Crafting & Executing Strategy The Quest for Competitive Advantage Concepts and Cases 21st Edition By Arthur A. Thompson Jr -Test Bank

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Crafting & Executing Strategy The Quest for Competitive Advantage Concepts and Cases 21st Edition By Arthur A. Thompson Jr -Test Bank

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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?

A. How can a company attract, keep, and please customers?

 

B. How can a company modify its entire product line to emphasize its internal service attributes?

 

C. How should a company respond to changing economic and market conditions?

 

D. How should a company be competitive against rivals?

 

E. How should a company position itself in the marketplace?

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.

 

 

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?

A. modifying marketing communication to increase brand familiarity within key physician segments

 

B. relocating all the existing drug manufacturing facilities to developing countries to reduce operational costs

 

C. employing hiring plans that aim at acquiring drug designers from rival companies

 

D. exiting the market and entering a new unexplored geographical location

 

E. engaging in new contract talks with suppliers about price breaks

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.

 

 

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. stake out a unique market position and achieve superior profitability.

 

B. compete against rivals and establish a transitory competitive advantage.

 

C. concentrate on improving the existing product offering irrespective of the changing and turbulent markets.

 

D. develop a more appealing business model than rivals.

 

E. identify its strategic vision, its strategic objectives, and its strategic intent.

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.

 

 

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. A strategy

 

B. A mission statement

 

C. Strategic intent

 

D. A cost-price framework

 

E. A market vision

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.

 

 

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

A. matching rival businesses products and quality dimensions in the marketplace.

 

B. building profits for short-term success.

 

C. realigning the market to provoke change in rival companies.

 

D. developing lasting success that can support growth and secure the companys future over the long term.

 

E. re-creating a business model with regularity.

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.

 

 

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

A. realizing a higher cost structure and lower operating profit margins than rivals in order to drive sales growth.

 

B. creating products analogous with competitors so as to be competitive in the same markets.

 

C. pursuing similar personalized customer service or quality dimensions as rivals.

 

D. being undecided whether or not to concentrate operations on local versus global markets.

 

E. strengthening competitiveness by pursuing strategic alliances and collaborative partnerships.

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.

 

 

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. creating a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs

 

B. devising a marketing plan that aims at mass customer segments with attractive advertisements and offers on products

 

C. implementing a diversification plan that aims at adding non-generic prescription medications to the existing line of products

 

D. charting an acquisition plan that aims at acquiring local smaller-scale pharmaceutical manufacturers that seek funding and offer a complementary product lineup

 

E. establishing a distribution plan to set up more supply outlets than any other rivals in the location

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.

 

 

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

A. a distinctive element that attracts customers and produces a competitive edge.

 

B. to include similar characteristics to rival company strategies.

 

C. to pursue conservative growth built on historical strengths.

 

D. to employ diverse and sundry operating practices for producing greater control over sales growth targets.

 

E. to mimic the plans of the industrys most successful companies.

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.

 

 

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

A. attract and please customers.

 

B. stake out the same market position as successful rival companies.

 

C. grow the business.

 

D. compete successfully.

 

E. conduct operations and improve the companys financial and market performance.

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.

 

 

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?

A. employing night delivery drivers at a high cost and maintenance charges

 

B. developing radio tags that could be attached to packages to allow for real-time tracking by customers PCs and mobile phones

 

C. diversifying the different types of packages that can be transported and enabling booking through calls

 

D. acquiring small transportation companies with cheaper trucks and tempos, rebranding, and using them for deliveries

 

E. engaging in expensive advertising with new tag lines and famous celebrities to enhance its brand image in the market

Developing new tracking technology would be a unique strategy to address the current issue of losing customers.

 

 

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

A. it is developed through a collaborative process involving all managers and staff from all levels of the organization.

 

B. managers employ conservative strategic moves based on past experience and form an underlying basis of control.

 

C. it is predicated on competitive moves aimed at appealing to buyers in ways that set the company apart from rivals.

 

D. managers copy the strategic moves of successful companies in its industry.

 

E. managers focus on meeting or beating shareholder expectations.

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.

 

 

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. face the biggest challenge of how closely to replicate strategies of successful companies in the industry.

 

B. have comparatively little freedom in choosing the hows of strategy.

 

C. are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility.

 

D. need to come up with a sustainable competitive advantage that draws in customers and produces a competitive edge over rivals.

