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COMPLETE TEST BANK WITH ANSWERS
Crafting & Executing Strategy The Quest for Competitive Advantage Concepts and Cases 21st Edition By Arthur A. Thompson Jr Test Bank
Sample Questions
Chapter 01 What Is Strategy and Why Is It Important? Answer Key
Multiple Choice Questions
1. | Which of the following is NOT one of the managerial considerations in determining how to compete successfully?
Managerial considerations for successful strategies serve consumers better while increasing performance. Internal attributes are modified to meet product line changes based on changes in the market rather than vice versa.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 01-01 What we mean by a companys strategy. Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Strategic management |
2. | A pharmaceutical company functioning in France for the last 10 years has moderate sales in a crowded market with competitors offering drugs with similar efficacy and safety precautions, but with better sales. The greatest challenge is to increase the prescription of their drugs. What would be the MOST effective strategy to improve sales performance in the existing market?
Modifying marketing communication to target the most preferred set of physicians would help increase the prescription of drugs, boosting sales and performance, and increasing market share. Relocation or reduced supplier costs might improve profits but would not affect sales performance. Employing drug designers does not add value as the rivals, too, offer drugs with similar efficacy and safety precautions.
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AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic management |
3. | A companys strategy consists of the action plan management takes to
A companys strategy is the set of actions that its managers take to outperform the companys competitors with a unique market position and sustained competitive advantage.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic planning |
4. | __________ is the set of actions that its managers take to outperform the companys competitors and achieve superior profitability.
A companys strategy is the set of actions that its managers take to outperform the companys competitors and achieve superior profitability. Achieving this entails making a managerial commitment to a coherent array of well-considered moves about how to compete.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic management |
5. | Strategy, at its essence, is about
Strategy at its essence is about setting a company apart from its rivals and staking out a market position that is not crowded with strong competitors. It aims doing what rivals cannot or do not do.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic management |
6. | To improve performance, there are many different avenues for outcompeting rivals such as
Strategy is about competing differently from rivalsdoing what competitors dont do or doing what they cant do. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen their market position and competitiveness.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic positioning |
7. | A multinational pharmaceutical company enters a new geographical location, considered an emerging market, with its established product line: generic antibiotics. Which of the following would NOT serve as a good strategic move to enhance profits?
A sales plan that is based on a low price, high cost model usually does not work as it creates a wide gap between investment and realized profits, whereas an attractive mass market plan, diversification of products, positive acquisition, and more visibility in a market are moves to enhance profits.
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AACSB: Analytical Thinking AACSB: Technology Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic planning |
8. | Every strategy needs
Every companys strategy needs to have some distinctive and unconventional element that draws in customers and produces a competitive edge. Mimicking the strategies of successful industry rivals and employing diverse practices, not necessarily aligned to a strategy, rarely work.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 01-01 What we mean by a companys strategy. Topic: Competitive intelligence |
9. | A companys strategy is NOT concerned with managements choices about how to
Mimicking the strategies of successful industry rivalswith either copycat product offerings or maneuvers to stake out the same market positionis certainly not the best at yielding successful results.
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AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Strategic management |
10. | FaberRoad, a respected courier brand, is fast losing its market share to competitors who do overnight deliveries of packages or offer lower prices. The companys research department has found that many customers care more about knowing exactly when a package will arrive than getting it the next day. Which strategy would best address the current state of FaberRoad and help it regain its market?
