Test Answers on ch6

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Which of the following is NOT one of the risks of the focus strategy?
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the exit of focusers from the industry
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When Kimberly-Clark introduced Huggies disposable diapers against Procter & Gamble’s market leading Pampers, they were using the offensive tactic known as a
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frontal assault
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According to Porter, the competitive strategy that reflects the ability to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service is called
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differentiation
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The T in SWOT represents
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threat
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According to Porter, the competitive strategy that reflects the ability of the corporation or its business unit to design, produce, and market a comparable product more efficiently than its competitors is called
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lower cost
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Which of the following is NOT one of the eight dimensions of quality?
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value
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Business strategy is composed of
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competitive and cooperative strategy
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Porter recommends that a division with tight cost control, frequent detailed control reports, a well structured organization, and quantitatively-based incentives is required for which of the following generic competitive strategies?
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overall cost leadership
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Wal-Mart, McDonalds, and Alamo are all examples of companies following which of Porter’s competitive strategies?
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cost leadership
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When a company following a differentiation strategy ensure that the higher price it charges for its higher quality is not priced too far above the price of the competition, the company is using the process of
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cost proximity
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Timing tactics answer the question
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when a company implements a strategy
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The text authors note that the essence of strategy is
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opportunity divided by capacity
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Most entrepreneurial ventures follow
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focus strategies
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According to Porter, a business unit a competitive marketplace with no generic competitive strategy is
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stuck in the middle
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Which of the following was NOT one of the questions that development of a competitive strategy should raise?
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should we compete by garnering political support of influential leader
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The concept that advocates management’s attempt to find a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses is called
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situational analysis
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A car’s cruise control, known as a “bell and whistle” is an example of which of the eight dimensions of quality?
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features
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An acronym for the assessment of the external and internal environments of the business corporation in the process of strategy formulation/strategic planning is
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S.W.O.T.
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The last stage of a hypercompetititve industry is reached when the remaining large global competitors
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work their way to a situation of perfect competition in which no one has any advantage and profits are minimal
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What are the two generic competitive strategies that Porter promotes as the means for outperforming other corporations in a particular industry?
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lower cost and differentiation
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According to Porter, the term that applies to the breadth of a company’s or business unit’s target market is called
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competitive scope
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In a TOWS matrix, ST Strategies
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consider a company’s or unit’s strengths as a way to avoid threats
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Which of Porter’s competitive strategies concentrates on seeking differentiation in a particular buyer group, product line segment, or geographic market?
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differentiation focus
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Patagonia uses sustainability in pursuing which of Porter’s generic strategies?
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differentiation
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In a TOWS matrix, WT Strategies
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are basically defensive and primarily act to minimize weaknesses and avoid threats
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One company that has successfully found a propitious niche is
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Frank J. Zamboni & Company
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Orphagenix, a small biotech firm, avoids head-to-head competition with large pharmaceutical companies by developing orphan drugs to target diseases that affect fewer than 200,000 people. This is an example of which of Porter’s generic strategies?
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differentiation focus
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Which of the following is NOT one of the risks of a cast leadership strategy?
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achieving excessive success causing jealousy amongst competitors
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The focus strategies will likely predominate when many small and medium sized local companies compete for relatively small shares of the total market in a
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fragmented industry
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A tactic is defined by the text as
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a specific operating plan specifying how a strategy is to be implemented in terms of when and where it is to be put into action
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In the development of a SFAS matrix, the first step is to
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list the most important EFAS and IFAS items
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Which offensive tactic utilizes a head-to-head approach with the firm’s competitor by matching every category of competition from price to promotion to distribution channel?
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frontal assault
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Which tactic deals with where a company implements a strategy
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a market location tactic
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Which of the following is NOT an advantage of being a first mover?
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first movers may be able to keep R & D cost low by imitating the technological advances of others
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All of the following reflect criticisms of the SWOT analysis EXCEPT
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provides a rational link to strategy implementation
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Which offensive tactic proposes an indirect approach against the established competitor such as changing the rules of the game?
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bypass attack
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The text the authors note that the essence of strategy
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opportunity dived by capacity
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A corporation specific competitive role while is so well-suited to the firm’s internal and external environment that other corporations are NOT likely to challenge or dislodge it
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propitious niche
