Management BSG Chapters 1-12

A company’s strategy

consists of the competitive moves and business approaches that managers employ to attract and please customer, compete successfully, capitalize on opportunities to grow the business, respond to changing market conditions, conduct operations, and achieve the targeted financial and market performance.

According to Figure 1.1, which of the following is not something to look for in identifying a company’s strategy?

Actions to strengthen the company’s competitive position by hiring one or more new top executives or laying off a portion of its work force or paying down its long-term debt.

In endeavoring to craft an ethical strategy, company managers

have to go beyond what strategic actions and behaviors are deemed legal and address whether all the various elements of the company’s strategy can pass the test of moral scrutiny.

Which of the following is not a reason that a company’s strategy evolves over time?

The ongoing need to frequently pursue entirely new ways to cut costs and boost profitability

Excellent execution of an excellent strategy

is the best test of managerial excellence

A company’s strategy can be considered "ethical"

if it does not entail actions or behaviors that cross the moral line from "can do" to "should not do" (because such actions are unsavory, unconscionable, injurious to others, or unnecessarily harmful to the environment).

A company’s strategy evolves from one version to the next because of

the proactive efforts of company managers to improve this or that aspect of the strategy, a need to respond to changing customer requirements and expectations, and a need to react to fresh strategy maneuvers on the part of rival firms

A portion of a company’s strategy is always developed on the fly because

managers must always be willing to supplement or modify various proactive strategy elements with as-needed reactions to unanticipated happening in the surrounding environment.

The two crucial elements of a company’s business model are

its customer value proposition (the buyer wants and needs it seeks to satisfy and whether customers will consider the price charged to be a "good value") and its "profit formula" (the business approach, the mean of generating revenues, and the principal resources and operation systems that will be employed to create and deliver the intended customer value in a cost-efficient and profitable manner).

Which of the following is not a frequently used dependable strategic approach to setting a company apart from rivals, delivering superior value, achieving competitive advantage, and converting buyers into loyal customers?

Outcompeting rivals by having the most unique and economically priced product offering of any firms in the industry.

A winning strategy is one that

fits the company’s internal and external situations, helps achieve sustainable competitive advantage, and produces good company performance.

The difference between a company’s business model and a company’s strategy is that

its business model relates to management’s blueprint for delivering a valuable product or service to customers in a manner that will generate ample revenues to cover costs and yield an attractive profit while its strategy related to the company’s competitive moves and business approaches (which may or may not lead to profitability).

A company’s business model

is managements blueprint for delivering a valuable product or service to customers in a manner that will generate ample revenues to cover costs and yield an attractive profit

Which of the following is not something a company’s strategy is concerned with

management’s choice of which of several alternative business models to employ in delivering value to customers and shareholders

The heart and should of any strategy

is the actions and moves in the marketplace that managers are taking to gain a competitive advantage over rivals.

The value of doing a weighted competitive strength assessment is to

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-a-vis key rivals.

The market opportunities most relevant to a company are those that

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

which of the following provides the most accurate picture of whether a company is cost competitive with its rivals

how the combined costs of a company’s internally performed activities, the activities performed by its suppliers, and the activities performed by its forward channel allies compare against the costs of the supplier-performed, internally-performed, and forward channel ally-performed value chain systems employed by rival firms

The best example of company strength is

having proven technological expertise and ability to churn out new and improved products on a regular basis

In a weighted competitive strength assessment like that shown in table 4.3, the measures elected as indicators of competitive strength should be based on

industry key success factors and other important determinants of whether industry members will be competitively successful or not so successful; the importance weights assigned to each of these strength measures should sum to 1.0

In table 4.2, which one o the following is not an example of a potential resource weakness or competitive deficiency that a company may have?

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

The competitive power of a company resource strength or competitive capability does not hinge on which one of the following?

Whether the strength or capability represents a distinctive competence

Which of the following is not one of the objectives of benchmarking

to identify the best practices in performing various value chain activities

According to table 4.1 the profitability ratios most commonly used to evaluate a company’s financial performance table

its gross profit margin, operating profit margin, net profit margin, return on stockholders’ equity (ROE), return on invested capital (ROIC), and earning per share (EPS).

According to figure 4.1, which of the following is not pertinent in identifying a company’s present strategy?

the company’s strategic intent and the moves it has made to build an attractive value chain

When a company performs a competitively important activity better than its rivals, it is said to have

a distinctive competence in performing that activity

two useful tools for determining whether a company’s customer value proposition, prices, and costs are competitive are

value chain analysis and benchmarking

SWOT analysis

is a simple and powerful tool for evaluating the competitive power of a company’s resources and capabilities and whether a company’s overall situation is fundamentally healthy or unhealthy.

which one of the following is not park of the task of identifying the strategy-related issues and problems that merit the front-burner attention of company managers

determining what strategic actions to take and which strategic moves to make

which of the following statements about company value chains is false

identifying the primary and secondary activities that comprise a company’s value chain and comparing these activities to the value chain activities of rivals is called benchmarking

According to figure 4.5, for a company to translate its performance of value chain activities into competitive advantage, it must

beat rivals in performing value chain activities more proficiently (thus creating a differentiation-based competitive advantage keyed to delivering what customers preview as a superior product offering) or beat rivals in performing value chain activities more cheaply (thus achieving a cost-based competitive advantage).

As shown in Figure 4.2, the three steps of SWOT analysis include

(1) identifying the company’s resource strengths and weaknesses, its market opportunities, and the external threats to its future well-being, (2) drawing conclusions from the SWOT listings about the company’s overall business situation, and (3) translating these conclusions into strategic actions for improving the company’s strategy

Which one of the following is not something that can be learned from doing a competitive strength assessment (as illustrated in Table 4.3 and explained in the accompanying discussion)?

Which of the rated competitors are employing offensive strategies and which are employing defensive strategies

In Table 4.2, which of the following is not an example of a potential external threat to a company’s future profitability?

The company’s lack of a well-known brand name

Which of the following is not an option for lowering the costs of distribution-related activities?

Implementing an activity-based cost accounting system for all distribution-related activities and ceasing to perform all those distribution-related activities having unacceptably high costs

The most appealing approaches to differentiation are those that

are hard or expensive for rivals to duplicate – east to copy differentiating features cannot produce sustainable competitive advantage

Which of the following is not one of the five generic type of competitive strategy?

A best-value strategy

Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities most cost-effectively

Outsourcing all production related activities

for a company to do a more cost-efficient job of managing its value chain than rivals, managers must

search out cost-saving opportunities in every part of the value chain and pay particular attention to a set of factors known as cost drivers that have a strong effect on a company’s costs and can be used as level to lower costs

a low cost leader can translate its low cost advantage over rivals into superior profit performance by

either using its low cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or else by refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold thereby boosting the firm’s total profits and return on investment

broad differentiation strategies are well suited for market circumstances where

there are many ways to differentiate the product or service that have value to buyers

the chief difference between a low cost provider strategy and focused low cost strategy is

the size of the buyer group that a company is trying to appeal to

Which of the following is not one of the pitfalls of a low cost provider strategy

not cutting prices far enough below what rivals are charging to achieve dramatically large gains in sales volumes and market shares

A company achieves best-cost provider status by

using its resources and capabilities to incorporate attractive upscale attributes at a lower cost than those rivals with comparable upscale product offerings

a focused low cost strategy seeks to achieve competitive advantage by

serving buyers in the target market niche at a lower cost and a lower price than rival competitors – this requires out managing rivals in performing value chain activities cost effectively and/or finding innovative ways to bypass certain value chain activities.

Which of the following statements about a best cost provider strategy is false?

what makes a best-cost provider strategy so attractive is the ability to translate best cost status into achieving the highest profit margins of any firm in the industry

A strategy to be the industry’s overall low cost provider tends to be more appealing than a differentiation or best cost or focused (or market niche) strategy when

buyers incur low costs in switching their purchases from one seller to another and the products of rival sellers are both essentially identical and in abundant supply

A low cost leader’s basis for competitive advantage is

meaningfully lower overall costs than rivals

Focused strategies keyed either to low cost or differentiation are especially appropriate for situations where

the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive nice suited to its resource strengths and capabilities and, also, to avoid the risk of overcrowding that occurs when too many rivals attempt to focus their energies on the same target segment

For a company’s competitive strategy to succeed in delivering good performance or the intended competitive advantage over rivals

it must be underpinned by a set of resources, know-how, and competitive capabilities that is well matched to the strategy

which of the following is not one of the pitfalls or mistakes associated with pursuing a differentiation strategy?

Trying to strongly differentiate the company’s product from those of rivals rather than be content with weak product differentiation

A company’s competitive strategy deals with

the specifics of managing a company’s game plan for competing successful – how it intends to please customers, offensive and defensive move to counter the maneuvers of rivals, responses to shifting market conditions, and initiatives to strengthen the company’s market position and achieve a particular kind of competitive advantage

a broad differentiation strategy enhances profitability when

a company is able to either keep the costs of achieving differentiation below the added price premium the differentiating attributes can command in the marketplace or else offset thinner profit margins per unit by selling enough additional units to increase total profits

The essence of broad differentiation strategy is to

offer unique product attributes that a wide range of buyers find appealing and worth paying for

which of the following statements about cost drivers is true?

The term cost drivers refers to a set of factors that have a strong effect on a company’s costs and can be used as levers to lower costs.

competing in one or more countries or regions of the world causes strategy-making to be more complex because of

differing governmental policies and regulations that make the business climate more favorable in some countries than in others

which of the following is not among the important strategic issues associated with competing across national boundaries

which foreign country markets will prove to be the best and most well-protected profit sanctuary

which of the following statements regarding multi country competitions is false?

with multi country competition, the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole

because buyer tastes for a particular product or service sometimes differ substantially from country to country

companies operating in a global marketplace must wrestle with whether and how much to customize their offerings in each different country market to match the tastes and preferences of local buyers or whether to pursue a strategy of offering a mostly standardized product worldwide.

according to figure 7.2, which of the following does not accurately characterize the differences between localized multi country strategy and a global strategy

a global strategy involves striving to minimize worldwide shipping costs whereas a multi country strategy entails a willingness to tolerate high shipping costs in the interest of minimizing overall production costs

which one of the following is not a reason why a company decides to enter foreign markets?

to build the profit sanctuaries necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market

the advantages of using an export strategy to build a customer base in foreign markets includes

being a conservative way to testing the merits of pursuing international sales and limiting the amount of capital required to being competing internationally.

when the Brazilian real declines in value against the euro, a European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to those European countries where the currency is euros

is in better position to compete against the makers of the same good whose plants are located in the euro-based European countries

Which of the following is not a potential benefit of collaborative strategies involving alliances and/or joint ventures with foreign partners?

greater ability to employ offensive strategies and build well-protected santuaries

which of the following is the most unlikely element of a "think global, act global" approach to crafting a global strategy?

having relatively small plants in many countries, with each plant producing product versions for local area markets

which of the following is not one of the primary strategy options for competing in the markets of foreign countries?

a multiple cross-country strategy involving strategic alliances, joint ventures, and other cooperative agreements with foreign companies

in which of the following situations is employing a "think local, act local" multi country strategy highly questionable?

when a company is striving to build a globally recognized brand name for one of its products or services

which of the following qualifies as an offensive strategy for companies competing internationally or globally?

dumping goods at cut-rate prices in the markets of rivals

profit sanctuaries

are country markets (or geographic regions) in which a company derives substantial profits because of its strong or protected market position

a firm can endeavor to gain competitive advantage or counteract disadvantages in foreign country markets by

doing a better job than rivals of sharing and transferring competitively valuable resources and capabilities across the boarders of the countries in which it competes

which of the following is the best example of unrelated diversification?

a producer of men’s apparel acquiring a maker of golf equipment

the top-level executive task of crafting a diversified company’s overall or corporate strategy includes which one of the following?

evaluating the growth and profitability prospects for each business and then investing aggressively in the most promising businesses with the best prospects, investing cautiously in businesses with just average prospects, and divesting businesses with unacceptable prospects

calculating quantitative competitive strength ratings for each of a diversified company’s business units involves

selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, summing the weighted rating for each business unit to obtain an overall competitive strength score, and using the overall competitive strength scores to evaluate the competitive strength of the businesses units, both individually and as a group.

what makes related diversification an attractive strategy is

the opportunity to convert cross-business strategic fits into competitive advantage over undiversified competitors and competitors whose own diversification efforts don’t offer equivalent strategic-fit benefits

which of the following is the best example of related diversification?

a manufacturer of dining room furniture acquiring a maker of patio furniture

based on the information presented in figure 8.1, which of the following would not be something to look for in identifying a diversified company’s strategy?

the generic competitive strategy each business is employing

different businesses are said to be"unrelated" when

they have dissimilar value chains, containing no competitively useful cross-business relationships or strategic fits

which of the following is not part of the procedure for evaluating the pluses and minuses of a diversified company’s strategy and deciding what actions to take to improve the company’s performance?

conducting a SWOT analysis of each business the company has diversified into

economies of scope

stem from strategic fit efficiencies along the value chains of related businesses

the two biggest drawbacks or disadvantages of pursuing unrelated diversification strategies are

demanding managerial requirements and no potential for competitive advantage beyond any benefits or corporate parenting and what each individual business can generate on its own

diversification does not result in added long-term value for shareholders unless it

produces a 1+1=3 effect where sister businesses perform better together as part of the same firm than they could have performed as independent companies

a business unit’s location in the nine-cell industry attractiveness-competitive strength matrix

signals whether each business’s priority for receiving new investment capital and other resources from its corporate parent should be high, medium, or low

a "cash hog" type of business

is one that generates cash flows that are too small and to fly fund its operations and growth – such businesses require periodic cash infusions to fund internal operations and finance capital requirements

which of the following is not part of the task of checking a diversified company’s business line-up for adequate financial and non financial resource fit?

determining whether some business units have value chain match-ups that offer opportunities to transfer skills, technology, and/or intellectual capital from one business to another

which of the following is not one of the appeals of related diversification?

it is particularly well-suited for minimizing business risk and capturing valuable industry attractiveness fits

when industry attractiveness ratings are calculated for each of the industries a multi-business company has diversified into, the results help indicate

which of the industries the company has diversified into are most attractive and least attractive and the overall appeal of the whole group of industries they company has diversified into

which one of the following is not one of the ways for a diversified company to build competitively advantage by pursuing a multinational diversification strategy?

increased ability to build well-protected profit sanctuaries in those foreign country markets where profit margins are highest

which one of the following is not something that corporate executives must do to succeed in using a strategy of unrelated diversification to produce companywide financial results above and beyond what the businesses could generate operating as stand-alone entities?

focus on acquiring businesses that offer the best opportunities for achieving global market leadership (thereby satisfying the industry attractiveness and competitive strength tests)

once a company has diversified into a collection of related or unrelated businesses and concluded that some strategy adjustments are needed, which one of the following is not one of the main strategy options that a company can pursue?

have all of the company’s businesses operate under a common brand name and craft new initiatives to build/enhance the reputation of this brand name worldwide

diversification becomes a prime strategic option in all but which one of the following situations?

when a company has more resource deficiencies than resource strengths in tis principal business

according to integrative social contracts theory

universal ethical principles or norms based on the collective views of multiple cultures and societies combines to form a "social contract" that all individuals, groups, organizations, and businesses in all situations have a duty to observe; however, within the boundaries of this social contract, local cultures or groups have the "moral space" to specify what other actions may or may not be ethically permissible.

when it comes to the practice of some businesses paying bribes and kickbacks to secure government contracts, obtain a license or permit from government agencies, or win/retain the business of customers, it is fair to say that

it is very difficult for a multinational company to ethically justify such payments when it does business in countries where such payments are illegal and/or when the company’s code of ethics forbids such payments

the school ethical relativism holds that

because there are meaningful variations in what societies generally agree to be ethically right and wrong in the conduct of business activities, it is appropriate for there to be differing standards of what constitutes ethical business behavior and what constitutes unethical business behavior and further, for local ethical standards to take precedence over the ethical standard that exist elsewhere

the use of child labor

may be ethically permissible according to the school of ethical relativism (based on the rule of "when in Rome do as the Romans do") but does not qualify as ethically permissible business behavior according to the school of ethical universalism because in most societies, especially modern industrialized countries, such a practice is not in keeping with generally acceptable standard of business behavior.

which of the following are major drivers of unethical managerial behavior?

overzealous pursuit of wealth and other selfish interests, head pressures on campy managers to meet or beat performance targets, and a company culture that puts profitability and good business performance ahead of ethical behavior.

a company’s strategy needs to be ethical because

a strategy that is unethical in while or in part is morally incorrect and the "wrong thing to do" pursuit of an unethical strategy reflects baldy on the character of the company personnel involved

multinational companies

the forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition are acting in accord with the principles of the school of ethical universalism and are rejecting the principles underlying the school of ethical relativism

which one of the following is not among the good business reasons why companies should be public-spirited and devote time and resources to social responsibility initiatives, environmental sustainability, and being good corporate citizens?

a business is obligated to act as a responsible citizen and do its fair share to promote the general welfare; otherwise it is in violation of its implied contract with society and subject to both heavy fines and excess profits tax.

as depicted in figure 9.2 which one of the following is not a component of a social responsibility strategy?

actions to reduce corruption in business activities worldwide and to promote greater adherence to a worldwide code of ethics

business ethics concerns

the application of general ethical principles and standards to the actions and decisions of businesses and the conduct of their personnel

according to the school of ethical universalism

the most important standards of what if right and what is wrong resonate the peoples of most societies regardless of local traditions and cultural norms – hence, common ethical standards can be used to judge the conduct of personnel at companies operating in all countries and cultural circumstances

according to the data in table 9.1

the CPI scores in such countries as Finland, Denmark, New Zealand, Sweden, Netherlands and Switzerland is higher (indicating lower received levels of corruption)than in such countries as the US, France, South Korea, China, India, Russia and Brazil.

moral managers

see themselves as stewards of ethical behaviors and believe it is important to exercise ethics leadership; they are ethically principled and pursue success in business within the confines of both the letter and spirit of what is ethical and legal.