same companies because of the financial drain of using the company's cash resources to accomplish the merger or acquisition. E. is one of the best ways for helping a company strongly differentiate its product offering and use a differentiation strategy to strengthen its market position.

What outcomes do horizontal merger and acquisition strategies intend? A. Expanding a company's geographic coverage. B. Gaining quick access to new technologies or complementary resources and capabilities. C. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities. D. Extending the company's business into new product categories. E. All of these.

Vertical integration strategies: A. extend a company's competitive scope within the same industry by expanding its operations across multiple segments or stages of the industry value chain. B. are one of the best strategic options for helping companies win the race for global market leadership. C. offer good potential to expand a company's lineup of products and services. D. are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries. E. is a good strategy option for helping a company revamp its value chain and bypass low value-added activities.

A vertical integration strategy can expand the firm's range of activities: A. backward into sources of supply and/or forward toward end users. B. backward into other industry business-lines and/or forward to suppliers of raw materials. C. to enable the supply chain the opportunity for expansion. D. to complement the industry's horizontal value chain line of profitability. E. to establish full integration by participating in a tapered integration (without the outsourced and in-house activities).

Vertical integration can lower costs by: A. expanding supplier power. B. facilitating the coordination of production flows and avoiding bottlenecks. C. establishing the framework for operating. D. creating control factors across the value chain. E. All of these.

Which of the following is NOT a potential advantage of backward vertical integration? A. Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity). B. Reduced risks of disruptions in obtaining crucial components or support services. C. Reduced costs. D. Reduced business risk because of controlling a bigger portion of the overall industry value chain. E. Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

Backward vertical integration can produce: A. a full integration when activities remain the domain of key suppliers. B. a tapered integration if the firm consolidates all activities in-house. C. a differentiation-based competitive advantage when activities enhance the performance of the final product. D. a focused differentiation strategy when the market is broad and the product is a commodity. E. All of these.

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if: A. it reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users. B. it can result in better coordination of the firm's direct sales activity to wholesalers and distributors C. it can establish a retail frontal attack while efficiently managing its backward (defensive) sales orientation. D. it combines the best of all sales channels and provides financial support to distribution allies. E. it creates a channel conflict, thereby providing competitive improvisation.

A strategy of vertical integration can have substantial drawbacks, including: A. whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities. C. the environmental costs of coordinating operations across vertical chain activities. D. the ease to manage a set of skills and capabilities needed to operate in another stage of the vertical chain. E. the difficulties faced in entering outside vertical and horizontal markets.

The two big drivers of outsourcing are: A. an increased ability to cut R&D expenses and an increased ability to avoid the problems of strategic alliances. B. that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies). C. a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities. D. the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences. E. that a smaller in-house workforce and a low investment in intellectual capital will produce cost savings.

Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house? A. Streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace. B. Allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best. C. Helps the company assemble diverse kinds of expertise speedily and efficiently. D. Enables a company to gain better access to end users and better market visibility. E. Improves a company's ability to innovate.

The big risk of employing an outsourcing strategy is: A. causing the company to become partially integrated instead of being fully integrated. B. 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. C. hurting a company's R&D capability. D. putting the company in the position of being a late mover instead of an early mover. E. increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

Entering into strategic alliances and collaborative partnerships can be competitively valuable because: A. working closely with outsiders is essential in developing new technologies and new products in virtually every industry. B. cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology. C. they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages. D. they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations. E. they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

An alliance becomes "strategic" as opposed to just a convenient business arrangement when it serves strategic purposes such as when designed to help: A. build, sustain, or enhance a core competence or competitive advantage. B. block a competitive threat. C. increase the bargaining power of alliance members over suppliers or buyers. D. open up important new market opportunities. E. All of these.

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to: A. combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. B. help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers. C. get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. D. help wage price wars against foreign competitors. E. exercise better control over efforts to revamp the global industry value chain.

Which of the following is NOT a typical reason that many alliances prove unstable or break apart? A. Diverging objectives and priorities. B. An inability to work well together. C. The emergence of more attractive technological paths. D. Disagreement over how to divide the profits gained from joint collaboration. E. Changing conditions that render the purpose of the alliance obsolete.

The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is: A. that partners will not fully cooperate or share all they know, preferring instead to guard their most valuable information and protect their more valuable know-how. B. becoming dependent on other companies for essential expertise and capabilities. C. the added time and extra expenses associated with engaging in collaborative efforts. D. having to compromise the company's own priorities and strategies in reaching agreements with partners. E. the collaborative arrangements will not live up to expectations.

Alliance management is considered an organizational capability and: A. develops over time, out of effort and learning. B. decreases a company's knowledge assets. C. creates successful strategic alliances. D. decreases a company's knowledge capabilities. E. rapidly transfers assets into the strategic alliance.