Question 1

Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to

Accepted Answer

A)  combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. 
B)  help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers. 
C)  get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. 
D)  help wage price wars against foreign competitors. 
E)  exercise better control over efforts to revamp the global industry value chain.

Question 2

The difference between a merger and an acquisition is that

Accepted Answer

A)  a merger involves one company purchasing the assets of another company with cash, whereas an acquisition involves a company acquiring another company by buying all of the shares of its common stock. 
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. 
C)  in a merger the companies retain their original names whereas in an acquisition the name of the company being acquired is changed to be the name of the acquiring company. 
D)  a merger is a combination of three or more companies whereas an acquisition is a pooling of interests of just two companies. 
E)  a merger involves two or more companies deciding to adopt the same strategy whereas an acquisition involves one company taking over the strategy-making function of another company.

Question 3

The big risk of employing an outsourcing strategy is

Accepted Answer

A)  causing the company to become partially integrated instead of being fully integrated. 
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. 
C)  hurting a company's R&D capability. 
D)  putting the company in the position of being a late mover instead of an early mover. 
E)  increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

Question 4

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 5

Mergers and acquisitions

Accepted Answer

A)  are nearly always successful in achieving their desired purpose. 
B)  frequently do not produce the hoped-for outcomes. 
C)  are generally less effective than forming alliances or partnerships with these same companies. 
D)  are highly risky because of the financial drain that comes from using the company's cash resources to pay for the costs of the merger or acquisition. 
E)  are usually more successful in achieving cost reductions than in expanding a company's market opportunities.

Question 6

Identify and explain at least two drawbacks to forming a strategic alliance.

Accepted Answer

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Question 7

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when,

Accepted Answer

A)  new industry or market segments are yet to be developed and create altogether new consumer demand. 
B)  fast followers find it easy to leapfrog the pioneer with even better next-generation products of their own. 
C)  the market depends on the development of complementary products or services that are currently not available, buyers have high switching costs, and influential rivals are in position to derail the efforts of a first-mover. 
D)  entry barriers are high, substitute products or services are readily available, and buyers are prone to negotiate aggressively for better terms and lower prices. 
E)  there are nearly always big advantages to being a slow mover rather than an early mover, especially as concerns avoiding the "mistakes" of first or early movers.

Question 8

In which of the following instances is being a first-mover not particularly advantageous?

Accepted Answer

A)  When moving first with a preemptive strike makes imitation difficult or unlikely 
B)  When first-time buyers remain strongly loyal to pioneering firms in making repeat purchases 
C)  When early commitments to new technologies, types of components, or emerging distribution channels produce an absolute cost advantage over rivals 
D)  When markets are slow to accept the innovative product offering of a first-mover and fast followers possess sufficient resources and marketing muscle to overtake a first mover 
E)  When being a pioneer helps build a firm's image with buyers

Question 9

What are the three principal advantages of strategic alliances over vertical integration or mergers/acquisitions?

Accepted Answer

The answer of What are the three principal advantages of...

Question 10

Under what sorts of circumstances are mergers with or acquisitions of other companies a better solution than entering into partnerships or alliances with these companies? How do mergers and/or acquisitions contribute to enhancing a company's position?

Accepted Answer

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Question 11

Which of the following is not a potential advantage of backward vertical integration?

Accepted Answer

A)  Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity) 
B)  Reduced risks of disruptions in obtaining crucial components or support services 
C)  Reduced costs 
D)  Reduced business risk because of controlling a bigger portion of the overall industry value chain 
E)  Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage

Question 12

Once a company has decided to employ a particular generic competitive strategy,then it must make such additional strategic choices as

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 display a strong bias for swift, decisive, and overwhelming actions to overpower rivals. 
D)  whether to create and deploy company resources to cause rivals to defend themselves. 
E)  All of these.

Question 13

A blue ocean strategy

Accepted Answer

A)  is an offensive attack used by a market leader to steal customers away from unsuspecting smaller rivals. 
B)  involves a preemptive strike to secure an advantageous position in a fast-growing market segment. 
C)  works best when a company is the industry's low-cost leader. 
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. 
E)  involves the use of highly creative, never-used-before strategic moves to attack the competitive weaknesses of rivals.

Question 14

Which of the following is not one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits?

Accepted Answer

A)  Picking a good partner 
B)  Recognizing that the alliance must benefit both sides 
C)  Minimizing the amount of resources that the partners commit to the alliance 
D)  Ensuring that both parties live up to their commitments 
E)  Structuring the decision-making process so that actions can be taken swiftly when needed

Question 15

Identify and briefly discuss two "best targets" for offensive attacks by companies.

Accepted Answer

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Question 16

The two best reasons for investing company resources in vertical integration (either forward or backward)are to

Accepted Answer

A)  expand into foreign markets and/or control more of the industry value chain. 
B)  broaden the firm's product line and/or avoid the need for outsourcing. 
C)  gain a first mover advantage over rivals in revamping the industry value chain. 
D)  strengthen the company's competitive position and/or boost its profitability. 
E)  achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs.

Question 17

Identify and briefly discuss three factors a company must consider in order to capture the benefits of engaging in strategic alliances.

Accepted Answer

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Question 18

Which of the following ways are employed by defending companies to fend off a competitive attack?

Accepted Answer

A)  Introduce new features, add new models, or broaden its product line. 
B)  Grant volume discounts or better financing terms. 
C)  Gain product line exclusivity to force competitors to use alternate distributors. 
D)  Offer better training and support services. 
E)  All of these.

Question 19

Outsourcing strategies can offer such advantages as

Accepted Answer

A)  increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy. 
B)  obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure. 
C)  speeding a company's entry into foreign markets. 
D)  permitting greater use of strategic alliances and collaborative partnerships. 
E)  giving a firm more direct control over the costs of value chain activities.

Question 20

Which of the following is not a strategic disadvantage of vertical integration?

Accepted Answer

A)  Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later. 
B)  Vertical integration backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components. 
C)  Vertical integration reduces the opportunity for achieving greater product differentiation. 
D)  Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses. 
E)  Vertical integration poses all kinds of capacity-matching problems.

Exam 6: Strengthening a Companys Competitive Position: Strategic Moves, timing, and Scope of Operation