CH. 5 – Leadership – Flashcards
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1. An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage is the definition of: a. strategy. c. sustained competitive advantage. b. core competencies. d. strategic mission.
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A
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A firm's core strategy is its ____. a. corporate strategy b. business strategy c. acquisitions and restructuring strategy d. international strategy
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B
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Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in: a. the selection of industries in which the firm will compete. b. specific product markets. c. specific functional departments. d. specific plant locations.
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B
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A ____ reflects where and how the firm has an advantage over its rivals. a. business-level strategy c. differentiated-cost strategy b. strategy d. core competence profile
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A
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In evaluating its customers, which of the following questions should the firm NOT ask? a. How will core competencies meet the customer's needs? b. Who is the customer? c. What are the customers' needs? d. How will our top management team interact with the customer?
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D
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Customer needs are related to the: a. characteristics that can be used to subdivide a large market into segments. b. set of values exhibited by a group of customers. c. use of core competencies to implement a strategy. d. benefits and features of a good or service that customers want to purchase.
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D
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The example of General Motors dropping the Oldsmobile brand illustrates the fact that a. brands are ultimately unimportant to the customer, regardless of their history. b. this brand appealed to a generation which is no longer actively spending money. c. this brand no longer conveyed specific benefits and features that satisfied target customer needs. d. brands are fungible properties of products.
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C
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Among college students, Subway targets a more narrow market segment than the segment on which McDonald's focuses. Subway focuses on students interested in healthy fast food. This is a result of studying all EXCEPT which of the following? a. demographic factors. c. consumption-pattern factors. b. psychological factors. d. geographic factors.
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D
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SAS Institute is the world's largest privately owned software company. Its core competence is ____ on which it allocates over 30 percent of its revenues. a. research and development c. employee training b. marketing and sales d. inbound and outbound logistics
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A
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Business-level strategies are concerned specifically with: a. creating differences between the firm's position and its rivals. b. the industries in which the firm will compete. c. how functional areas will be organized within the firm. d. how a business with multiple physical locations will operate one of those locations.
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A
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Which of the following is NOT considered a generic strategy? a. Product diversification b. Cost leadership c. Focused differentiation d. Integrated cost leadership/differentiation
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A
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The four generic business-level strategies a firm can implement include all of the following EXCEPT: a. focused cost leadership. c. differentiation. b. cost leadership. d. leadership.
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D
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A company using a narrow scope in its business strategy is: a. following a cost leadership business strategy. b. focusing on a broad array of geographic markets. c. limiting the group of product segments served. d. likely to earn only average returns.
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C
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The effectiveness of any of the generic business-level strategies is contingent upon: a. customer needs and competitors' strategies. b. the firm's resources, capabilities, and core competencies and the opportunities/threats of the environment. c. product line scope and national economic conditions. d. management's leadership style and the wealth of the firm's target market.
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B
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A simple structure can be described by all of the following EXCEPT: a. informal relationships. b. limited task specialization. c. active involvement by a chief executive officer. d. few rules.
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C
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The functional structure allows for effective: a. control of strategic issues by functional managers. b. control of potentially time-consuming activities by the chief executive. c. control of any myopic vision. d. development of professional expertise in functional areas.
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D
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Functional structures work best for firms with: a. diversified products. b. diversified markets. c. single and dominant business strategies. d. conglomerate strategies.
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C
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One disadvantage of the functional structure is that: a. career paths and professional development are not facilitated. b. it does not allow for functional specialization. c. the CEO cannot coordinate and control the efforts of functional level employees. d. communication is hindered among organizational functions.
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D
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Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure? a. Increasing diversification b. Coordination and control issues c. Decreasing sales revenues d. Greater amounts of data and information to process
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C
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20. A cost leadership strategy can be summarized as: a. providing products with features acceptable to customers at the lowest competitive price. b. providing products with features that are very inexpensive so that the price of the product is very low. c. providing products that are so unique that customers are willing to pay a premium. d. focusing on a few unique features for which customers are willing to pay a premium.
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A
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To achieve strategic competitiveness, Ryanair has relied upon: a. becoming the low-cost provider. b. adding services that make the airline more like large carriers. c. offering luxury-based in-flight amenities. d. cutting down on fuel costs.
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A
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Research suggests that having a competitive advantage in ____ creates more value in the cost leadership strategy than in the differentiation strategy. a. marketing and sales c. inbound and outbound logistics b. technology development d. human resource management
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C
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The firm successfully implementing the cost leadership strategy would expect: a. competitors to compete against it primarily on the basis of prices charged. b. to constantly face challenges from a steady stream of new entrants to the industry. c. to be able to fend off the challenge of product substitutes. d. to focus on its own cost structure, but not its competitors' cost structures.
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C
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When the costs of supplies increase in an industry, the low-cost leader may: a. continue competing with rivals on the basis of product features. b. lose customers as a result of price increases. c. make it difficult for new entrants to the industry to achieve above-average returns. d. be the only firm able to pay the higher prices and continue to earn average or above-average returns.
