Strategic Management midterm #1 – Flashcards
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A company's strategy concerns
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the competitive moves and business approaches that managers are employing.
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In crafting a company's strategy,
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managers need to come up with some distinctive "aha" element that draws in customers and produces a competitive edge over rivals.
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A company's strategy and its quest for competitive advantage are tightly connected because
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this is a company's most reliable ticket for earning above-average profits
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Which of the following is NOT a frequently used strategic approach to setting a company apart from rivals and achieving a sustainable competitive advantage?
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Striving to be more profitable than rivals and aiming for a competitive edge based on bigger profit margins
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One of the keys to successful strategy-making is
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to come up with one or more strategy elements that act as a magnet to draw customers and that produce a lasting competitive edge over rivals.
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It is normal for a company's strategy to end up being
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a blend of proactive actions and adaptive reactions to unanticipated developments and fresh market conditions.
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A company's business model
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is management's story line for how the strategy will be a moneymaker.
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The difference between a company's strategy and a company's business model is that
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strategy relates broadly to a company's competitive moves and business approaches while its business model relates to whether the business will earn satisfactory profits.
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A winning strategy is one that
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fits the company's situation, builds sustainable competitive advantage, and improves company performance.
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Crafting and executing strategy are top-priority managerial tasks because
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good strategy coupled with good strategy execution greatly raises the chances that a company will be a standout performer in the marketplace.
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The managerial task of developing a strategic vision for a company
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involves management's aspirations for the future and delineates the company's strategic course and long-term direction.
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The difference between the concept of a company mission statement and the concept of a strategic vision is that
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a mission statement typically concerns a company's present business scope ("who we are and what we do") whereas the principal concern of a strategic vision is the company's aspirations for its future ("where we are going").
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Company managers connect values to the chosen strategic vision by
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making it clear that company personnel are expected to live up to the values in the pursuit of the strategic vision and mission.
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A company needs financial objectives
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because adequate profitability and financial strength is critical to its long-term health and ultimate survival.
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A "balanced scorecard" that includes both strategic and financial performance targets is a conceptually strong approach for judging a company's overall performance because
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financial performance measures are lagging indicators whereas strategic performance measures are leading indicators of future financial performance.
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A company that pursues and achieves strategic objectives
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is frequently in a better position to improve its future financial performance because of the increased competitiveness that flows from the achievement of strategic objectives.
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Strategy-making is
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more of a collaborative effort that includes managers in various positions and at various organizational levels.
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Corporate strategy for a diversified or multi-business enterprise
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how to capture cross-business synergies, what businesses to hold or divest, which new markets to enter, and what mode of entry to employ, and the scope of the firm.
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In a single-business company, the strategy-making hierarchy consists of
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business strategy, functional strategies, and operating strategies.
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A company with strategic intent
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usually has an unshakable—often obsessive—commitment to do whatever it takes to acquire the resources and achieve the goals.
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Which of the following is not a major question to ask in thinking strategically about industry and competitive conditions in a given industry?
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How many companies in the industry have good track records for revenue growth and profitability?
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Factors that cause the rivalry among competing sellers to be weak include
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rapid growth in buyer demand and high buyer switching costs.
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Potential entrants are more likely to be deterred from actually entering an industry when
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incumbent firms are willing and able to launch strong defensive maneuvers to maintain their positions.
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Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?
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Coca-Cola as a substitute for Pepsi
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Whether supplier-seller relationships in an industry represent a strong or weak source of competitive pressure is a function of
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whether suppliers can exercise sufficient bargaining power to influence the terms and conditions of supply in their favor.
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As a rule, the stronger the collective impact of competitive pressures associated with the five competitive forces,
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the lower the combined profitability of industry members
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Whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members depends in part on
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whether supply-demand conditions represent a buyer's market or a seller's market.
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Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions?
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Growing supplier-seller collaboration, and growing buyer-seller collaboration
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Strategic group mapping is a technique for displaying
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the different market or competitive positions that rival firms occupy in an industry.
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Which of the following can aid industries in identifying key success factors?
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Crucial product attributes and service characteristics
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The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as
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what are the company's resource strengths and weaknesses and its external opportunities and threats.
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One important indicator of how well a company's present strategy is working is whether
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the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
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Which of the following most accurately reflect a company's resource strengths?
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Its human, physical and/or organization assets and achievements or attributes that enhance the company's ability to compete effectively
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The competitive power of a company resource strength is not measured by which one of the following tests?
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Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders?
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The difference between a company competence and a core competence is that
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a competence is an activity that a company has learned to perform with proficiency whereas a core competence is an activity that a company performs proficiently that is also central to its strategy and competitive success.
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The competitive power of a company's core competence or distinctive competence depends on
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how hard it is to copy and how easily it can be trumped by different resources and capabilities of rivals.
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Sizing up a company's overall resource strengths and weaknesses
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involves constructing a "strategic balance sheet" where strengths represent competitive assets and weaknesses represent competitive liabilities.
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The three steps of SWOT analysis are
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identifying the company's resource strengths and weaknesses and its opportunities and threats, drawing conclusions about the company's overall situation, and translating the conclusions into strategic actions to improve the company's strategy.
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The three main areas in the value chain where significant differences in the costs of competing firms can occur include
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the costs of internally performed activities (its own value chain), the costs in the value chains of its suppliers and distribution channel allies.
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Which of the following is not part of the task of identifying the strategic issues and problems that merit front-burner managerial attention?
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Surveying a company's board members, managers, select employees, and key investors regarding what strategic issues they think the company faces
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While there are many routes to competitive advantage, they all involve
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delivering more customer value and building competencies and resource strengths in performing value chain activities that rivals cannot readily match.
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How valuable a low-cost leader's cost advantage is depends on
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whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low costs.
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In which of the following circumstances is a strategy to be the industry's overall low-cost provider not particularly well matched to the market situation?
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When buyers have widely varying needs and special requirements
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The essence of a broad differentiation strategy is to
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be unique in ways that are valuable and appealing to a wide range of buyers.
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Perceived value and signaling value are often an important part of a successful differentiation strategy because
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buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.
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A focused low-cost strategy can lead to attractive competitive advantage when
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a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.
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Which one of the following does not represent market circumstances that make a focused low-cost or focused differentiation strategy attractive?
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When many rivals are attempting to specialize in the same segment
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A company's biggest vulnerability in employing a best-cost provider strategy is
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getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies.
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The production emphasis of a company pursuing a broad differentiation strategy usually involves
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efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority.
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The marketing emphasis of a company pursuing a focused low-cost provider strategy usually is to
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communicate the attractive features of a budget-priced product offering that fits niche members' expectations.
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A blue ocean strategy
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involves 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.
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What is the goal of signaling a challenger that strong retaliation is likely in the event of an attack?
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Divert the challenger to use less threatening options
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The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when,
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the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover.
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What does the scope of the firm refer to?
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The range of activities the firm performs internally and the breadth of its product offerings.
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Mergers and acquisitions
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frequently do not produce the hoped-for outcomes
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The two best reasons for investing company resources in vertical integration (either forward or backward) are to
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strengthen the company's competitive position and/or boost its profitability.
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Which of the following is not a potential advantage of backward vertical integration?
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Reduced business risk because of controlling a bigger portion of the overall industry value chain
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The two big drivers of outsourcing are
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that outsiders can often perform certain activities better or cheaper and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies).
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Entering into strategic alliances and collaborative partnerships can be competitively valuable because
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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.
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The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is
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becoming dependent on other companies for essential expertise and capabilities.
