Ch. 6 Multiple Choice Flashcards
Once a company has decided to employ a particular generic competitive strategy, then it must make such additional strategic choices as
A. Whether to enter into strategic alliances or collaborative partnerships
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?
C. Whether to employ a market share leadership strategy
B. Are collaborative arrangements where two or more companies join forces to achieve mutually beneficial strategic outcomes
A strategic alliance
C. Is a formal agreement between two or more companies in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control and mutual dependence
Entering into strategic alliances and collaborative partnerships can be competitively valuable because
B. Cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology
The best strategic alliances
A. Are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit
Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries in order to
C. Get into critical country markets quickly and accelerate the process of building a potent global presence, gain inside knowledge about unfamiliar markets and cultures and access valuable skills and competencies that are concentrated in particular geographic locations
A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships in order to
C. Help master new technologies and build new expertise and competencies faster than would be possible through internal efforts, establish a stronger beachhead for participating in the target industry and open up broader opportunities in the target industry by melding their capabilities with the resources and expertise of partners
Which of the following is NOT a typical reason that many alliances prove unstable or break apart?
D. Disagreement over how to divide the profits gained from joint collaboration
Experience indicates that strategic alliances
D. Have a high "divorce rate."
Which of the following is NOT a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement?
E. The alliance helps the company obtain additional financing on better credit terms
The Achilles heel (or biggest disadvantage/danger/pitfall) of relying heavily on alliances and cooperative strategies is
B. Becoming dependent on other companies for essential expertise and capabilities
Which of the following is NOT one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits?
C. Minimizing the amount of resources that the partners commit to the alliance
Which one of the following is NOT a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors or makers of complementary products?
C. To enable greater vertical integration
The competitive attraction of entering into strategic alliances and collaborative partnerships is
A. In allowing companies to bundle competencies and resources that are more valuable in a joint effort than when kept separate
The difference between a merger and an acquisition is that
B. A merger is a pooling of equals whereas an acquisition involves one company, the acquirer, purchasing and absorbing the operations of another company, the acquired
Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions?
D. To facilitate a company's shift from a broad differentiation strategy to a focused differentiation strategy
Mergers and acquisitions are often driven by such strategic objectives as to
A. Expand a company's geographic coverage or extend its business into new product categories
Merger and acquisition strategies
B. May offer considerable cost-saving opportunities (perhaps helping to transform otherwise high-cost companies into a competitor with average or below-average costs) and can also be beneficial in helping a company try to invent a new industry and lead the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities
Mergers and acquisitions
B. Frequently do not produce the hoped-for outcomes
Vertical integration strategies
A. Extend a company's competitive scope within the same industry by expanding its operations across more parts of the industry value chain
The two best reasons for investing company resources in vertical integration (either forward or backward) are to
D. Strengthen the company's competitive position and/or boost its profitability
For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company
B. Must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality
The strategic impetus for forward vertical integration is to
A. Gain better access to end users and better market visibility
Which of the following is typically the strategic impetus for forward vertical integration?
C. Gaining better access to end users and better market visibility
A good example of vertical integration is
C. A crude oil refiner purchasing a firm engaged in drilling and exploring for oil
Which of the following is NOT a potential advantage of backward vertical integration?
D. Reduced business risk because of controlling a bigger portion of the overall industry value chain
Which of the following is NOT a strategic disadvantage of vertical integration?
C. Vertical integration reduces the opportunity for achieving greater product differentiation
E. Involve farming out value chain activities presently performed in-house to outside specialists and strategic allies
Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense when
A. An activity can be performed better or more cheaply by outside specialists
B. It allows a company to focus its entire energies on those activities that are at the center of its expertise (its core competencies) and that are most critical to its competitive and financial success
C. Outsourcing won't adversely hollow out the company's technical know-how, competencies or capabilities
D. It reduces the company's risk exposure to changing technology and/or changing buyer preferences
E. All of these
The two big drivers of outsourcing are
B. A desire to take advantage of the fact that outsiders can perform certain activities better or cheaper and allowing a company to focus its entire energies on those activities that are at the center of its expertise (its core competencies) and that are most critical to its competitive and financial success
Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house?