 

E. are well-advised to be risk-averse and develop a conservative strategydare-to-be-different strategies are rarely successful.

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.

 

 

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. become the industrys low-cost provider.

 

B. maximize profits and shareholder value.

 

C. improve the efficiency of its business model.

 

D. maximize profits while simultaneously operating in a socially responsible manner that keeps the companys prices as low as possible.

 

E. come up with moves and actions that produce a durable competitive edge over rivals.

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.

 

 

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. strengthen market standing and competitiveness by acquiring or merging with other companies.

 

B. strengthen competitiveness via strategic coalitions and partnerships.

 

C. upgrade competitively important resources and capabilities.

 

D. gain sales and market share with lower prices despite increased costs.

 

E. strengthen the firms bargaining position with suppliers and distributors.

A companys strategy would include actions to gain sales and market share with lower prices based on lower costs, not higher costs.

 

 

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. without a competitive advantage a company cannot become the industry leader.

 

B. without a competitive advantage a company is likely to fall into bankruptcy.

 

C. crafting a strategy that yields a competitive advantage over rivals is a companys most reliable means of achieving above-average profitability and financial performance.

 

D. a competitive advantage is what enables a company to achieve its strategic objectives.

 

E. how a company goes about trying to please customers and outcompete rivals is what enables senior managers to choose an appropriate strategic vision for the company.

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.

 

 

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

A. provides buyers with superior value compared to rival sellers or offers the same value at a lower cost.

 

B. has a profitable business model.

 

C. is able to maximize shareholder wealth.

 

D. is consistently able to achieve both its strategic and financial objectives.

 

E. has a strategy well-matched to its business model.

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.

 

 

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

A. is a reliable indicator that the company has a socially responsible business model.

 

B. is achievable in emerging but not mature industries.

 

C. is a companys most reliable ticket to above-average profitability.

 

D. signals that the company has a bold, ambitious strategic intent that places the achievement of strategic objectives ahead of the achievement of financial objectives.

 

E. is the best indicator that the companys strategy and business model are well-matched and properly synchronized.

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.

 

 

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. the ability of the strategy to keep the company profitable

 

B. the proven ability of the strategy to generate maximum profits

 

C. the speed with which it helps the company achieve its strategic vision

 

D. managements ability to forge a series of actions, both in the marketplace and internally, that sets the company apart from rivals and produces sustainable competitive advantage

 

E. whether it allows the company to maximize shareholder value in the shortest possible time.

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.

 

 

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. focused differentiation

 

B. best-cost provider

 

C. low-cost provider

 

D. broad differentiation

 

E. focused low-cost

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.

 

 

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?

A. striving to be the industrys low-cost provider

 

B. outcompeting rivals on the basis of differentiating features that will appeal to a broad spectrum of buyers

 

C. developing a best-cost provider strategy that gives customers more value for the money

 

D. focusing on a narrow market niche and serving buyers special needs and tastes

 

E. striving to be the industrys high-price provider

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.

 

 

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?

A. striving to be the industrys low-cost provider, thereby aiming for a cost-based competitive advantage

 

B. outcompeting rivals on the basis of differentiating features such as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money

 

C. simply trying to mimic the successful strategies of rivals

 

D. focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche

 

E. developing a cost advantage based on offering more value for the money

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.

 

 

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?

A. a company that is involved in mass production of goods to cater to its expanding customer base

 

B. a company that actively caters to a broad price-sensitive customer base

 

C. a company that generates high quality product components from easily available raw materials for a broad customer base

 

D. a company whose products are highly popular and easily available across most supermarkets

 

E. a company that offers high-cost specialized products that could be used only by customers of a certain age group

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.

 

 

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?

A. having a distinctive competitive product offering

 

B. building competitively valuable expertise and capabilities not readily matched, and offering distinctive products

 

C. building experience, know-how, and specialized capabilities that have been perfected over a long period of time

 

D. having hard-to-beat capabilities and impressive product innovation

 

E. building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost

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.

 

 

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?

A. Airline 1 offers low prices on short-distance flights and cuts down on meals during flights.

 

B. Airline 2 offers low prices on long-distance flights and has long service times for its planes between flights.

 

C. Airline 3 offers low prices on short-distance flights and improves flight carrier capacity through addition of seats by reducing distance between existing seats.

 

D. Airline 4 offers low prices on short-distance flights and pays minimum wage rates to the flight crew.

 

E. Airline 5 offers low prices on long-distance flights and charges fees for carry-on as well as checked luggage.

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.

 

 

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?

A. a low-cost provider strategy

 

B. a broad differentiation strategy

 

C. a focused low-cost strategy

 

D. a differentiation strategy

 

E. a best-cost provider strategy

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.

 

 

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?

A. a low-cost provider strategy

 

B. a broad differentiation strategy

 

C. a focused low-cost strategy

 

D. a focused differentiation strategy

 

E. a best-cost provider strategy

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.

 

 

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?

A. A fashion clothing line uses sought-after designers and natural fabrics.

 

B. A mortgage company specializes in lending money for second homes.

 

C. An online retailer delivers organic groceries overnight.

 

D. A baby products retailer sells unassembled baby furniture produced in China.

 

E. A dairy products manufacturer uses exotic substitutes to produce lactose-free dairy products.

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.

 

 

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.

 

B. focused low-cost strategy.

 

C. focused differentiation strategy.

 

D. broad differentiation strategy.

 

E. low-cost provider strategy.

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.

 

 

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?

A. the need to keep strategy in step with changing circumstances, market conditions, and changing customer needs and expectations

 

B. the proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy

 

C. the need to abandon some strategy features that are no longer working well

 

D. the need to respond to the newly initiated actions and competitive moves of rival firms

 

E. the need to respond to short-term swings in the stock market

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.

 

 

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?

A. a government agency that makes plans for a set period of time and implements them phase by phase through the tenure

 

B. a mobile company, established in a saturated market, that aims at quarterly release of new products

 

C. a new cosmetics manufacturer in a market that replicates the products of a competitor at a moderate quality and lower price

 

D. a nationalized bank that lends at a lower interest rate but a zero processing fee in a market crowded with privatized banks running at high cost

 

E. a firearms regulatory agency, set up by the government, that publishes industry standards for safety, reliability, and quality of arms and ammunition

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.

 

 

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. market conditions and circumstances are changing over time or the current strategy is clearly failing.

 

B. the task of crafting strategy is a one-time event.

 

C. the strategic vision necessitates periodic updating.

 

D. frequent changes in strategy make it very difficult for rivals to imitate.

 

E. all strategies are reactive.

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.

 

 

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. an assured profitability strategy.

 

B. a broad market entry strategy.

 

C. an emergent strategy.

 

D. unlimited revenue generation.

 

E. a proactive strategy.

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.

 

 

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

A. changing circumstances that affect performance and the desire to improve the current strategy.

 

B. competitor moves in the market and shifting needs of buyers.

 

C. stagnating market and restrictive industrial opportunities.

 

D. mounting evidence that the strategy is less effective.

 

E. public pronouncements from rivals about monthly profit margins.

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.

 

 

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

A. importance of developing a fresh strategic plan every year that keeps employees from becoming bored with executing the same strategy year after year.

 

B. ongoing need to imitate the new strategic moves of the industry leaders.

 

C. need to make regular adjustments in the companys strategic vision.

 

D. ongoing need of company managers to react and respond to changing market and competitive conditions.

 

E. frequent need to modify key elements of the companys business model.

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.

 

 

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. a blend of offensive actions on the part of managers to improve the companys profitability and defensive moves to counteract changing market conditions.

 

B. a combination of conservative moves to protect the companys market share and somewhat more risky initiatives to set the companys product offering apart from rivals.

 

C. a close imitation of the strategy employed by the recognized industry leader.

 

D. a blend of proactive actions to improve the companys competitiveness and financial performance, and adaptive reactions to unanticipated developments and fresh market conditions.

 

E. more a product of clever entrepreneurship than of efforts to clearly set a companys product/service offering apart from the offerings of rivals.

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.

 

 

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

A. imitate as much of the market leaders strategy as possible so as not to end up at a competitive disadvantage.

 

B. comprise a five-year strategic plan that is then fine-tuned during the remainder of the plan period; big changes in strategy are thus made only once every five years.

 

C. consist of a blend of proactive new planned initiatives plus ongoing strategy elements continued from prior periods.

 

D. deliberately eliminate the ongoing strategic elements and implement new planned initiatives.

 

E. consist of adaptive change plans to new market situations along with abandoned redundant ongoing elements.

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.

 

 

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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