GBA 490 Test 1 – Chapter 4

Which of the following is not one of the five questions that comprise the task of evaluating a company’s resources and competitive position?
A. What are the company’s most profitable geographic market segments?
B. How well is the company’s present strategy working?
C. Are the company’s prices and costs competitive?
D. Is the company competitively stronger or weaker than key rivals?
E. What strategic issues and problems merit front-burner management attention?

A. What are the company’s most profitable geographic market segments?

Which of the following is not a component of evaluating a company’s resources and competitive position?
A. Evaluating how well the present strategy is working
B. Scanning the environment to determine a company’s best and most profitable customers
C. Assessing whether the company’s costs and prices are competitive
D. Evaluating whether the company is competitively stronger or weaker than key rivals
E. Pinpointing what strategic issues and problems merit front-burner management attention

B. Scanning the environment to determine a company’s best and most profitable customers

The spotlight in analyzing a company’s resources, internal circumstances and competitiveness includes such questions/concerns as
A. Whether the company’s present strategy is better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend payout ratio and average annual increase in the common stock price
B. Whether the company’s key success factors are more dominant than the key success factors of close rivals
C. Whether the company has the industry’s most efficient and effective value chain
D. What are the company’s resource strengths and weaknesses and its external opportunities and threats
E. What new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position

D. What are the company’s resource strengths and weaknesses and its external opportunities and threats

Which of the following is not pertinent in identifying a company’s present strategy?
A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR and finance) a company is employing
B. Management’s planned, proactive moves to outcompete rivals (via better product design, added features, improved quality or service, wider product lines and so on)
C. The company’s mission, strategic objectives and financial objectives
D. Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions
E. The strategic role of its collaborative partnerships and strategic alliances with others

C. The company’s mission, strategic objectives and financial objectives

One important indicator of how well a company’s present strategy is working is whether
A. It has more core competencies than close rivals
B. Its strategy is built around at least two of the industry’s key success factors
C. The company is achieving its financial and strategic objectives and whether it is an above-average industry performer
D. It is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign)
E. It is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign)

C. The company is achieving its financial and strategic objectives and whether it is an above-average industry performer

The best quantitative evidence of whether a company’s present strategy is working well is A. Whether the company has more competitive assets than it does competitive liabilities
B. Whether the company is in the industry’s best strategic group
C. The caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer
D. Whether the company has a shorter value chain than close rivals
E. Whether the company is in the Fortune 500

C. The caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer

Which one of the following is not a reliable measure of how well a company’s current strategy is working?
A. Whether the company’s sales are growing faster, slower or about the same pace as the industry as a whole, thus resulting in a rising, falling or stable market share
B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product
C. The firm’s image and reputation with its customers
D. Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals
E. How well the firm stacks up against rivals on technology, product innovation, customer service, product performance and quality, price, delivery time, speed in getting newly developed products to market, brand image and other relevant factors on which buyers base their choice of which brand to purchase

B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product

Identifying and assessing a company’s resource strengths and weaknesses and its external opportunities and threats is called
A. SWOT analysis
B. Competitive asset/liability analysis
C. Competitive positioning analysis
D. Strategic resource assessment
E. Company resource mapping

A. SWOT analysis

SWOT analysis is a powerful tool for
A. Gauging whether a company has a cost competitive value chain
B. Sizing up a company’s resource capabilities and deficiencies, its market opportunities and the external threats to its future well-being
C. Evaluating whether a company is in the most appropriate strategic group
D. Determining a company’s competitive strength vis-à-vis close rivals
E. Identifying the market segments in which a company is strongly positioned and weakly positioned

B. Sizing up a company’s resource capabilities and deficiencies, its market opportunities and the external threats to its future well-being

SWOT analysis
A. Is a way to measure whether a company’s value chain is longer or shorter than the chains of key rivals
B. Is a tool for benchmarking whether a firm’s strategy is closely matched to industry key success factors
C. Reveals whether a company is competitively stronger than its closest rivals
D. Provides a good overview of whether a company’s situation is fundamentally healthy or unhealthy
E. Identifies the reasons why a company’s strategy is or is not working very well

D. Provides a good overview of whether a company’s situation is fundamentally healthy or unhealthy

The payoff of doing a thorough SWOT analysis is
A. Identifying whether the company’s value chain is cost effective vis-à-vis the value chains of rivals
B. Helping strategy-makers benchmark the company’s resource strengths against industry key success factors
C. Enabling a company to assess its overall competitive position relative to its key rivals
D. Revealing whether a company’s market share, measures of profitability and sales compare favorably or unfavorably vis-à-vis key competitors
E. Assisting strategy-makers in crafting a strategy that is well-matched to the company’s resources and capabilities, its market opportunities and the external threats to its future well-being

E. Assisting strategy-makers in crafting a strategy that is well-matched to the company’s resources and capabilities, its market opportunities and the external threats to its future well-being