D. Preventing a company from hollowing out its technical know-how, competencies or capabilities
Relying on outsiders to perform certain value chain activities offers such strategic advantages as
A. Obtaining higher quality and/or cheaper components or services
B. Improving the company's ability to innovate by allying with "best-in-world" suppliers
C. Reducing the company's risk exposure to changing technology and/or changing buyer preferences
D. Increasing the firm's ability to assemble diverse kinds of expertise speedily and efficiently
E. All of the above
Outsourcing strategies can offer such advantages as
B. Obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate and reducing its risk exposure
The big risk of employing an outsourcing strategy is
B. Hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success
Which of the following is not one of the principal offensive strategy options?
C. Blocking the avenues open to challengers
Which one of the following is an example of an offensive strategy?
C. Pursuing continuous product innovation to draw sales and market share away from less innovative rivals
A blue ocean type of offensive strategy
D. Involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand
A hit-and-run or guerilla warfare type of offensive strategy involves
E. Random raids by a small competitor to grab sales and market share from complacent or distracted rivals
Launching a preemptive strike type of offensive strategy entails
B. Moving first to secure an advantageous position that rivals are prevented or discouraged from duplicating
Which one of the following statements about offensive strategies is false?
D. One of the most potent types of offensive strategy is to introduce new features or models to fill vacant niches in a company's overall product offering and thereby better match the product offerings of key rivals
Which one of the following is NOT a trait of a good strategic offensive?
A. Trying to build a more cost-efficient supply chain than rivals have
Which one of the following is NOT a good type of rival for an offensive-minded company to target?
D. Other offensive-minded companies with a sizable war chest of cash and marketable securities
Which one of the following statements regarding the basis for offensive attack on rivals is false?
E. Attacking a market leader is always unwise
The purposes of defensive strategies are to
B. Lower the risk of being attacked by rivals, weaken the impact of any attack that occurs and influence challengers to aim their offensive efforts at other rivals
Which one of the following is NOT a defensive option for protecting a company's market share and competitive position?
C. Running comparison ads that call attention to weaknesses in rivals' products
Which of the following is a potential defensive move to ward off challenger firms?
A. Granting volume discounts or better financing terms to dealers/distributors and providing discount coupons to buyers to help discourage them from experimenting with other suppliers/brands
B. Signaling challengers that retaliation is likely in the event they launch an attack
C. Lengthening warranties, offering free or low-cost training and support services and providing coupons and sample giveaways to buyers most prone to experiment with using rival brands
D. Maintaining a war chest of cash and marketable securities
E. All of these
One of the biggest Internet-related strategic issues facing many businesses is
E. What role the company's Web site should play in the company's competitive strategy
Which of the following is NOT one of the options that companies have for using the Internet as a distribution channel to access buyers?
A. Establishing a company Web site so as to have an Internet presence
One very important advantage of a product-information-only Web site strategy is
D. Avoiding channel conflict
The advantages of a brick-and-click strategy include
C. Low incremental investments to establish a Web site, the ability to access a wider customer base and the ability to use existing distribution centers and/or company store locations for picking orders from on-hand inventories and making deliveries
Two big appeals of a brick-and-click strategy are
B. Economically expanding a company's geographic reach and giving existing and potential customers another choice of how to communicate with the company, shop for company products, make purchases or resolve customer service problems
A company that elects to use the Internet as its exclusive channel for accessing buyers must address such strategic issues as
A. Whether it will have a broad or narrow product offering
B. How it will deliver unique value to buyers
C. How it will draw traffic to its Web site and then convert page views into revenues
D. Whether it will perform order fulfillment activities internally or outsource them
E. All of the above
Assuming a company elects to use the Internet as its exclusive channel for accessing buyers, then which of the following is not one of the strategic issues that it will need to address?
D. Whether to employ a forward integration strategy
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. First-time buyers remain strongly loyal to pioneering firms in making repeat purchases
C. Moving first can result in a cost advantage over rivals
D. Moving first can constitute a preemptive strike, making imitation extra hard or unlikely
E. All of these
In which of the following instances is being a first-mover NOT particularly advantageous?
B. When buyers are not loyal to pioneering firms in making repeat purchases
Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is
E. To carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly
When the race among rivals for industry leadership is a marathon rather than a sprint,
C. A slow mover may not be unduly penalized and first-mover advantages can be fleeting
First-mover disadvantages arise when
A. The costs of pioneering are much higher than being a follower and only negligible buyer loyalty or cost savings accrue to the pioneer
B. Technological change is rapid and following rivals find it easy to leapfrog the pioneer with next-generation products of their own
C. The pioneer's skills, know-how and products are easily copied or even bested by late movers
D. All of these
In which of the following cases are first-mover disadvantages NOT likely to arise?
B. When new infrastructure is needed before market demand can surge