Developing new tracking technology would be a unique strategy to address the current issue of losing customers.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-01 What we mean by a companys strategy. Topic: Competitive advantage |
11. | A companys strategy stands a better chance of succeeding when
Attracting and pleasing customers through cost, quality, and brand image of a product is one of the hows to be considered while devising strategies that are dynamic, unique, and provide sustainable edge over competitors. Usually, only the management is involved in devising strategies.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Competitive advantage |
12. | In crafting a companys strategy, managers
A well-crafted, well-executed, constantly evolving strategy manages to please customers and shareholders by providing lasting competitive edge. In the process, managers have to take risks and provide concrete solutions in ever-changing markets.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-01 What we mean by a companys strategy. Topic: Competitive advantage |
13. | The heart and soul of a companys strategy-making effort is determining how to
A company achieves a competitive advantage whenever it has some type of edge over rivals in attracting buyers and coping with competitive forces. Strategy, at its essence, is about competing differentlydoing what rival firms dont do or what rival firms cant do.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Competitive advantage |
14. | The pattern of actions and business approaches that would NOT define a companys strategy include actions to
A companys strategy would include actions to gain sales and market share with lower prices based on lower costs, not higher costs.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Competitive advantage |
15. | A creative, distinctive strategy that delivers a sustainable competitive advantage is important because
A company might tailor a strategy to compete profitably in a new market that has few rivals for its business. But when rivals are already entrenched in a market, sustainable competitive advantage provides buyers with lasting reasons to prefer a companys products or services over its rivals offeringsreasons that competitors are unable to nullify or overcome despite their best efforts.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Competitive advantage |
16. | A company achieves a competitive advantage when it
There are many routes to competitive advantage, but they all involve either giving buyers what they perceive as superior value compared to the offerings of rival sellers or giving buyers the same value as others at a lower cost to the firm.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Competitive advantage |
17. | A creative and distinctive strategy that sets a company apart from rivals and that gives it a sustainable competitive advantage
If a companys competitive edge holds promise for being sustainable (as opposed to just temporary), then so much the better for both the strategy and the companys future profitability.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
18. | What separates a powerful strategy from a run-of-the-mill or ineffective one?
A powerful strategy leads to a durable competitive advantage that competitors are unable to nullify or overcome despite their best efforts. This involves balancing and excelling in both internal and external environments.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-02 The concept of a sustainable competitive advantage. Topic: Competitive advantage |
19. | Overdrive Motors, a manufacturer of self-driving delivery trucks, is working on developing its next-generation vehicles. It has decided on a strategy of focusing on a narrow buyer segment and outcompeting rivals by offering buyers customized vehicles at a lower cost than rivals. What basic strategic approach has Overdrive Motors decided upon?
A best-cost provider strategy involves concentrating on a narrow buyer segment and outcompeting rivals by offering buyers more value for their money by providing customized attributes that meet their specialized needs and tastes better than rivals products but at a lower cost.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Cost leadership strategy |
20. | Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage?
Basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage include a low-cost provider strategy, a broad differentiation strategy, a best cost provider strategy, and a focused differentiation strategy. Charging the highest prices in an industry without offering additional value would not be a successful strategy.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
21. | Which of the following is NOT a frequently used strategic approach to set a company apart from rivals and achieve a sustainable competitive advantage?
Simply trying to mimic the strategies of the industrys successful companies never works. Rather, every companys strategy needs to have some distinctive element that draws in customers and produces a competitive edge.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
22. | Which of the following companies would have the LEAST bargaining power with its suppliers?
Companies usually engage in mass production when the demand is high, which usually renders low-priced products. Mass production would also result in easy availability of products to customers. These are direct results of adopting a low-cost provider strategy. Companies that produce high-quality products for a large customer base use a broad differentiation strategy. Companies offering high-cost specialized products have a narrow market focus with lower volume generation, thereby reducing their bargaining power with suppliers who are supplying specialized materials.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
23. | Winning a sustainable competitive edge over competitors does NOT hinge on which of the following?
Although building products that are sold at low prices achieves a cost-based advantage over rivals, it is highly dependent on low manufacturing cost of products. A cost-independent pricing would widen the gap between investments made and profits generated, leading to losses.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
24. | Which of the following airlines does NOT employ a low-cost provider strategy?
Long service times between flights would greatly increase the cost of an airlines operation that cannot be nullified by low prices, which would, in turn, lead to losses. Other airlines on the other hand offer low prices by cutting down on costs, internal and external.
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AACSB: Analytical Thinking AACSB: Technology Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Competitive advantage |
25. | Amys Drive-Thru, a fast food facility, offers healthy, sustainably grown veggie and vegan fast food at higher prices than its competitors in the market and has a drive-through and indoor seated casual dining operation. What strategy is Amys Drive-Thru using to gain competitive advantage?
Amys Drive-Thru focuses on healthy fast food for non-meat eaters. It caters to drive-through and casual dining customers seeking healthy alternatives and generates profits by offering products and services that rivals do not and by focusing on a narrow customer base.