Which one of the following is not part of conducting a SWOT analysis?
A. Identifying a company’s resource strengths and competitive capabilities
B. Benchmarking the company’s resource strengths and competitive capabilities against industry key success factors
C. Identifying a company’s market opportunities
D. Drawing conclusions about the company’s overall business situation—what is attractive and what is unattractive about the company’s circumstances and where on the scale from "alarmingly weak" to "exceptionally strong" does its situation rank?
E. Translating the results of the analysis into actions for improving the company’s strategy and market position

B. Benchmarking the company’s resource strengths and competitive capabilities against industry key success factors

The two most important parts of SWOT analysis are
A. Pinpointing the company’s competitive assets and pinpointing its competitive liabilities
B. Identifying the company’s resource strengths and identifying the company’s best market opportunities
C. Identifying the external threats to a company’s future profitability and pinpointing how many market opportunities it has
D. Drawing conclusions from the SWOT listings about the company’s overall situation and translating these conclusions into strategic actions to better match the company’s strategy to its resource strengths and market opportunities, correct the important weaknesses and defend against external threats
E. Making accurate lists of the company’s strengths, weaknesses, opportunities and threats and then using these lists as a basis for ascertaining how well the company’s strategy is working

D. Drawing conclusions from the SWOT listings about the company’s overall situation and translating these conclusions into strategic actions to better match the company’s strategy to its resource strengths and market opportunities, correct the important weaknesses and defend against external threats

The three steps of SWOT analysis are
A. 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 action to improve the company’s strategy
B. Pinpointing the company’s competitive assets, pinpointing its competitive deficiencies and determining whether it enjoys a competitive advantage
C. Determining whether the company has more competitive assets than competitive liabilities, determining whether the company has good market opportunities and evaluating the seriousness of the threats to the company’s future profitability
D. Matching the company’s strategy to its resource strengths, correcting the company’s important resource weaknesses and identifying the company’s best market opportunities
E. Benchmarking the company’s strengths and weaknesses against those of key rivals, identifying its market opportunities and the external threats it faces and determining the company’s potential for establishing a competitive advantage over rivals

A. 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 action to improve the company’s strategy

A company resource strength can concern
A. A skill, specialized expertise or competitively important capability
B. Valuable human assets and intellectual capital
C. An achievement or attribute that puts the company in a position of market advantage
D. Competitively valuable alliances or cooperative ventures
E. All of these

E. All of these

Which of the following most accurately reflect a company’s resource strengths?
A. Its human, physical and/or organization assets; its skills and competitive capabilities; achievements or attributes that enhance the company’s ability to compete effectively; and whether it is engaged in competitively valuable alliances or cooperative ventures
B. The sizes of its unit sales, revenues and market share vis-à-vis those of key rivals
C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals
D. Whether it has more primary activities in its value chain than close rivals and a better overall value chain than these rivals
E. Whether it has more core competencies than close rivals

A. Its human, physical and/or organization assets; its skills and competitive capabilities; achievements or attributes that enhance the company’s ability to compete effectively; and whether it is engaged in competitively valuable alliances or cooperative ventures

A company’s resource strengths are important because
A. They pave the way for establishing a low-cost advantage over rivals
B. They represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace
C. They provide extra muscle in helping lengthen the company’s value chain
D. They give it competitive protection against the industry’s driving forces
E. They provide extra organizational muscle in turning a core competence into a key success factor

B. They represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace

A company’s resource strengths
A. Represent its core competencies
B. Are the most important parts of the company’s value chain
C. Signal whether it has the wherewithal to be a strong competitor in the marketplace or whether its capabilities and competitive strengths are modest, thus relegating it to a trailing position in the industry
D. Give it excellent ability to insulate itself against the impact of the industry’s driving forces
E. Combine to give it a distinctive competence

C. Signal whether it has the wherewithal to be a strong competitor in the marketplace or whether its capabilities and competitive strengths are modest, thus relegating it to a trailing position in the industry

The best example of a company strength is
A. Having higher earnings per share and a higher return on shareholders’ equity investment than key rivals
B. Being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders or strategic alliances
C. Having proven technological expertise and ability to churn out new and improved products on a regular basis
D. Having a larger number of competitive assets than competitive liabilities
E. Having more built-in key success factors than rivals

C. Having proven technological expertise and ability to churn out new and improved products on a regular basis

Which of the following is not a good example of a company strength?
A. More intellectual capital and better e-commerce capabilities than rivals
B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance
C. Having higher earnings per share and a higher stock price than key rivals
D. A well-known brand name and enjoying the confidence of customers
E. A lower-cost value chain than rivals

C. Having higher earnings per share and a higher stock price than key rivals

When a company has real proficiency in performing a competitively important value chain activity, it is said to have
A. A distinctive competence
B. A core competence
C. A key value chain proficiency
D. A competitive advantage over rivals
E. A company competence