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D
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____ is the degree to which rules and procedures govern the activities of an organization. a. Formalization c. Specialization b. Centralization d. Unification
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A
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Firms implementing a cost leadership strategy should use a ____ structure. a. highly formalized, simple b. specialized multidivisional c. product line d. highly centralized, functional
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A
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Wal-Mart's effective strategy/structure configuration is: a. cost leadership/functional structure. b. related-linked/SBU multidivisional structure. c. unrelated diversification/competitive form multidivisional structure. d. cost leadership/differentiation/functional structure.
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A
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The risks of a cost leadership strategy include: a. becoming "stuck in the middle." b. production and distribution processes becoming obsolete. c. the ability of competing firms to provide similar features in a product. d. customers deciding the product isn't worth what the firm must charge for it.
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B
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The risks of a cost leadership strategy include all of the following EXCEPT: a. manufacturing equipment can become obsolete due to innovation. b. firms may fail to understand customers' perceptions of competitive levels of differentiation. c. competitors may learn how to successfully imitate their strategy. d. firms may fail to include enough unique features in the product.
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D
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The products or services that differentiate often have qualities that are: a. perceived by the customer to add value. b. valued by the typical industry customer. c. appealing to the customer regardless of price. d. seen as classic attributes rather than passing fads.
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A
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When a product's unique attributes provide value to customers, the firm is implementing: a. a differentiation strategy. b. a cost leadership strategy. c. an integrated cost leadership/differentiation strategy. d. a single-product strategy.
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A
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The differentiation strategy calls for a firm to provide products that: a. are at the lowest cost possible. b. have acceptable features. c. incorporate features for which the customer will pay a premium. d. solve the problem of being "stuck in the middle."
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C
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All of the following are examples of differentiated products EXCEPT: a. Toyota's Lexus. b. Acer Computer Corporation's PCs. c. McKinsey & Co's consulting services. d. Caterpillar's heavy equipment.
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B
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Firms pursuing a differentiation strategy want to be differentiated from competitors: a. on only one central dimension. b. only to the point where the features of their products are adequate. c. along as many dimensions as possible. d. on only two or three central dimensions.
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C
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35. The firm successfully implementing a differentiation strategy would expect all of the following EXCEPT: a. customers to be more sensitive to price increases. b. to be able to charge a premium price for its product. c. to be able to pass additional costs of supplies to the customer. d. to be partially insulated from competitive rivalry.
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A
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A firm successfully implementing a differentiation strategy would expect: a. customers to be sensitive to price increases. b. to charge premium prices. c. customers to perceive the product as standard. d. to automatically have high levels of power over suppliers.
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B
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Which of the following is NOT a value-creating activity associated with the differentiation strategy? a. intensive training programs to improve employee effectiveness and efficiency b. strong capability in basic research. c. rapid and timely deliveries to customers. d. procurement systems focused on finding the highest quality raw materials.
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A
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The differentiation strategy can be effective in controlling the power of rivalry in an industry because: a. customers will seek out the lowest cost product. b. customers have no loyalty. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry.
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C
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A differentiation strategy can be effective in controlling the power of substitutes in an industry because: a. buyers are not brand loyal. b. substitute products are from a different industry. c. customers want the low-cost product. d. customers are loyal to a brand offering differentiated features that they value.
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D
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Firms seeking to differentiate particularly need support from the ____ and ____ functions. a. finance, accounting c. product R&D, marketing b. finance, record keeping d. management information, finance
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C
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Which of the following is a true statement about organizational structures for implementing business-level strategies? a. A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. b. A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the R&D and marketing functions. c. An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision-making, and vertical coordination. d. A focused strategy requires a functional structure featuring high levels of both specialization and formalization.
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B
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Typically, a successful firm pursuing a differentiation strategy will: a. have a very hierarchical structure. b. require a structure which is very formal. c. use cross-functional development teams. d. develop free-standing business units.
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C
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Successful implementation of the differentiation strategy requires that: a. decision making be centralized. b. decision making be decentralized. c. the finance function be the dominant function. d. the accounting function be the dominant function.
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B
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The risks of a differentiation strategy do NOT include which of the following? a. Customers may find the price differential between the low-cost producer and the differentiated product too large. b. Customers' learning can narrow a customer's perception of the value of a firm's differentiated features. c. The means of differentiation no longer provide value to the customer. d. The differentiation strategy is built on product features that the customer values.
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D
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One risk of the differentiation strategy is that: a. a competitor may generate process innovations. b. equipment may quickly become obsolete. c. the firm may offer differentiated features that exceed the customers' needs. d. the firm may fail to detect competitors' efforts to differentiate the commodity product.
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C
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The risks of the differentiation strategy include: a. being "stuck in the middle." b. other firms being able to match the low cost. c. customers being willing to pay a premium for the features. d. a decision that the differentiated features are not worth the price.
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D
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When implementing a focus strategy, the firm seeks: a. to be the lowest cost producer in an industry. b. to offer products with unique features for which customers will pay a premium. c. to avoid being stuck in the middle. d. to serve the specialized needs of a market segment.