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AACSB: Analytical Thinking AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Focused differentiation strategy |
26. | BloomsJay Resorts Inc. has multiple tropical resorts in various locations. In a crowded market that caters to all kinds of consumers, this resort caters mainly to gays with guaranteed hassle-free holiday experience at a premium price. What strategy is BloomsJay using to gain competitive advantage?
BloomsJay caters to gay customers, focusing on a narrow customer base and providing a unique holidaying experience. It has adopted a focused differentiation strategy concentrating on a narrow customer segment and outcompeting rivals by offering customers attributes that meet their specialized needs and tastes better than rivals offerings.
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AACSB: Analytical Thinking AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Focused differentiation strategy |
27. | Different companies across different industries adopt any one of the five generic strategies to gain competitive advantage. Which of the following is most likely to use a low-cost provider strategy?
The baby products retailer selling unassembled parts made in China is most likely to have the lowest costs, and to pursue a low-cost provider strategy. The other companies are more likely to pursue focused differentiation or best-cost strategies.
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AACSB: Analytical Thinking AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Focused low-cost strategy |
28. | Giving customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations is a
A best-cost provider strategy is giving customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and differentiation strategies; the aim is to have lower costs than rivals while simultaneously offering better differentiating attributes.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. Topic: Cost leadership strategy |
29. | Which of the following is NOT typically a trigger to an evolving strategy?
Adapting to new conditions and constantly evaluating what is working well enough to continue and what needs to be improved are normal parts of the strategy-making process, resulting in an evolving strategy. Strategy features that work with evolving markets would not trigger evolution as long as the firms fundamentals are sound.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Competitive advantage |
30. | To which of the following firms is the term repeatedly evolving strategy MOST applicable?
Industry environments characterized by high-velocity change require companies to repeatedly adapt their strategies. The companies in industries with rapid-fire advances in technology like electronics find it essential to adjust key elements of their strategies several times a year, especially in a saturated market with ample competitors.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Competitive advantage |
31. | Managers of every company should be willing and ready to modify the strategy because
A companys strategy evolves incrementally as management fine-tunes various pieces of the strategy and adjusts it in response to unfolding events. Inevitably there will be occasions when changing market and competitive conditions call for some kind of strategic reaction or abandonment of a current strategy, but a companys strategy also consists of deliberate and proactive (or planned) elements.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Strategic leadership |
32. | Adapting to new conditions like new innovations by competitors, fast-changing technological developments, and constantly evaluating what is working result in
A portion of a companys strategy is always developed on the fly, coming as a response to fresh strategic maneuvers on the part of rival firms, unexpected shifts in customer requirements, fast-changing technological developments, newly appearing market opportunities, a changing political or economic climate, or other unanticipated happenings in the surrounding environment. These adaptive strategy adjustments make up the firms emergent strategy.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Strategic positioning |
33. | Managers must be prepared to modify their strategy in response to all of the following EXCEPT
Managers of every company must be willing and ready to modify the strategy in response to changing market conditions, advancing technology, unexpected moves by competitors, shifting buyer needs, emerging market opportunities, and new ideas for improving the strategy.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Strategic leadership |
34. | A companys strategy is a work in progress and evolves over time because of the
Regardless of whether a companys strategy changes gradually or swiftly, the important point is that the task of crafting strategy is not a one-time event but always a work in progress. The strategic vision of a company affects the strategies and changes to strategies are not a set target: they depend on market factors and the companys position.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Strategic leadership |
35. | It is normal for a companys strategy to end up being
A companys realized strategy comprises planned initiatives to improve the companys financial performance and secure a competitive edge in combination with initiatives to deal with unanticipated developments and fresh market conditions.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Competitive advantage |
36. | Crafting a deliberate strategy involves developing strategy elements that
The biggest portion of a companys current strategy flows from previously initiated actions that have proven themselves in the marketplace and newly launched initiatives aimed at edging out rivals and boosting financial performance. This part of managements action plan for running the company is its deliberate strategy, consisting of proactive strategy elements that are both planned and realized as planned.
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AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 That a companys strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy. Topic: Strategic planning |
37. | Which of the following statements about a companys strategy is true?
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