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According to Porter, a business unit in a competitive marketplace with no generic competitive strategy is
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stuck in the middle
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Which offensive tactic advocates attacking a part of the market where the competitor is weak?
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flanking maneuver
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The two general types of cooperative strategies are
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strategic alliances and collusion
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The first company to manufacture and sell a new product or service is called
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first mover
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In a TOWS Matrix, SO Strategies
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are generated by thinking of ways in which a company or business unit could use its strengths to take advantage of opportunities
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Which of the following is NOT an offensive tactic
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raising structural barriers
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The technique that illustrates how management can match the external opportunities and threats with its strengths and weaknesses to yield four sets of strategic alternatives is called a
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TOWS matrix
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The kind of strategic alliance in which there is a partnership of similar companies in similar industries who pool their resources to gain a benefit that is too expensive to develop alone is the
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mutual service consortia
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The book hypercompetition was written by
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D’Aveni
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Which defensive tactic was used by Southwest airlines when deliberately keeping their prices low and constantly investing in cost-reducing measures
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lower the inducement for attack
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Which of Porter’s competitive strategies recommends that a company emphasizes a particular buyer group or geographic market in attempts to seek a cost advantage in its targeted segment
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cost focus
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A method developed in the mid-1990s as an efficient means to quickly consolidate a fragmented industry can be referred to as a(n)
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strategic rollup
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An industry matures while overcoming fragmentation and becomes dominated by a small number of large companies, it tends to become a(n)
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consolidated industry
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The particular capabilities and resources a firm posses and the superior way in which the are used is called
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distinctive competencies
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The focus strategies will likely predominate when many small and medium sized local companies compete for relatively small shares of the total market in a(n)
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fragmented industry
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Business strategy focuses on
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improving the competitive position of company’s or business units products or services within the specific industry or market segment that the company or business unit serves
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In the development of a SFAS matrix, the first step is to
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list to most important EFAS and IFAS items
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As an industry becomes hypercompetititve, firms initially respond be
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competing on cost and quality
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If it is to be successful, Porter advices that a division posses strong marketing abilities, product engineering, a creative flair, strong capability in basic research, and a corporate reputation for quality or technology leadership, for which of the following generic competitive strategies?
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differentiation
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Which of the following is NOT one of the risk of a cost leadership strategy?
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achieving excessive success causing jealousy amongst competitors
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When lower cost and differentiation strategies have a narrow focus on a market niches, they are simply called
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cost focus and differentiation focus
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According to the text, unique market opportunities that are available for only a particular time are called
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strategic windows
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Which of the following is NOT one of the risk of the focus strategy?
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the exit of focusers from the industry
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Which of the following is a function of corporate culture
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It conveys a sense of identity for employees
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When scientists concentrate on quality control and the development of design specifications, this is referred to as
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engineering R&D
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Which one of the following best describes a divisional structure
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This is most appropriate for large corporations with many product lines in several related industries, with employees acting as functional specialists attempting to gain synergy among divisional activities
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When a company determines a competency’s competitive advantage, Barney refers to this issue as
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value
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The second step when analyzing the value-added chain is to
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examine the linkages among the product’s or service’s value activities
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Through market research, corporations can target their various products or services so that management can discover what niches to seek or develop, and how to minimize competitive pressure. This is descriptive of
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market segmentation
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In order to move more quickly through a product’s development stage, companies like Motorola and Chrysler are using
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cross-functional work teams
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What are the two distinct attributes of corporate culture
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intensity and integration
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When a company’s core competencies are superior to those of competitors, these are known as
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distinctive competencies
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The ratio of total debt to total assets is known as
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financial leverage
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In Christensen’s book, The Innovator’s Dilemma, he explains that managers remain with certain technologies based on
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return of investment
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Which of the following is NOT one of the four question areas Barney proposes in his VRIO framework used to evaluate a firm’s key resources
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durability
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The rate at which a firm’s underlying resources, capabilities, or core competencies can be duplicated by others is called
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imitability
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Which of the following best describes a simple structure?
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This is most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate in a small niche market, with employees acting as jack-of-all trades.
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The process of taking a new technology from the laboratory to the marketplace is called
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technology transfer
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When a company takes apart a competitor’s product in order to find out how it works, this process is known as
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reverse engineering
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The second step when analyzing the value-added chain is to
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examine the linkages among the product’s or service’s value activities.
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An example of the promotion variable of the marketing mix is
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advertising
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The part of an industry’s value chain that is most important to a company and the point where its greatest expertise and capabilities lie is called the company’s
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center of gravity
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The particular combination of product, place, promotion, and price is called
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marketing mix
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Which of the following describes a typical functional structure?
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Employees tend to be specialists in the business functions important to that industry such as manufacturing, marketing, finance, and human resources.
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When the value chains of two separate products or services share activities, such as the same marketing channels, in order to reduce costs, this is an example of
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economies of scope
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Knowledge that can be easily articulated and communicated is known as
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explicit knowledge
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Things that a corporation can do exceedingly well across the corporation are called
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core competencies
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Those critical strengths and weaknesses that are likely to determine if a firm will be able to take advantage of opportunities while avoiding threats are called
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internal strategic factors
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On the continuum of resource sustainability, where would Sony’s Walkman be placed?
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fast-cycle resources
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The business model used by IBM to make money not selling IBM products, but by selling its expertise to improve their customers operations is the
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customer solutions model
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When examining the corporate value chain of a particular product or service, which one of the following is NOT one of the PRIMARY activities that usually occur?
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auditing and accounting
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Which one of the following best describes a conglomerate structure?
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This is most appropriate for large corporations with many product lines in several unrelated industries; unrelatedness prevents any attempt at gaining synergy among the divisions.
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Which of the following is NOT a primary activity of the value chain?
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purchasing
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Which of the following is NOT a function of corporate culture?
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keeps people guessing what to do next
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The concept that suggests that unit production costs decline by some fixed percent each time the total accumulated volume of production in units doubles is referred to as
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the experience curve
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Flexible manufacturing emphasizes
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economies of scope over economies of scale
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The rate at which a firm’s underlying resources and capabilities depreciate or become obsolete is called
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durability
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The breadth of an organization’s culture is also known as
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cultural integration
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According to the text, which one of the following is NOT descriptive of a corporation’s culture?
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Corporate cultures are only temporary and can be easily changed.
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As compared to a firm with low financial leverage, a firm with a high amount of financial leverage in an expanding market should have
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higher earnings per share
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A corporation’s ability to exploit its resources is referred to as its
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capabilities
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When examining the corporate value chain of a particular product or service, which of the following is NOT one of the PRIMARY activities that usually occur?
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auditing and accounting
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A linked set of value creating activities beginning with basic materials provided by suppliers and ending with distributors getting the final product into the hands of the ultimate consumer is called a(n)
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value chain
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An automobile assembly line is an example of which approach to manufacturing?
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continuos system
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According to Barney’s VRIO framework, the exploitation of a resource pertains to the ____ of the resource
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organization
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The proposition that silicon chips double in complexity every 18 months is referred to as
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moore’s law
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According to the text, the primary task of the operations manager is to
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develop and operate a system that will produce the requires number of products or services with a certain quality, at a given cost, within an allotted time
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Which of the following is NOT a responsibility of a research and development manager?
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taking the design and opertionalizing the plan into mass production
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What is the attribute of corporate culture that is the degree to which members of a unit accept the norms, values, or other culture content associated with the unit?
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intensity
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The business model used by Hp is selling printers and printer cartridges is the
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multi-compnent system/installed base model
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The business model used by IBM to make money not selling IBM products, but by selling its expertise to improve their customers operations is the
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customer solutions model
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Human Resource departments have found that to reduce employee dissatisfaction and unionization efforts, they must
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consider the quality of work life in the design of jobs
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Which of the following is NOT a primary activity of the value chain?
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purchasing
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The speed with which other firms can understand the relationship of resources and capabilities supporting a successful firms strategy is called
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transparency
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The particular combination of product, place, promotion, and price is called
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marketing mix
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When a company determines a competency’s competitive advantage, Barney refers to this issue as
answer