B. A core competence

When a company is good at performing a particular internal activity, it is said to have
A. A competitive advantage over rivals
B. A competitive capability
C. A distinctive competence
D. A core competence
E. A company competence

E. A company competence

The difference between a company competence and a core competence is that
A. A company competence refers to a company’s best-executed functional strategy and a core competence refers to a company’s best-executed business strategy
B. A company competence refers to a company’s strongest resource whereas a core competence refers to a company’s lowest-cost and most efficiently performed value chain activity
C. A company competence is a competitively relevant activity which a firm performs especially well relative to other internal activities, whereas a core competence is an activity that a company has learned to perform proficiently
D. A company competence represents real proficiency in performing an internal activity whereas a core competence is a competitively relevant activity which a firm performs better than other internal activities
E. A core competence usually resides in a company’s technology and physical assets (state-of-the-art plants and equipment, attractive real estate locations, modern distribution facilities and so on) whereas a company competence usually resides in a company’s human assets and intellectual capital

D. A company competence represents real proficiency in performing an internal activity whereas a core competence is a competitively relevant activity which a firm performs better than other internal activities

The difference between a core competence and a distinctive competence is that
A. A distinctive competence refers to a company’s strongest resource or competitive capability and a core competence refers to a company’s lowest-cost and most efficiently executed value-chain activity
B. A core competence usually resides in a company’s base of intellectual capital whereas a distinctive competence stems from the superiority of a company’s physical and tangible assets
C. A core competence is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs, whereas a distinctive competence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes
D. A core competence represents a resource strength whereas a distinctive competence is achieved by having more resource strengths than rival companies
E. A core competence usually resides in a company’s technology and physical assets (strong R&D capabilities, specialized technological expertise, state-of-the-art plants and equipment, attractive real estate locations, modern distribution facilities and so on) whereas a distinctive competence usually resides in a company’s know-how, expertise and intellectual capital

C. A core competence is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs, whereas a distinctive competence is a competitively relevant activity which a firm performs especially well in comparison to other firms with which it competes

A core competence
A. Adds to a company’s arsenal of competitive capabilities and competitive assets and is a genuine resource strength
B. Is typically knowledge-based, residing in a company’s intellectual capital and not in its tangible physical assets on the balance sheet
C. Is often grounded in cross-department combinations of knowledge and expertise
D. Is a competitively relevant activity which a firm performs especially well in comparison to the other activities it performs
E. All of the above

E. All of the above

A core competence
A. Gives a company competitive capability and is a genuine company strength and resource
B. Typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company’s balance sheet
C. Usually is grounded in the technological expertise of a particular department or work group
D. Is more difficult for rivals to copy than a distinctive competence
E. Refers to a company’s lowest-cost and most efficiently executed value-chain activity

A. Gives a company competitive capability and is a genuine company strength and resource

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have
A. A company competence
B. A strategic resource
C. A distinctive competence
D. A core competence
E. A key success factor

C. A distinctive competence

Which of the following does not represent a potential core competence?
A. Skills in manufacturing a high-quality product at a low cost
B. Know-how in creating and operating systems for cost-efficient supply chain management
C. The capability to fill customer orders accurately and swiftly
D. Having a wider product line than rivals
E. The capability to speed new or next-generation products to the marketplace

D. Having a wider product line than rivals

A distinctive competence
A. Is a competitively important activity that a company performs better than its competitors
B. Gives a company competitively valuable capability that is unmatched by rivals
C. Is a basis for sustainable competitive advantage
D. Can underpin and add real punch to a company’s strategy
E. All of the above

E. All of the above

Which one of the following is inaccurate as concerns a distinctive competence?
A. A distinctive competence is a competitively important activity that a company performs better than its competitors
B. A distinctive competence is typically less difficult for rivals to copy than a core competence
C. A distinctive competence can be a basis for sustainable competitive advantage
D. A distinctive competence can underpin and add real punch to a company’s strategy
E. A distinctive competence gives a company competitively valuable capability that is unmatched by rivals

B. A distinctive competence is typically less difficult for rivals to copy than a core competence

The competitive power of a company’s core competence or distinctive competence depends on
A. Whether it helps differentiate a company’s product offering from the product offerings of rival firms
B. How hard it is to copy and how easily it can be trumped by the different resource strengths and competitive capabilities of rivals
C. Whether customers are aware of the competence and view the competence positively enough to boost the company’s brand name reputation
D. Whether the competence is one of the industry’s key success factors
E. Whether the competence is technology-based or based on superior marketing know-how

B. How hard it is to copy and how easily it can be trumped by the different resource strengths and competitive capabilities of rivals

The competitive power of a company resource strength or competitive capability hinges on
A. How hard it is for competitors to copy
B. Whether it is durable and has staying power (in the sense of not losing its value quickly because of new developments)
C. Whether it is really competitively superior to the essentially equivalent type of resource/capability of rivals
D. How easily it can be trumped by the different resources/capabilities of rivals
E. All of these

