Question 1

Entering into strategic alliances and collaborative partnerships can be competitively valuable because

Accepted Answer

A)  working closely with outsiders is essential in developing new technologies and new products in virtually every industry. 
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. 
C)  they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages. 
D)  they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations. 
E)  they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

Question 2

What are the merits of outsourcing the performance of certain value chain activities as opposed to performing them in-house? Under what circumstances does outsourcing make good strategic sense?

Accepted Answer

The answer of What are the merits of outsourcing the...

Question 3

A good example of vertical integration is a

Accepted Answer

A)  global public accounting firm acquiring a small local or regional public accounting firm. 
B)  large supermarket chain getting into convenience food stores. 
C)  crude oil refiner purchasing a firm engaged in drilling and exploring for oil. 
D)  hospital opening up a nursing home for the aged. 
E)  railroad company acquiring a trucking company specializing in long-haul freight.

Question 4

Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when

Accepted Answer

A)  pioneering helps build up a firm's image and reputation and creates strong brand loyalty. 
B)  buyers remain strongly loyal to pioneering firms because of incentives and switching costs barriers. 
C)  there is a steep learning curve and when learning can be kept proprietary. 
D)  moving first can constitute a preemptive strike, making imitation extra hard or unlikely. 
E)  market uncertainties make it difficult to ascertain what will eventually succeed.

Question 5

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

Accepted Answer

A)  reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users. 
B)  can result in better coordination of the firm's direct sales activity to wholesalers and distributors. 
C)  can establish a retail frontal attack while efficiently managing its backward (defensive) sales orientation. 
D)  combines the best of all sales channels and provides financial support to distribution allies. 
E)  creates a channel conflict, thereby providing competitive improvisation.

Question 6

Experience indicates that strategic alliances

Accepted Answer

A)  are generally successful. 
B)  work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. 
C)  work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies. 
D)  can suffer culture clash and integration problems due to different management styles and business practices. 
E)  are rarely useful in helping a company win the race for global industry leadership.

Question 7

In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise?

Accepted Answer

A)  when the costs of pioneering are much higher than being a follower and only negligible learning/experience benefits accrue to the pioneer 
B)  when the marketplace is skeptical about the benefits of a new technology or product being pioneered by a first-mover 
C)  when the pioneer's products are somewhat primitive and are easily bested by late movers 
D)  when opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand 
E)  when technological change is rapid and fast-following rivals find it easy to leapfrog the pioneer with next-generation products of their own

Question 8

Backward vertical integration can produce a

Accepted Answer

A)  full integration when activities remain the domain of key suppliers. 
B)  tapered integration if the firm consolidates all activities in-house. 
C)  differentiation-based competitive advantage when activities enhance the performance of the final product. 
D)  focused differentiation strategy when the market is broad and the product is a commodity. 
E)  lower degree of flexibility in accommodating shifting buyer preferences.

Question 9

What are the strategic disadvantages of a backward vertical integration strategy?

Accepted Answer

The answer of What are the strategic disadvantages of a...

Question 10

Which of the following is NOT an example of a defensive move to protect a company's market position and restrict a challenger's options for initiating a competitive attack?

Accepted Answer

A)  challenging struggling runner-up firms that are on the verge of going under 
B)  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 
C)  signaling challengers that retaliation is likely in the event they launch an attack 
D)  publicly committing the company to a policy of matching a competitors' terms or prices 
E)  maintaining a war chest of cash and marketable securities

Question 11

For backward vertical integration into the business of suppliers to be a viable and profitable strategy, a company

Accepted Answer

A)  must first be a proficient manufacturer. 
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. 
C)  must have excess production capacity so that it has an ample in-house ability to undertake additional production activities. 
D)  needs to have a wide product line, so it can supply parts and components for many products. 
E)  should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

Question 12

Market conditions and factors that tend NOT to favor first movers include

Accepted Answer

A)  buyer behavior that is readily attracted to new technology or product features. 
B)  conditions that make imitation difficult and absolute cost advantages that accrue to those who make early commitments to new technologies, components, or distribution channels. 
C)  quick market penetration and strong loyalty among first-time customers. 
D)  growth in demand that depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed before buyer demand can surge. 
E)  pouring too few resources into getting ahead of the market opportunity.

Question 13

Identify and briefly explain what is meant by each of the following terms: a. outsourcing strategy
b. vertical integration strategy
c. first-mover advantage
d. first-mover disadvantage
e. horizontal and vertical scope

Accepted Answer

The answer of Identify and briefly explain what is meant...

Question 14

The principal offensive strategy options include all of the following EXCEPT

Accepted Answer

A)  offering an equally good or better product at a lower price. 
B)  using hit-and-run or guerrilla warfare tactics to grab sales and market share from complacent or distracted rivals. 
C)  launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating. 
D)  pursuing continuous product innovation to draw sales and market share away from less innovative rivals. 
E)  initiating a market threat and counterattack simultaneously to effect a distraction.

Question 15

Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house?

Accepted Answer

A)  streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace 
B)  allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best 
C)  helps the company assemble diverse kinds of expertise speedily and efficiently 
D)  enables a company to gain better access to end users and better market visibility 
E)  improves a company's ability to innovate

Question 16

The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as

Accepted Answer

A)  horizontal scale. 
B)  vertical scope. 
C)  outsourcing scope. 
D)  cooperative scaled scope. 
E)  focal scope.

Question 17

Which 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?

Accepted Answer

A)  whether to focus on building competitive advantages 
B)  whether to employ the element of surprise as opposed to doing what rivals expect and are prepared for 
C)  whether to employ a market share leadership strategy 
D)  whether to display a strong bias for swift, decisive, and overwhelming actions to overpower 
E)  whether to create and deploy company resources to cause rivals to defend themselves

Question 18

Once a company has decided to employ a particular generic competitive strategy, then it must make the following additional strategic choices, EXCEPT whether to

Accepted Answer

A)  focus on building competitive advantages. 
B)  employ the element of surprise as opposed to doing what rivals expect and are prepared for. 
C)  display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. 
D)  create and deploy company resources to cause rivals to defend themselves. 
E)  pay special attention to buyer segments that a rival is already serving.

Question 19

Mergers and acquisitions are often driven by such strategic objectives as

Accepted Answer

A)  expanding a company's geographic coverage or extending its business into new product categories. 
B)  reducing the number of industry key success factors. 
C)  reducing the number of strategic groups in the industry. 
D)  facilitating a company's shift from a low-cost leadership strategy to a focused low-cost strategy. 
E)  lengthening a company's value chain and thereby putting it in a better position to deliver superior value to buyers.

Question 20

What does the scope of the firm refer to?

Accepted Answer

A)  the range of activities the firm performs externally and its social responsibility activities 
B)  to gain competitive advantage based on where it locates its various value chain activities 
C)  the firm's capability to employ vertical integration strategies 
D)  the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses 
E)  to prevent foreign competition from affecting the market

Exam 6: Supplementing the Chosen Competitive Strategy: Other Important Business Strategy Choices