value
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As compared to a firm with low financial leverage, a firm with a high amount of financial leverage in an expanding market should have
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higher earnings per share
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According to te text, which one of the following is NOT descriptive of a corporation’s culture?
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corporate cultures are only temporary and can be easily changed
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______ is more valuable because it can provide companies with a sustainable competitive advantage that is harder for competitors to imitate
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tacit knowledge
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Through market research, corporations can target their various products or services so that management can discover what niches to seek or develop, and how to minimize competitive pressure. This is descriptive of
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market segmentation
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According to Barney’s VRIO framework, the exploitation of a resource pertains to the ___ of the resource
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organization
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When the value chains of two separate products or service share activities, such as the same marketing channels, in order to reduce costs is an example of
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economies of scope
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Which one of the following best describes a conglomerate structure?
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this is the most appropriate of large corporations with many product lines in several unrelated industries; unrelatedness prevents any attempt in gaining synergy among the divisions
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A graph showing time plotted against the dollar sales of a product as it moves from introduction through growth and maturity to decline is called the
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product life cycle
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Which of the following is NOT a function of corporate culture>
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keeps people guessing about what to do next
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Flexible manufacturing emphasizes
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economies of scope over economies of scale
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Which of the following is NOT descriptive of a high level of bargaining powers of buyers?
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A buyer earns high profits and is very insensitive to costs and service differences.
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Which environment was generally perceived by business people to be a given until the 20th century?
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the natural environment
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Other software companies could not compete with Microsoft based on the hesitation of consumers to try a new software. Which of Porter’s forces does this reflect?
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bargaining power of suppliers
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Which barrier to entry is demonstrated by Microsoft’s MS-DOS operating system?
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cost disadvantages independent of size
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When the pressure for coordination is strong and the pressure for local responsiveness is weak for multinational corporations within a particular industry, the industry will tend to become
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global
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Which of the following is NOT descriptive of “threat of substitute products or services?”
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Identifying substitutes is relatively easy since they look similar.
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The combination of the degree of complexity and the degree of change existing in an organization’s external environment is/are called
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environmental uncertainty.
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Which strategic orientation is demonstrated by companies that have a limited product line and focuses on improving the efficiency of their existing operations?
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defenders
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A company or an industry whose product works well with a firm’s product and without which the product would lose much of its value is considered to be a(n)
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complementor
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A company that operates in at least two different product-market areas in which one product is stable and the other one is variable, reflects which strategic orientation?
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analyzers
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Which of the following is NOT descriptive of the “threat of new entrants?”
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Does not impact industry attractiveness.
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A study of nearly 500 of the world’s largest corporations indicated which of the following to be the most widely practiced form of forecasting?
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trend extrapolation
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According to the text, the strength of each of the six driving forces of industry competition varies according to the
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stage of industry evolution.
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When strategic managers have a willingness to reject unfamiliar as well as negative information it is referred to as
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strategic myopia
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Industry analysis is primarily concerned with a corporation’s
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task environment
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All of the following are technological breakthroughs already having a significant impact on many industries EXCEPT
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growing health consciousness.
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According to Porter’s model, a low force can enable the company to earn greater profits and can be regarded as a(n)
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opportunity
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An industry dominated by a few large firms, all of which struggle with product differentiation, is known as
answer

