(Test Bank) Crafting And Executing Strategy

Thompson, 22

Business

Test Bank

22nd Edition

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Test Bank for Crafting And Executing Strategy, The downloadable file consists of 343 pages, and the total size of the file is 2.19 MB. Purchase now only for highly discounted price.

Author(s): Thompson

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Crafting and Executing Strategy, 22e (Thompson) Chapter 1 What Is Strategy and Why Is It Important? 1) Managerial considerations in determining how to compete successfully do not normally include 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) H ow 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? Answer: B Explanation: Managerial considerations for successful st rategies 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. Difficulty: 1 Easy Topic: Strategy and the Strategic Management Process Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) A pharmaceutical company selling prescription drugs in France for the past 10 years has had moderate sales in a crowded market, as its rivals manufacture and market drugs of similar efficacy and having similar safety precautions, but that have superior market share. This particular pharmaceutical company's greatest challenge is to increase French doctors' prescribing their drugs. What would be the most effective strategy to improve sales performance in the existing market? A) modifying marketing communic ation 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 com panies D) exiting the market and entering a new unexplored geographical location E) engaging in new contract talks with suppliers about price breaks Answer: A Explanation: 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 th e rivals, too, offer drugs with similar efficacy and safety precautions. Difficulty: 3 Hard Topic: Strategy and the Strategic Management Process Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' s trategies. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) A company's 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. Answer: A Explanation: A company's strategy is the set of actions that its managers take to outperform the company's competitors with a unique market position and sustained competitive advantage. Difficulty: 2 Medium Topic: Strategy and the Strategic Management Process Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 4) ________ is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability. A) A strategy B) A mission statement C) Strategic intent D) A cost -price framework E) A market vision Answer: A Explanation: A company's strategy is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability. Achieving this entails making a managerial commitment to a coherent array of well -considered moves about how to compete. Difficulty: 1 Easy Topic: Strategy and the Strategic Management Process Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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 company's future over the long term. E) re -creating a business model with regularity. Answer: D Explanation: 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 at doing what rivals cannot or do not do. Difficulty: 2 Medium Topic: Strategy and the Strategic Management Pr ocess Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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 marke ts. 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 collabor ative partnerships. Answer: E Explanation: Strategy is about competing differently from rivals —doing what competitors don't do or doing what they can't do. Sometimes companies enter strategic alliances and collaborative partnerships to strengthen their market position and competitiveness. Difficulty: 2 Medium Topic: Strategy Analysis Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 7) Under Armour , a multinational sports apparel company plans entry into a new geographical location, Vietnam, considered an emerging market, with its established and best -selling product line: women's running shorts. How should Under Armour not craft a strategy to enhan ce future profits in Vietnam? A) create a sales plan that aims to enhance initial sales and market penetration with low prices based on high operational costs B) devise a marketing plan that aims at mass customer segments with attractive advertisements and offers on products C) implement a diversification plan that aims at adding health and fitness centers to its existing line of products D) chart an acquisition plan that aims at acquiring local smaller -scale sports apparel manufacturers that seek funding a nd offer a complementary product lineup E) establish a distribution plan to set up more supply outlets than any other rivals in the location Answer: A Explanation: A sales plan that is based on a low price, high cost model usually does not work as it cr eates 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. Difficulty: 3 Hard Topic: Strategy Analysis Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Apply AACSB: Analytical Thinking; Technology Accessibility: Keyboard Navigation 8) Every strategy needs A) a distinctive e lement 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 produ cing greater control over sales growth targets. E) to mimic the plans of the industry's most successful companies. Answer: A Explanation: Every company's 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. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) A company's strategy is NOT concerned with management's 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 company's financial and market performance. Answer: B Explanation: Mimicking the strategies of successful industry rivals —with either copycat product offerings or maneuvers to stake out the same market position —is certainly not the best at yielding successful results. Difficulty: 2 Medium Topic: Define Competitive Advantage Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 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 company's research department has found that many customers care more about knowing exactly when a package will arrive than get ting 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, rebrandi ng, 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 Answer: B Explanation: Developing new tracking technology would be a unique strategy to address the current issue of losing customers. Difficulty: 3 Hard Topic: Define Competitive Advantage Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Apply AACSB: Analytic al Thinking Accessibility: Keyboard Navigation 11) A company's 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 emplo y 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 s uccessful companies in its industry. E) managers focus on meeting or beating shareholder expectations. Answer: C Explanation: Attracting and pleasing customers through cost, quality, and brand image of a product is one of the "hows" to be considered whi le devising strategies that are dynamic, unique, and provide sustainable edge over competitors. Usually, only the management is involved in devising strategies. Difficulty: 2 Medium Topic: Define Competitive Advantage Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) In crafting a company's 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" strategy —"dare- to-be-different" strategies are rarely succes sful. Answer: D Explanation: 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. Difficulty: 2 Medium Topic: Define Competitive Advantage Learning Objective: 01- 01 What we mean by a company's strategy and why it needs to differ from competitors' strategies. Bloom's: Understand AACSB: Analytical Thinking Accessi bility: Keyboard Navigation 13) The heart and soul of a company's strategy -making effort is determining how to A) become the industry's low -cost provider. B) maximize profits and shareholder value. C) improve the efficiency of its business model. D) ma ximize profits while simultaneously operating in a socially responsible manner that keeps the company's prices as low as possible. E) come up with moves and actions that produce a durable competitive edge over rivals. Answer: E Explanation: A company ac hieves 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 differently—doing what rival firms don't do or what rival firms can't do. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 02 The concept of a sustainable competitive advantage. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) The pattern of actions and business approaches that would not define a company's 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 firm's bargaining position with suppliers and distributors. Answer: D Explanation: A company's strategy would include actions to gain sales and market share with lower prices based on lower costs, not higher costs. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 02 The concept of a sustainable competitive advantage. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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 company's most reliable means of achieving ab ove-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. Answer: C Explanation: 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 company's products or services over its rivals' offerings —reasons that competitors are unable to nullify or overcome despite their best efforts. Difficulty: 2 Medium Topic: Define Compe titive Advantage Learning Objective: 01- 02 The concept of a sustainable competitive advantage. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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. Answer: A Explanation: 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. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 02 The concept of a sustainable competitive advantage. Bloom's: Understand AACSB: Analytical Thinking Accessi bility: Keyboard Navigation 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 company's 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 ac hievement of financial objectives. E) is the best indicator that the company's strategy and business model are well -matched and properly synchronized. Answer: C Explanation: If a company's competitive edge holds promise for being sustainable (as opposed to just temporary), then so much the better for both the strategy and the company's future profitability. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) What separates a powerful strategy from a run -of-the-mill or in effective 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) management's ability to forge a seri es 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. Answer: D Explanation: 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. Difficulty: 1 Easy Topic: Define Competitive Advantage Learning Objective: 01- 02 The concept of a sustainable competitive advantage. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 19) Volta Motors, a manufacturer of self -driving de livery trucks, is working on developing its next -generation electric vehicles. It has decided on a strategy of focusing on a narrow buyer segment and outcompeting rivals by offering buyers customized autonomous, self -driving electric vehicles at a lower co st than rivals. What basic strategic approach has Volta Motors decided upon? A) focused differentiation B) best -cost provider C) low -cost provider D) broad differentiation E) focused low -cost Answer: B Explanation: 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 but at a lower cost than rivals' products. Difficulty: 3 Hard Topic: Strategic Approaches to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) Strategic approaches to set a company apart from rivals and achieve a sustainable competitive advantage are not likely to include A) striving to be the industry's low -cost provider. B) outcompeting rivals on the basis of differentiating features that wil l 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 industry's high- price provider. Answer: E Explanation: 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. Difficulty: 2 Medium Topic: Strategic Approaches to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) If you were advising Rebel Toad Brewing, a local brewpub, about how to set itself apart from rivals and achieve a sustainable competitive advantage, you would most likely not recommend that Rebel Toad Brewing A) strive to be the industry's low -cost provider, thereby aiming for a cost -based competitive advantage. B) outcompete rivals on the basis of differentiating features such as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiori ty, or unusually good value for the money. C) mimic the successful strategies of rivals. D) focus on a narrow market niche to achieve a competitive edge by doing a better job than rivals of satisfying the needs and tastes of buyers comprising the niche. E) develop a cost advantage based on offering more value for its patrons' money. Answer: C Explanation: Simply trying to mimic the strategies of the industry's successful companies never works. Rather, every company's strategy needs to have some distincti ve element that draws in customers and produces a competitive edge. Difficulty: 2 Medium Topic: Strategic Approaches to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22) A salsa manufacturing company that enjoys the le ast bargaining power with its suppliers would most likely be A) involved in mass production of its products to cater to an expanding customer base. B) actively catering to a broad, price -sensitive customer base. C) manufacturing high- quality salsa and related products from readily available raw materials for a broad customer base. D) selling salsa and related products deemed to be highly popular and easily available across most supermarkets. E) offering high- cost specialized salsas that could be consumed only by customers with specific food allergies . Answer: E Explanation: 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 suppl ying specialized materials. Difficulty: 3 Hard Topic: Strategic Approaches to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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 experti se 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 innova tion E) building products and distributing them at low prices to a broad customer base irrespective of manufacturing cost Answer: E Explanation: 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. Difficulty: 2 Medium Topic: Strategic Approaches to Winning a Sustainable Competitive A dvantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) If you were asked to develop a low -cost provider strat egy for a startup passenger air carrier business, what would you most likely not recommend? A) offer low prices on short -distance flights and eliminate meals during flights B) offer low prices on long -distance flights and maintain long service times for ai rcraft between flights C) offer low prices on short -distance flights and improve airplane capacity by reducing the distance between existing seats to permit adding more rows of seating D) offer low prices on short -distance flights and pay flight attendants a minimum wage E) offer low prices on long- distance flights and charge fees for both carry- on and checked luggage Answer: B Explanation: Long service times between flights would greatly increase the cost of an airline's operation that cannot be mitigated by low prices, which would, in turn, lead to losses. Other airlines, on the other hand, offer low prices by aggressively reducing costs, internal and external. Difficulty: 3 Hard Topic: Strategic Approaches to Winning a Sustainable Competitive A dvantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Apply AACSB: Analytical Thinking; Technology Accessibility: Keyboard Navigation 25) Amy's 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 Amy's Drive -Thru using to gain competitive advant age? 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 Answer: D Explanation: Amy's 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. It also concentrates on a narrow customer base. Difficulty: 3 Hard Topic: Strategic Approac hes to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 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 a 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 Answer: D Explanation: 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 is more appealing than rivals' offerings. Difficulty: 3 Hard Topic: Strategic Approaches to Winning a Sustainable Competitive Advantage Learning Objective: 01- 03 The five most basic approaches for setting a company apart from its rivals. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation