Essentials of Strategic Management
Strengthening a Company’s Competitive Position: Strategic Moves, Timing, and Scope of Operations – CH6
Your Results:
The answer for each question is indicated by a .
1
Which of the following is not one of the principal offensive strategy options?
A)
Adopting and improving on the good ideas of other companies.
B)
Launching preemptive strikes.
C)
Blocking the avenues open to challengers.
D)
Attacking competitors’ weaknesses.
E)
Offering an equal or better product at a lower price.
2
A blue ocean type of offensive strategy _______________
A)
is a preemptive strike type of price-cutting offensive used by a market leader to steal customers away from higher-priced rivals.
B)
involves deliberately attacking those market segments where a key rival makes big profits.
C)
involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or distinctive market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.
D)
involves using innovative advertising and deep price discounts to grab sales and market share from complacent or distracted rivals.
E)
employs highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.
3
A hit-and-run or guerrilla warfare type of offensive strategy involves _______________
A)
random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals.
B)
undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position.
C)
tactics that work best if the guerrilla is the industry’s low-cost leader.
D)
pitting a small company’s own competitive strengths head-on against the strengths of much larger rivals.
E)
surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.
4
Which one of the following is not a good type of rival for an offensive-minded company to target?
A)
Market leaders that are vulnerable.
B)
Runner-up firms with weaknesses in areas where the challenger is strong.
C)
Small local and regional companies with limited capabilities.
D)
Other offensive-minded companies with a sizable war chest of cash and marketable securities.
E)
Struggling enterprises that are on the verge of going under.
5
The purposes of defensive strategies are to _______________
A)
aggressively retaliate against rivals pursuing offensive strategies and prevent price wars.
B)
restrict a competitive attack by a challenger, weaken the impact of any attack that occurs, and influence challengers to aim their offensive efforts at other rivals.
C)
guard against adverse changes in the company’s macro-environment and insulate the company from the impact of industry-driving forces.
D)
strengthen a company’s competitive advantage and reduce its exposure to business risk.
E)
eliminate a company’s resource weaknesses and competitive deficiencies, thereby making it invulnerable to competitive attack from would-be challengers.
6
Being first to initiate a particular move can have a high payoff when _______________
A)
pioneering helps build up a firm’s image and reputation with buyers.
B)
early commitments to new technologies, new-style components, new or emerging distribution channels, and so on, can produce an absolute cost advantage over rivals.
C)
first-time customers remain strongly loyal to pioneering firms in making repeat purchases.
D)
moving first constitutes a preemptive strike, making imitation extra hard or unlikely.
E)
All of these.
7
In which of the following situations is being first to initiate a particular move not likely to result in a positive payoff?
A)
When potential buyers are skeptical about the benefits of a new technology or product being pioneered by a first mover.
B)
When pioneering helps build up a firm’s image and reputation with buyers.
C)
When first-time buyers remain strongly loyal to a pioneering firm in making repeat purchases.
D)
When moving first can constitute a preemptive strike, making imitation extra hard or unlikely.
E)
When moving first can result in a cost advantage over rivals.
8
In which of the following cases are first-mover disadvantages not likely to arise?
A)
When the costs of pioneering are much higher than being a follower and only negligible buyer loyalty or cost savings accrue to the pioneer.
B)
When new infrastructure is needed before market demand can surge.
C)
When the pioneer’s skills, know-how, and products are easily copied or even bested by late movers.
D)
When customer loyalty to the pioneer is low.
E)
When technological change is rapid and following rivals find it easy to leapfrog the pioneer with next-generation products of their own.
9
Mergers and acquisitions are a popular strategy because they are an effective means of _______________
A)
revamping a company’s value chain.
B)
facilitating the employment of both offensive and defensive strategies.
C)
creating a more cost-efficient operation, expanding a company’s geographic coverage, and extending a company’s business into new product categories.
D)
gaining quick access to new technologies or other resources and competitive capabilities and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.
E)
Both C and D.
10
Which one of the following statements about merger and acquisition strategies is true?
A)
Merger and acquisition strategies are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies.
B)
Merger and acquisition strategies tend to be far more successful than forming strategic alliances and cooperative partnerships with other companies.
C)
Mergers and acquisitions do not always produce the hoped for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may take substantially longer to realize or may never materialize. Efforts to mesh the corporate cultures can stall due to formidable resistance from organization members.
D)
Mergers and acquisition strategies are a very high-risk strategy because of the financial drain of using the company’s cash resources to accomplish the merger or acquisition.
E)
Merger and acquisition strategies are one of the best ways for helping a company strengthen its brand image.
11
Which of the following is typically the strategic impetus for forward vertical integration?
A)
To charge lower retail prices and thereby attract a bigger, more loyal clientele of customers.
B)
To make it easier to expand the company’s product line.
C)
To gain better access to end users and better market visibility.
D)
To achieve greater control over advertising and in-store retail merchandising.
E)
To gain better access to greater economies of scale.
12
Which of the following is not a strategic disadvantage of vertical integration?
A)
It greatly reduces the opportunity for capturing maximum scale economies and achieving the lowest possible operating costs.
B)
Vertical integration increases a firm’s capital investment in the industry.
C)
Integrating into more industry value chain segments increases business risk if industry growth and profitability sour.
D)
Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities.
E)
Integrating backward potentially results in less flexibility in accommodating shifting buyer preferences when a new product design doesn’t include parts and components that the company makes in-house.
13
Which of the following is not a potential advantage of backward vertical integration?
A)
Adding to a company’s differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.
B)
Lessening a company’s vulnerability to powerful suppliers inclined to raise prices at every opportunity.
C)
Spares a company the uncertainty of being dependent on suppliers for crucial components or support services.
D)
Enhanced R&D capability, better opportunity to establish a core competence in supply chain management, more flexibility in incorporating state-of-the-art parts and components, and better overall product quality.
E)
Contributes to a better-quality product/service offering.
14
Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders?
A)
Being able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company’s website.
B)
Allowing a company to reduce costs if the activity is not crucial to the firm’s ability to achieve sustainable competitive advantage and won’t hollow out its capabilities, core competencies, or technical know-how.
C)
Improving organizational flexibility and speeding time to market.
D)
Allowing a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best.
E)
Being able to reduce the company’s risk exposure to changing technology and/or buyer preferences.
15
Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies?
A)
Whether and when to go on the offensive and initiate aggressive strategic moves to improve the company’s market position.
B)
Which value chain activities, if any, should be outsourced.
C)
Whether to employ a low-end strategy or a middle-of-the-road strategy or a high-end strategy.
D)
Whether to integrate forward or backward into more stages of the industry value chain.
E)
Whether to enter into strategic alliances or collaborative partnerships.
16
Strategic alliances _______________
A)
are the cheapest means of developing new technologies and getting new products to market quickly.
B)
are a proven means of reducing the costs of performing value chain activities.
C)
are best used to insulate a company from the impact of the five competitive forces.
D)
help insulate a firm from the adverse impacts of industry driving forces.
E)
are formal agreements between two or more companies to work cooperatively toward some common objective.
17
Companies are motivated to enter into strategic alliances or cooperative arrangements _______________
A)
to expedite the development of promising new technologies or products.
B)
to overcome deficits in their own technical and manufacturing expertise.
C)
to bring together the personnel and expertise needed to create desirable new skill sets and capabilities.
D)
to acquire or improve market access.
E)
All of these.
18
The most long-lasting strategic alliances _______________
A)
aim at teaming up with world-class suppliers or else companies with world-class know-how in product innovation.
B)
are those whose purpose is helping a company master a new technology.
C)
are those formed to enable the partners to be consistent first movers or fast followers.
D)
(1) involve collaboration with suppliers or distribution allies, or (2) conclude that continued collaboration is in their mutual interest, perhaps because new opportunities for learning are emerging.
E)
aim at insulating the partners against the impacts of the five competitive forces and industry driving forces.
19
Experience indicates that strategic alliances _______________
A)
have a high “divorce rate.”
B)
are generally successful.
C)
work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency.
D)
work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies.
E)
are rarely useful in helping a company win the race for global industry leadership and in establishing positions in industries of the future.
20
Which of the following is not a typical reason that many alliances prove unstable or break apart?
A)
Inability to work well together.
B)
The emergence of more attractive technological paths.
C)
Changing conditions make the purpose of the alliance obsolete.
D)
Disagreement over how to divide the added market share and profits gained from joint collaboration.
E)
Diverging objectives and priorities.