E. All of these

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should
A. Be hard for competitors to copy, be durable and long-lasting and not be easily trumped by the different resources/capabilities of rivals
B. Be something that a company does internally rather than in collaborative arrangements with outsiders
C. Be patentable
D. Be an industry key success factor and occupy a prime position in the company’s value chain
E. Have the potential for lowering the firm’s unit costs

A. Be hard for competitors to copy, be durable and long-lasting and not be easily trumped by the different resources/capabilities of rivals

The competitive power of a company resource strength is not measured by which one of the following tests?
A. Is the resource strength durable—does it have staying power?
B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders?
C. Is the resource strength easily trumped by the different resources/capabilities of rivals?
D. Is the resource strength hard to copy?
E. Is the resource strength really competitively superior?

B. Is the resource strength something that a company does internally rather than in collaborative arrangements with outsiders?

If a company doesn’t possess a distinctive competence,
A. All potential for competitive advantage is lost
B. It is unlikely to survive in the marketplace and should exit the industry
C. It can still marshal competitive power in the marketplace via a collection of adequate-to-good resource strengths
D. It is virtually blockaded from using offensive strategies and must rely on defensive strategies
E. Its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities

C. It can still marshal competitive power in the marketplace via a collection of adequate-to-good resource strengths

A company resource weakness or competitive deficiency
A. Represents a problem that needs to be turned into a strength because weaknesses prevent a firm from being a winner in the marketplace
B. Causes the company to fall into a lower strategic group than it otherwise could compete in
C. Prevents a company from having a distinctive competence
D. Usually stems from having a missing link or links in the industry value chain
E. Is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace

E. Is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace

A company’s resource weaknesses can relate to
A. Inferior or unproven skills, expertise or intellectual capital in competitively important parts of the business
B. Something that it lacks or does poorly (in comparison to rivals)
C. Deficiencies in competitively important physical, organizational or intangible assets
D. Missing or competitively inferior capabilities in key areas
E. All of these

E. All of these

In doing SWOT analysis, which one of the following is not an example of a potential resource weakness or competitive deficiency that a company may have?
A. Less productive R & D efforts than rivals
B. Having a single, unified functional strategy instead of several distinct functional strategies
C. Lack of a strong brand image and reputation (as compared to rivals)
D. Higher overall unit costs relative to rivals
E. Too narrow a product line relative to rivals

B. Having a single, unified functional strategy instead of several distinct functional strategies

Sizing up a company’s overall resource strengths and weaknesses
A. Essentially involves constructing a "strategic balance sheet" where the company’s resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities
B. Is called benchmarking
C. Is called competitive strength assessment
D. Is focused squarely on ascertaining whether the company has more/less resource strengths than weaknesses
E. Is called company resource mapping

A. Essentially involves constructing a "strategic balance sheet" where the company’s resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities

The external market opportunities which are most relevant to a company are the ones that
A. Increase market share
B. Reinforce its overall business strategy
C. Match up well with the firm’s financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage
D. Correct its internal weaknesses and resource deficiencies
E. Help defend against the external threats to its well-being

C. Match up well with the firm’s financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage

The market opportunities most relevant to a particular company are those that
A. Offer the best growth and profitability
B. Provide a strong defense against threats to the company’s profitability
C. Hold the most potential for product innovation
D. Provide avenues for taking market share away from close rivals
E. Hold the most potential to reduce costs

A. Offer the best growth and profitability

In doing SWOT analysis and trying to identify a company’s market opportunities, which of the following is not an example of a potential market opportunity that a company may have?
A. Serving additional customer groups or market segments
B. Growing buyer preferences for substitutes for the industry’s product
C. Acquiring rival firms or companies with attractive technological expertise or capabilities
D. Expanding into new geographic markets
E. Openings to win market share away from rivals

B. Growing buyer preferences for substitutes for the industry’s product

Which of the following best describes the market opportunities that tend to be most relevant to a particular company?
A. Those market opportunities that provide avenues for taking market share away from close rivals and enhance a company’s image as a leader in product innovation and product quality
B. Those market opportunities that offer the company a chance to raise entry barriers
C. Those market opportunities that help promote greater diversification of revenues and profits
D. Those market opportunities that match up well with the firm’s financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage
E. Those market opportunities that help correct a company’s biggest weaknesses and competitive deficiencies

D. Those market opportunities that match up well with the firm’s financial resources and competitive capabilities, offer the best growth and profitability and present the most potential for competitive advantage

Which of the following is not an example of an external threat to a company’s future profitability?
A. The lack of a distinctive competence
B. New legislation that entails burdensome and costly government regulations
C. Slowdowns in market growth
D. More intense competitive pressures
E. The introduction of restrictive trade policies in countries where the company does business

A. The lack of a distinctive competence

Which of the following is not an example of an external threat to a company’s future profitability?
A. Likely entry of potent new competitors
B. The lack of a well-known brand name with which to attract new customers and help retain existing customers
C. Shifts in buyer needs and tastes away from the industry’s product
D. Costly new regulatory requirements
E. Growing bargaining power on the part of the company’s major customers and major suppliers

B. The lack of a well-known brand name with which to attract new customers and help retain existing customers

One of the lessons of SWOT analysis is that a company’s strategy should
A. Be grounded in its resource strengths and capabilities
B. Be aimed at those market opportunities that offer the best potential for both profitable growth and competitive advantage
C. Seek to defend against threats to the company’s future profitability
D. Generally not place heavy demands on areas where company resources are weak or unproven
E. All of these

E. All of these

Which one of the following is not something that can be gleaned from identifying a company’s resource strengths, resource weaknesses, market opportunities and external threats?
A. How to improve a company’s strategy by using company strengths and capabilities as cornerstones for its strategy
B. Which market opportunities are best suited to a company’s strengths and capabilities
C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats
D. How to turn a core competence into a distinctive competence
E. Whether any of the company’s resource strengths can be used to help lessen the impact of external threats

D. How to turn a core competence into a distinctive competence

One of the most telling signs of whether a company’s market position is strong or precarious is
A. Whether its product is strongly or weakly differentiated from rivals
B. Whether its prices and costs are competitive with those of key rivals
C. Whether it has a lower stock price than key rivals
D. The opinions of buyers regarding which seller has the best product quality and customer service
E. Whether it is in a bigger or smaller strategic group than its closest rivals

B. Whether its prices and costs are competitive with those of key rivals

Two analytical tools useful in determining whether a company’s prices and costs are competitive are
A. SWOT analysis and key success factor analysis
B. SWOT analysis and benchmarking
C. Value chain analysis and benchmarking
D. Competitive position assessment and competitive strength assessment
E. Driving forces analysis and SWOT analysis

C. Value chain analysis and benchmarking

A company’s value chain identifies
A. The steps it goes through to convert its net income into value for shareholders
B. The primary activities it performs in creating value for its customers and the related support activities
C. The series of steps it takes to get a product from the raw materials stage into the hands of end-users
D. The activities it performs in transforming its competencies into distinctive competencies
E. The competencies and competitive capabilities that underpin its efforts to create value for customers and shareholders

B. The primary activities it performs in creating value for its customers and the related support activities

A company’s value chain
A. Consists of the primary activities that it performs in seeking to deliver value to shareholders in the form of higher dividends and a higher stock price
B. Depicts the internally performed activities associated with creating and enhancing the company’s competitive assets
C. Consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities
D. Concerns the basic process the company goes through in performing R&D and developing new products
E. Consists of the series of steps a company goes through to develop a new product, get it produced and into the marketplace and then start collecting revenues and earning a profit

C. Consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities

Identifying the primary and secondary activities that comprise a company’s value chain
A. Indicates whether a company’s resource strengths will ultimately translate into greater value for shareholders (in particular, higher dividends and a higher stock price)
B. Reveals whether a company’s resource strengths are well-matched to the industry’s key success factors
C. Is a first step in understanding a company’s cost structure (since each activity in the value chain gives rise to costs); assigning costs to each of the primary and secondary activities is called activity-based cost accounting
D. Is called benchmarking
E. Is called resource value analysis

C. Is a first step in understanding a company’s cost structure (since each activity in the value chain gives rise to costs); assigning costs to each of the primary and secondary activities is called activity-based cost accounting

Activity-based cost accounting is used to
A. Determine whether the value chains of rival companies are similar or different
B. Benchmark the costs of primary value chain activities against the costs of the support value chain activities
C. Determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and make-up of a company’s internal cost structure
D. Determine the costs of each strategic action a company initiates
E. None of the above accurately describes what activity-based costing is about

C. Determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and make-up of a company’s internal cost structure

The value chains of rival companies
A. Tend to be essentially the same—any differences are typically minor
B. Can differ substantially, reflecting differences in the evolution of each company’s own particular business, differences in internal operations, differences in strategy and differences in the approaches being used to execute strategy
C. Are fairly similar or fairly different, depending on how many activities are performed internally and how many are outsourced
D. Can be either fairly similar or fairly different, depending on the extent to which each company’s primary and support activities are comprised of fixed cost activities and variable cost activities
E. Are fairly similar except when rival companies have quite different product designs

B. Can differ substantially, reflecting differences in the evolution of each company’s own particular business, differences in internal operations, differences in strategy and differences in the approaches being used to execute strategy

The three main areas in the value chain where significant differences in the costs of competing firms can occur include
A. Age of plants and equipment, number of employees and advertising costs
B. Operating-level activities, functional area activities and line of business activities
C. The nature and make-up of their own internal operations, the activities performed by suppliers and the activities performed by wholesale distribution and retailing allies
D. Human resource activities (particularly labor costs), vertical integration activities and strategic partnership activities
E. Variable cost activities, fixed cost activities and administrative activities

C. The nature and make-up of their own internal operations, the activities performed by suppliers and the activities performed by wholesale distribution and retailing allies

Which one of the following provides the most accurate picture of whether a company is cost competitive with its rivals?
A. How the costs of the company’s internally performed activities (its own value chain) compare against the costs of the internally-performed activities of rival companies
B. Costs in the value chains of the company’s suppliers
C. Costs in the value chains of a company’s distributors and retail dealers forward channel allies
D. The costs of a company’s internally performed activities, costs in the value chains of both the company’s suppliers and forward channel allies and how all these costs compare against the costs that make up the value chain systems employed by rival firms
E. Whether the company has a longer or shorter value chain than its close rivals

D. The costs of a company’s internally performed activities, costs in the value chains of both the company’s suppliers and forward channel allies and how all these costs compare against the costs that make up the value chain systems employed by rival firms

Determining whether a company’s prices and costs are competitive
A. Requires looking at the costs of a company’s competitively relevant suppliers and forward channel allies (distributors/dealers)
B. Requires considering the costs of a company’s internally performed activities
C. Involves the use of benchmarking the costs in a company’s value chain system (the costs of its suppliers, its internally performed activities, the costs of its distributors/dealers) against the costs of the value chain systems employed by rival firms
D. Typically involves the use of activity-based cost accounting
E. All of these

E. All of these

Activity-based cost accounting aims at
A. Making cross-company comparisons of the costs of each value chain activity
B. Dividing all company expenses into two categories: activities whose costs are variable and activities whose costs are fixed
C. Determining the costs of each activity comprising a company’s value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost
D. Determining the costs of each strategic action a company initiates
E. None of the above accurately describes what activity-based costing is about

C. Determining the costs of each activity comprising a company’s value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost

Activity-based costing
A. Is an accounting system that assigns a company’s expenses to whichever activity in a company’s value chain is responsible for creating the cost
B. Involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival
C. Is a powerful tool for identifying the different pieces of a company’s value chain and classifying them as primary activities and support activities
D. Involves determining which value chain activities represent variable costs and which represent fixed costs
E. Is a tool for identifying the activities that cause a company’s product to be strongly differentiated from the products of rivals

A. Is an accounting system that assigns a company’s expenses to whichever activity in a company’s value chain is responsible for creating the cost

Benchmarking involves
A. Comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities
B. Checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with
C. Studying whether a company’s resource strengths are more/less powerful than the resource strengths of rival companies
D. Studying how a company’s competitive capabilities stack up against the competitive capabilities of selected companies known to have world class competitive capabilities
E. Comparing the best practices in one industry against the best practices in another industry

A. Comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities

Which of the following is not one of the objectives of benchmarking?
A. To identify the best practices in performing various value chain activities
B. To learn how best practice companies achieve lower costs or better results in performing benchmarked activities
C. To help construct a company value chain and identify which activities are primary and which are support activities
D. To develop cross-company comparisons of the costs of performing specific value chain activities
E. To take actions to improve a company’s cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what other companies have achieved

C. To help construct a company value chain and identify which activities are primary and which are support activities

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is
A. Competitive strength analysis
B. Activity-based costing
C. Resource cost mapping
D. SWOT analysis
E. Benchmarking

E. Benchmarking

The options for remedying an internal cost disadvantage include
A. Investing in productivity-enhancing, cost-saving technological improvements
B. Redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly
C. Implementing the use of best practices, particularly for high-cost activities
D. Eliminating some cost-producing activities from the value chain, especially low value-added activities
E. All of these

E. All of these

Which of the following is not a good option for trying to remedy high internal costs vis-à-vis rivals firms?
A. Investing in productivity-enhancing, cost-saving technological improvements
B. Redesigning the product or some of its components to permit more economical manufacture or assembly
C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction
D. Outsourcing high-cost activities to vendors or contractors who can perform them more economically
E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin America or Eastern Europe) where they can be performed more cheaply

C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction

A company’s strategic options for remedying cost disadvantages in internally performed value chain activities do not include
A. Revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities)
B. Implementing the use of best practices, particularly for high-cost activities
C. Investing in productivity-enhancing, cost-saving technological improvements
D. Switching to activity-based costing
E. Outsourcing the performance of high-cost activities to vendors that can perform them more cheaply

D. Switching to activity-based costing

The options for remedying a supplier-related cost disadvantage include
A. Trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs
B. Forward vertical integration
C. Shifting into the production of substitute products
D. Shifting from a low-cost leadership strategy to a differentiation or focus strategy
E. Cutting selling prices and trying to win a bigger market share

A. Trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs

Which of the following is not an option for remedying a supplier-related cost disadvantage?
A. Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchased
B. Negotiate more favorable prices with suppliers
C. Collaborate closely with suppliers to identify mutual cost-saving opportunities
D. Switch to lower priced substitute inputs
E. Persuade forward channel allies to implement best practices

E. Persuade forward channel allies to implement best practices

Which of the following is not an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)?
A. Shifting to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets
B. Trying to make up the difference by cutting costs earlier in the value chain
C. Pressuring distributors-dealers and other forward channel allies to reduce their costs and markups so as to make the final price to buyers more competitive with the prices of rivals
D. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house and those performed by distributors-dealers
E. Working closely with forward channel allies to identify win-win opportunities to reduce costs

D. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house and those performed by distributors-dealers

A company that does a first-rate job of managing its value chain activities relative to competitors
A. Is likely to have more distinctive competencies than rivals
B. Stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost
C. Is almost certainly going to have a longer and more profitable value chain
D. Usually has strong proficiencies in activity-based costing and benchmarking
E. Usually has the fewest primary activities and the lowest costs in the industry

B. Stands a good chance of achieving competitive advantage by performing its value chain activities either more proficiently or at lower cost

Out-managing rivals in performing value chain activities
A. Is one of the most dependable ways a company can build a competitive advantage over rivals
B. Allows a company to avoid the impact of the five competitive forces
C. Is one of the best ways for a company to avoid being impacted by the industry’s driving forces
D. Allows a company to move into a higher strategic group
E. Helps neutralize external threats to a company’s future business prospects

A. Is one of the most dependable ways a company can build a competitive advantage over rivals

For a company to translate its performance of value chain activities into competitive advantage, it must
A. Develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage
B. Have more core competencies than rivals
C. Have at least three distinctive competencies
D. Have competencies that allow it to produce the highest quality product in the industry
E. Have more competitive assets than competitive liabilities

A. Develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage

To build a competitive advantage by out-managing rivals in performing value chain activities, a company must
A. Position itself in the industry’s more favorably situated strategic group
B. Develop resources strengths that will enable it to pursue the industry’s most attractive opportunities
C. Develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it performs value chain activities such that it has a low-cost advantage
D. Outsource most all of its value chain activities to world-class vendors and suppliers
E. Eliminate its resource weaknesses

C. Develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers or else be more cost efficient in how it

The value of doing competitive strength assessment is to
A. Determine how competitively powerful the company’s core competencies are
B. Learn if the company’s market opportunities are better than those of its rivals
C. Learn whether a company has a distinctive competence
D. Learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals
E. Determine whether a company’s resource strengths are sufficient to allow it to earn bigger profits than rivals

D. Learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals

Doing a competitive strength assessment entails
A. Determining whether a company has a cost-effective value chain
B. Ranking the company against major rivals on each of the important factors that determine market success and ascertaining whether the company has a net competitive advantage or disadvantage versus major rivals
C. Identifying a company’s core competencies and distinctive competencies (if any)
D. Analyzing whether a company is well positioned to gain market share and be the industry’s profit leader
E. Developing quantitative measures of a company’s chances for future profitability

B. Ranking the company against major rivals on each of the important factors that determine market success and ascertaining whether the company has a net competitive advantage or disadvantage versus major rivals

A weighted competitive strength assessment is generally analytically superior to an unweighted strength assessment because
A. A weighted ranking identifies which competitive advantages are most powerful
B. An unweighted ranking doesn’t discriminate between companies with high and low market shares
C. It singles out which competitor has the most competitively potent core competencies
D. Weighting each company’s overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength
E. All of the various measures of competitive strength are not equally important

E. All of the various measures of competitive strength are not equally important

A weighted competitive strength analysis is conceptually stronger than an unweighted analysis because
A. It provides a more accurate assessment of the strength of competitive forces
B. It eliminates the bias introduced for those firms having large market shares
C. The different measures of competitive strength are unlikely to be equally important
D. The results provide a more reliable measure of what competitive moves rivals are likely to make next
E. Weighting each company’s overall competitive strength by the size of its market share produces a more accurate measure of its true competitive strength

C. The different measures of competitive strength are unlikely to be equally important

In a weighted competitive strength assessment, the sum of the weights should add up to
A. 100%
B. 1.0
C. 10
D. 100
E. None of the above

B. 1.0

In a weighted competitive strength analysis, each strength measure is assigned a weight based on
A. Its percentage share of total industry revenues
B. The importance of each competitive strength measure in building a sustainable competitive advantage
C. Its perceived importance in determining a company’s competitive success in the marketplace
D. Its percentage share of total industry profits
E. What it takes to provide better analytical balance between the companies with high ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.0