consolidated
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To succeed in a hypercompetitive industry, companies by be willing to
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cannibalize their own successful product lines
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A company with significant assets and activities in multiple countries is known as ___
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multinational corporation
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Which societal force includes demographic trends?
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sociocultural forces
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In which type of international industry do corporations tailor their products to the specific needs of consumers in a particular country?
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multidomestic industry
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Companies with fairly broad product lines that focus on product innovations and market opportunities, reflect which strategic orientation?
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prospectors
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Which of the following is NOT a major force in the societal environment?
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labor forces
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The two factors that tend to determine whether an industry will be primarily multidomestic or primarily global are (1) the pressure for coordination with the MNCs operating in the industry and (2)
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the pressure for local responsiveness on the part of individual country markets
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When General Motors considered making their own automative parts, Delphi Automotive Supply Company would be concerned with the
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bargaining power of buyers
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Which type of international industry manufactures and sells the same product with only minor adjustments made for individual countries around the world?
answer

global industry
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The collective strength of the interaction of potential entrants, buyers, substitutes, firm rivalry, and other stakeholders determine
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the ultimate profit potential in the industry measured in terms of long-run return on invested capital
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The corporations task environment
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includes those elements or groups within an organization’s industry
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Which barrier to entry uses cost advantage associated with large size?
answer

economies of scale
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According to Porters model, a strong or high force is likely to reduce profits and can be regarded as a
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threat
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Which of the following in NOT descriptive of external environmental scanning?
answer

used to identify strengths and weaknesses
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What are the key environmental trends that are judges to have a medium to high probability of occurrence and a medium to high probability of impact on the corporation?
answer

external strategic forces
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According to the text, one reason environmental uncertainty is a threat to strategic managers is because
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it hampers their ability to develop long-range plans
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Which of the following is NOT descriptive of a high level of bargaining power of suppliers?
answer

substitues are readily available
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Intel was able to gain a significant cost advantage over its competitors in the production and sale of microprocessors because of
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economies of scale
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The issues priority matrix is used in environmental scanning is composed of two axis or dimensions which are labeled
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probability of occurrence and probable impact on the corporation
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Which is the largest of the current US generations?
answer

baby boomers
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Which environment was generally perceived by business people to be a given until the 20th century?
answer

the natural environment
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Which barrier to entry uses brand identification to force new entrants to spend heavily to overcome existing customer loyalty?
answer

product differentiation
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In addition to Porter’s five Forces, another force added in the text is
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other stakeholders
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Which of the following is NOT one of the general strategic types?
answer

initiators
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Which of the following is an example of a global industry?
answer

tires
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Which of the following is NOT descriptive of external environmental scanning?
answer

used to identify strengths and weaknesses
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What is the set of business units or firms that “pursue similar strategies with similar resources?”
answer

strategic groups
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A company or an industry whose product works well with a firm’s product and without which the product would lose much of its value is considered to be a
answer

complementor
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An industry dominated by a few large firms all of which struggle with product differentiation is knowns as
answer

consolidated
question

A study of nearly 500 of the world’s largest corporations indicated which of the followings to be the most widely practiced form of forecasting?
answer

trend extrapolation
question

All of the following are technological breakthroughs already heaving a significant impact on many industries EXCEPT
answer

growing health consciousness
question

The U.S. major home appliance industry, including the companies of Maytag, Whirlpool, General Electric, and Electrolux, is an example of an industry
answer

that was once fragmented, but now is consolidated
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Which of the following is NOT descriptive of intense rivalry among firms?
answer

product offerings that are highly differentiated
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Which barrier to entry is demonstrated by Microsoft’s MS-DOS operating system?
answer

cost disadvantage independent of size
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A relationship that illustrated the term complementor is
answer

microsoft and intel
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Which of the following is NOT one of the general strategic types?
answer

initiators
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Which of the following is NOT an element of the organization’s task environment?
answer

technological developments
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According to Porter, the corporation is most concerned with
answer

the intensity of competition within its industry
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Those variables that can affect significantly the overall competitive positions of companies within any particular industry are known as
answer

key success factors
question

Which of the following is NOT descriptive of “threat of substitute products or services?”
answer

identifying substitutes is relatively easy since they look similar

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