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D
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A focus strategy seeks to exploit core competencies: a. on an industry-wide basis. b. by serving the needs of a certain industry segment. c. by servicing one particular corporation within a given industry. d. by servicing several professions.
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B
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Focus strategies are: a. associated only with cost leadership. b. associated only with differentiation. c. associated with both cost leadership and differentiation strategies. d. typically avoided due to their high risk.
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C
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The risks of a focus strategy do NOT include: a. a competitor outfocuses the focuser. b. a firm pursuing an industry-wide strategy decides that the segment being served by the focuser is attractive. c. the needs of customers in the narrow segment served by the focuser grow more similar to those of customers in the entire industry. d. the top management team deciding to change strategies.
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D
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The risks of a focus strategy include: a. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more narrowly defined segment. b. a competitor's ability to use its core competencies to outfocus the focuser by serving an even more broadly defined segment. c. decisions by industry-wide competitors to use their resources to serve a wider range of customers' specialized needs than the focuser has been serving. d. decisions by focused competitors to use their resources to serve a wider range of customers' needs.
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A
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The integration of a cost leadership and a differentiation strategy will: a. not be used extensively in the future. b. allow a firm to adapt more quickly. c. slow the ability of a firm to respond. d. lower the risks of the firm.
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B
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Some believe integrated strategies (combining attributes of both cost leadership and differentiation strategies): a. have been used successfully in the U.S. since the end of World War II. b. are essential to establishing and exploiting competitive advantage in a global economy. c. can only be implemented in specific, competitive industries. d. blend perfectly with the types of corporate-level strategies implemented by many of today's large diversified companies.
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B
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Companies successfully implementing an integrated cost leadership/differentiation strategy are better positioned to do all of the following EXCEPT: a. learn new skills. b. adapt quickly to a changing environment. c. continue using current technology. d. leverage core competencies across business units.
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C
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The integration of a cost leadership strategy and a differentiation strategy leads to a competitive advantage because: a. the managers have greater flexibility in the actions they can take. b. different firms need different types of strategies to be successful. c. it allows the firm to offer two types of value-some differentiated features and a relatively low cost. d. one strategy is not enough for most large firms.
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C
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The integrated cost leadership/differentiation strategy is difficult to implement mostly because: a. the value chain activities and support functions required to implement the cost leadership and differentiation strategies are not the same. b. this strategic approach demands more flexibility than most firms can manage. c. it is difficult to balance the structural emphasis between the two strategies. d. the cost leadership strategy requires less structured job roles than does the differentiation strategy.
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A
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The ____ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy. a. simple c. multidivisional b. functional d. flexible
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D
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As explained in the text, three approaches to organizational work that can increase strategic flexibility are: a. Flexible Manufacturing, Management by Walking Around, and Total Quality Management. b. Open Book Management, Reengineering, and Flexible Manufacturing. c. Reengineering, Total Quality Management, and Information Networks. d. Flexible Manufacturing, Total Quality Management, and Information Networks.
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D
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The conditions that make it possible for firms to gain a competitive advantage through implementation of the integrated cost leadership/differentiation strategy include all of the following EXCEPT: a. flexible manufacturing. b. total quality management systems. c. information networks across firms. d. downsizing of the organization.
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D
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A flexible manufacturing system is a: a. manufacturing system where the output produced varies each month. b. computer-controlled process that is used to produce a variety of products in moderate, flexible quantities with minimal human intervention. c. system of manufacturing where humans and machines are used interchangeably. d. system where firms may choose to produce a product in any given month.
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B
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The benefit of a flexible manufacturing system is that: a. the lot size needed to manufacture a firm's product efficiently is reduced. b. workers are no longer needed in the numbers required by standard manufacturing systems. c. the technological advantage of the company is expanded. d. the company is further enabled to shut down during periods of economic decline.
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A
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Elaborate enterprise resource planning (ERP) software systems improve firm efficiency by: a. allowing workforce reductions without corresponding losses in productivity. b. making it possible to share information quickly with everyone in the industry. c. reducing the time required to design and test new products. d. identifying the resources required across the firm to receive, record, procure and ship customer orders.
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D
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Which of the following is an assumption of TQM systems? a. The costs of poor quality are greater than costs of developing new processes to produce high quality products. b. Total quality of processes requires total control of employees by management. c. Quality and costs are tradeoffs. d. Finding the "one best way" and adhering to it results in continuously improving quality.
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A
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The term "stuck in the middle" means: a. a middle of the road strategy. b. the customers of the firm are willing to pay only a mid-range price for the product. c. the customers of the firm have only moderate expectations regarding product quality. d. the firm using an integrated strategy fails to establish a leadership position.
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D
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The integrated cost leadership/differentiation strategy: a. is one of the most common successful business strategies. b. has been shown by research to be consistently correlated with above-average returns. c. is more risky to implement than the cost-leadership or differentiation business strategies. d. is a more stable business strategy once the firm is established in a leadership position.
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C