C. Its perceived importance in determining a company’s competitive success in the marketplace

Calculating competitive strength ratings for a company and its rivals using the industry’s most telling measures of competitive strength or weakness
A. Is a way of determining which competitor has the biggest overall competitive advantage in the marketplace and which competitor is faced with the biggest overall competitive disadvantage
B. Is the most reliable indicator of which industry member has the highest overall product quality
C. Is a powerful way of revealing which competitors are in the best and worst strategic groups
D. Is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader
E. Pinpoints which industry rivals are most insulated from the industry’s driving forces

A. Is a way of determining which competitor has the biggest overall competitive advantage in the marketplace and which competitor is faced with the biggest overall competitive disadvantage

Quantitative measures of a company’s competitive strength
A. Signal which competitor has the most distinctive competencies and which competitor has the fewest
B. Provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival
C. Reveal which competitors are in the best and worst strategic groups
D. Show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities
E. Pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces

B. Provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival

Which one of the following is an accurate interpretation of the scores that result from doing a competitive strength assessment?
A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores
B. High scores indicate that a company is a power-user of best practices while low scores signal minimal or ineffective adoption of best practices
C. The company with the lowest score has the lowest-cost value chain
D. The company with the lowest score has the strongest net competitive advantage over its rivals
E. High scores indicate which rivals are most vulnerable to competitive attack

A. High scores signal a strong competitive position and possession of a competitive advantage over companies with lower scores

Which one of the following is not something that can be learned from doing a competitive strength assessment?
A. The factors on which a company is competitively strongest and weakest vis-à-vis key rivals
B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain
C. Which of the rated companies is competitively strongest and what size competitive advantage it enjoys
D. Whether a company has a net competitive advantage or a net competitive disadvantage relative to key rivals (with the size of the advantage/disadvantage being indicated by the differences among the companies’ competitive strength scores)
E. Which rival company is competitively weakest and the areas where it is most vulnerable to competitive attack

B. Whether a company should correct its weaknesses by adopting best practices and revamping the makeup of its value chain

Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate
A. Which weaknesses and vulnerabilities of competitors that the company might be able to attack successfully
B. Which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups
C. Which competitors are employing offensive strategies and which competitors are employing defensive strategies
D. Which competitors are likely to make money and which are likely to lose money in the years ahead
E. What the industry’s key success factors are

A. Which weaknesses and vulnerabilities of competitors that the company might be able to attack successfully

Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because
A. Without a precise fix on what problems/issues a company confronts, managers cannot know what the industry’s key success factors are
B. The "worry list" sets the management agenda for taking actions to improve the company’s performance and business outlook
C. Without a precise fix on what problems/roadblocks a company confronts, managers are less clear about what value chain activities to benchmark
D. The "worry list" helps company managers clarify their thinking about how best to modify the company’s value chain
E. These issues and obstacles must be cleared before management can focus clearly on what is the best strategy for the company to pursue

B. The "worry list" sets the management agenda for taking actions to improve the company’s performance and business outlook

Identifying the strategy-related issues and problems that company managers need to address and resolve entails
A. Drawing on what was learned from having analyzed the company’s industry and competitive environment
B. Drawing on the evaluations of the company’s own resources, internal circumstances and competitiveness
C. Locking in on what challenges/obstacles/roadblocks the company has to overcome in order to be financially and competitively successful in the years ahead
D. Developing a "worry list" of "how to," "whether to.," and "what to do about.."
E. All of the above

E. All of the above

Identifying the strategic issues and problems that merit front-burner managerial attention
A. Is accomplished in part by using the results of analyzing the company’s external environment to help come up with a "worry list" of "how to," "whether to.," and "what to do about.."
B. Helps set management’s agenda for taking actions to improve the company’s performance and business outlook
C. Is done in part by evaluating the company’s own internal situation—its resources and competitive position—to help come up with a "worry list" of "how to," "whether to.," and "what to do about.."
D. Is done in part as a basis for drawing conclusions about whether to stick with company’s present strategy or to modify it
E. All of the above

E. All of the above

Which of the following is not part of the task of identifying the strategic issues and problems that merit front-burner managerial attention?
A. Analyzing the company’s external environment
B. Evaluating the company’s own resources and competitive position
C. Surveying a company’s board members, managers, select employees and key investors regarding what strategic issues they think the company faces
D. Developing a "worry list" of "how to," "whether to.," and "what to do about.."
E. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead

E. Assessing what challenges the company has to overcome in order to be financially and competitively successful in the years ahead

Which of the following is not accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention?
A. It entails drawing upon the results and conclusions from analyzing the company’s external environment
B. It entails drawing on the results and conclusions from evaluating the company’s own resources and competitive position
C. It entails developing a "worry list" of "how to," "whether to.," and "what to do about.."
D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company’s internal and external environment
E. Developing a list of what issues and problems that managements needs to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company’s position and prospects

D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company’s internal and external environment